Thanks to a seven-year streak of rising US sales and strengthening markets worldwide, and to a spate of new product introductions to keep up with consumer demand for new SUVs and EVs, auto brands are climbing in value relative to all other brands, according to Interbrand’s 2017 Best Global Brands report.
Led by Toyota’s historical strength, car brands make up more than 14 percent of the 100 Best Global Brands for 2017. Twelve of the 16 car brands in Interbrand’s ranking also grew in value this year.
Still, as Jim Hoostal, Interbrand’s executive director for the automotive sector, wrote about the auto industry in the context of this year’s Best Global Brands rankings, “The automotive industry is facing unprecedented challenges that are affecting the entire ecosystem—from manufacturers to suppliers, retailers and the brands themselves. These are being driven by changes in technology, public policies and the consumer market—all materializing at the same time.”
The top five automotive brands on Interbrand’s 2017 Best Global Brands report: No. 7: Toyota, down 6% to $50 billion in brand value. No. 9: Mercedes-Benz, up 10% to $49 billion. No. 13: BMW, flat, $41 billion. No. 20: Honda, up 3% to $23 billion. No. 33: Ford, up 5% to $13.7 billion.
We spoke with Hoostal (right) about what differentiates the leading car brands of 2017 and how the industry’s future plays into current brand valuations.
What are the most significant growth drivers for auto brands making the 2017 Best Global Brands?
Mercedes-Benz, of the automotives, had the greatest percentage value move up, with a 10 percent increase over prior year. Last year Mercedes overtook BMW globally to be the No. 1 luxury brand in terms of sales. That was big news. They go head to head every year. That helped Mercedes improve in our formula for brand value and was driven largely by their investment in product, expanding in North America with smaller cars.
In our brand strength assessment we also recognize internal factors, and Mercedes, with Dieter Zetsche as the chairman [of parent Daimler], has a management culture change initiative going on and has been pretty public about it for leaders within Daimler AG.
It’s not just about the product; when it comes to brand strength we look at internal factors and culture. These are mammoth organizations that move slowly. How are they preparing for the future?
What’s another brand that has impressed you this year?
Ford, which had an internal culture change that was needed. Ford went up 5% this year, which is a bit above the average for automotive brands on Best Global Brands. We gave credit for that change and the forward-looking vision that [Executive Chairman] Bill Ford Jr. had and also the fact that he’s taking a more active role in the company. We think they’ll be accelerating in autonomous and ride-sharing and EVs and all of it. Bill and [new CEO Jim Hackett] will be really focused on that.
What keeps Toyota on top of the Best Global Brands automotive group year after year?
Global scale, and scope and service in markets worldwide. And they’ve always been great about investing in technologies and realizing that product is a key to future growth as well. The Toyota brand is known for durability, reliability and quality. Those are basic attributes within automotive that are never going to go away. Their brand represents that and people around the world know that.
What about Tesla?
They moved up a notch this year. Their capitalization is amazing and continues to awe people on Wall Street and people trying to analyze that company It’s all based on future earnings. The reason they’re lower than other car brands [on the 2017 Best Global Brands ranking] is because on the financials, they didn’t perform as well because it’s all betting on the future.
But now they’ve risen above the threshold because of product strategy, because the Model 3 is real. There’s still speculation about whether they can make it at scale, but the first 30 or so are out there. The Tesla brand itself continues to be stellar in terms of governance and authenticity that we evaluate for brand factors. And people know Tesla is about the environment. And from a retail channel standpoint they have complete control of their brands at retail and can control the whole brand experience.
What about factors such as how well brands are doing with electric vehicles or self-driving cars? Or is it too early for those to have much of an impact on brand value, other than Tesla?
It does in terms of product strategy. There’s enough information that says the industry is going electric, and they’ll sell at much bigger volumes in their future. If they’re doing it right it’ll help their brand value. BMW just announced in Frankfurt 12 pure electrics within a few years; that was the rage at the Frankfurt auto show.
And self-driving is coming, but how fast it comes to market — there’s still debate about that. Ultimately it’ll be good for the consumer. It’s important but a lesser factor than EVs. Autonomous driving ultimately becomes part of a brand’s product strategy. Each year it’ll become progressively more important and influential.
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