Economic ups and downs drove stop and go sales

Cars sales accelerated in the US but slowed in China and stalled in Europe.

Because of supply chain globalization and just-in-time inventories, most brands experienced shipment delays after the flooding and Fukushima nuclear accident in Japan and flooding in Thailand. Toyota and Honda suffered the most serious supply disruption.

Toyota, however, regained some of the trust lost during the uncontrolled acceleration problems of two years ago, which was eventually attributed to driver error. The Toyota Motor Corporation received the most awards for dependability in the J.D. Power and Associates dependability study.

Detroit returned to the car business. As the US economy recovered, carmakers marketed fuel-efficient family sedans rather than SUVs built on truck frames. This downshift in size resulted in part from the need to meet government fuel-efficiency standards. To drive sales and profit, carmakers reduced costs and built products with improved style, technology and driving experience. Consumer demand was the highest since 2006, according to Kantar Media.

The Korean brands Hyundai and Kia continued to fortify their presence worldwide. With distinctive combinations of quality, design and price, Hyundai challenged competitors at all model levels. It entered the BrandZ™ ranking of the most valuable global car brands.

VW also experienced strong global results. Sales of VW passenger cars rose 13.1 percent overall, led by a 22.2 percent increase in North America. Even in Europe, where car sales declined in most country markets except Germany, VW sales improved 12.3 percent. Global scale enabled the brand to deliver a premium image at a competitive price. With a 15 percent increase in brand value, VW ascended into the ranks of the BrandZ™ Top 100 Most Valuable Global Brands.

Growth varied by market

Sales momentum in the US varied according to brand. GM reported record profits. Ford sales slowed but the brand enjoyed a reservoir of good will because it had rejected the government bailout. In an ongoing industry trend to reduce the number of brands, Ford shed the Mercury, which it had introduced in 1938.

The Chrysler-Fiat arrangement seemed to be working, too. Chrysler enjoyed a massive turnaround into profitability, with the introduction of the first cross-platform effort of Chrysler and Fiat, the Dodge Dart, which shares styling with the Alfa Romeo Giulietta. This development highlighted the efficiencies gained from the globalization of the car industry. Europe’s troubled economy impacted Fiat sales, however. And weakness in its German-based Opel division prompted GM to consider collaborating with other European automakers as a way to cut costs.

Although auto sales in China slowed, the country remained the world’s largest auto market and a critical volume-driver for several Western brands, including Audi, VW, Mercedes and GM, which positions itself in China with a good, better, best range of Chevy, Buick and Cadillac. Auto sales in China grew 2.5 percent year-onyear to 18.5 million units. GM’s China sales rose 8 percent to 2.6 million vehicles. A Chinese government plan to exclude import brands from the list of vehicles approved for official use potentially would impact the international players.

Early in 2012, China’s Chery Auto and Jaguar Land Rover established a joint venture to sell the JLR brands and a new brand in China. India’s Tata Motors, meanwhile, continued to learn from its acquisition of Jaguar Land Rover, and it repositioned its inexpensive Nano to make the entry-level car seem more aspirational.

Technology went mainstream

At the other end of the market from Nano, luxury brands offered more affordable vehicle options, impacting some of the mid-market entrants, particularly in Europe. Within the sector, Audi continued to make inroads, at the expense of Mercedes, based on both design, attention to details and engineering improvements. With several new model introductions, unit sales of BMW rose more than 12 percent to 1.4 million, setting a sales record with growth in all regions, especially Asia.

Ironically, luxury cars may have experienced a negative impact from the rise in car quality overall. Because of generally improved performance, attention to design and the availability of sophisticated technology, factors that usually define luxury were available more broadly and less expensively.

Many brands loaded cars with sophisticated technology, including voice-activated communication and entertainment, which enhanced driving pleasure. Some included features like lane-changing alert that improved driving safety. Innovations in collision-avoidance technology generally differentiated the luxury brands. In some ways, cars became the ultimate mobile device.

Fuel-saving alternatives explored

Hybrid sales remained steady, led by Toyota’s Prius. While electric car development continued, the technology remained impractical for the mass market because of the limited driving range, inadequate power and the lack of a battery-recharging infrastructure. Two plug-in cars, the Nissan Leaf and Chevy Volt, missed sales targets. The Chinese BYD brand, which received several billion dollars from investor Warren Buffet three years ago, continued its development of electric cars but shifted some attention to buses and other commercial vehicles.

The car industry faces future demographic challenges. Increased urbanization may reduce dependence on cars as people turn to public transportation or car sharing arrangements to reduce traffic and pollution. Also, among the socially networked youth, cars become less necessary for staying in touch with friends. For them, cars do not define personal status as they did for their parents. And a computer or mobile device is much more affordable.

BrandZ Top 100 2012

BrandZ Global 2012 Report Top 100 Report

Top 100 Chart

Methodology and valuation by Kantar Millward Brown

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