Consistent quality produces need for more differentiation

Societal trends challenge category growth

Carmakers face a paradoxical dilemma: their product quality is better than ever, but their brands are increasingly difficult to differentiate.

Engine technology innovation has improved performance and reduced carbon emissions for most cars, while technology aids for driving safety and passenger comfort have become standard equipment at all price points.

Reducing the number of chassis used worldwide produced economies of scale and cost savings, but also resulted in sameness of car models.

Factors such as urbanization and the influence of millennials are changing the very idea of mobility in fundamental ways. Young people, in contrast to their parents, don't rely on cars for freedom or for defining and projecting a self-image. They have mobile devices.

In addition, people can select transportation alternatives based on sharing rather than ownership to get from place to place. Those who rely on a car expect it to be the ultimate mobile device compatible with all operating systems, and many brands including Google are developing the ultimate category disruptor: the autonomous auto.

More challenges

Carmakers enjoyed strong sales in the US and China, but Europe's economic problems hurt results. Of the 13 categories studied in this BrandZ™ report, cars is one of two categories that hasn't rebounded in brand value to its pre-recession level.

Car sales usually lag in times of recovery as they require substantial financial investment. This recovery is even more challenging because in today's digital world, brands no longer control either the conversation with customers or the path to purchase.

The number of dealerships has declined in Europe and North America and increased in China where car buyers also shop and purchase online. Online sales hold both the promise of direct connection with the consumer, but also the possibility of disintermediation with an emphasis on price and the loss of critical customer data. Brands responded in a variety of ways to all these challenges.

Top 10 Chart

Brands respond

Sensing a demand for vehicles that achieve high levels of environmental responsibility without sacrificing performance, BMW introduced its BMWi hybrid. A leader in hybrid technology, Toyota worked to enhance its technical achievements with emotional appeal.

Toyota's luxury brand Lexus, which ranked highest for overall dependability in two respected independent surveys, attracted consumers seeking luxury with reliability. Land Rover, the heritage British brand of off-road vehicles, now owned by India's Tata Motors, enjoyed the sweet spot where the popularity of SUVs converged with the desire for luxury.

Many brands sold fleets to car sharing operators as a way to introduce potential customers to the brand experience. Luxury brands balanced this opportunity for mass exposure against potential brand dilution. Audi tested Audi Unite in Sweden, an arrangement in which up to four people can share the lease of a car.

Audi and Mercedes-Benz battled with BMW in the race to become the world's luxury car market share leader. VW continued to seek production efficiencies from global platforms. The brand enjoyed significant presence in China, but lagged in its' US market share.

US recovery drives sales

As the US economy recovered, the auto industry enjoyed the best sales since 2006 – 16.5 million units – driven by pent up demand, low interest rates, and cheap gas at the pump as crude oil prices plummeted. SUVs and light trucks were especially popular.

The compact crossover, basically a smaller SUV, also was popular, but the US market was filled with choice at most segments, including micro cars, subcompacts, compacts, lower midsize, upper midsize, hatchbacks and the crossovers and SUVs. Sedans were the only soft segment.

As luxury amenities became more accessible in mid-market brands, luxury brands like Mercedes-Benz introduced lower priced models as entry ramps to the brand. Drivers of pick-up trucks who sought luxury could select options like the Ford King Ranch, and in some neighborhoods where people desired – and could afford – ultra luxury, badges like Maserati and Bentley became more prevalent.

The range of offerings reflects America's physical breadth and place of car ownership, which remains critical in rural areas. At the same time, massive recalls impacted some carmakers, particularly GM, which was the focus of a congressional inquiry into faulty ignition switches.

Slowdown in fast-growing markets

Slower economic growth impacted the rate of car sales in China, and carmakers pursued sales in lower tier markets as local governments in some major cities imposed quotas on car purchasing to help abate air pollution.

Despite these factors, China remained the world's largest car market. Driven by the popularity of SUVs and vans, passenger car sales increased almost 10 percent to 19.7 million units in 2014, according to the China Association of Automobile Manufacturers.

Although Chinese brands continued to expand at home and abroad, exports declined somewhat and Chinese consumers preferred to purchase foreign brands. Audi achieved an 18 percent year-on-year increase in sales volume in China, a strong performance especially because Audi is mostly locally produced, while other luxury car brands generally import vehicles to serve the China market.

VW continued to be the bestselling car brand in China, and enjoyed the strongest brand equity among the mass-market car brands in China. For the second consecutive year, GM sold over 3 million cars in China, its largest market.

Because of the high number of first-time buyers in China, most sales went through dealerships. But car brands also sold online, and several e-commerce companies developed one-stop options for purchasing and arranging finance from a mobile phone.

In India, a country where two-wheel vehicles remained popular, passenger car sales slowed to about 1.85 million units. Several carmakers suspended operations in Russia because of the drastic decline in the value of the ruble.

Brand Building Action Points


Build meaning into your brand. Your product has to be good and deliver on its promise, but people don't always buy the best products. They buy into what a product says about them or how it makes them feel about themselves.


Technology will reveal exactly how people drive. Understand the data and trust your instinct. Use the data creatively to create points of differentiation.


Don't view each brand communication individually. Rather, understand the full communication system and how the different parts of that system can build and impact on each other.


Explore new ways to provide convenient customer access to the brand, and present the brand with consistency in the physical and online worlds.

10-Year Trends & Analysis

Difference drives Brand Power

The car category, along with global banks, is one of only two categories analyzed in the BrandZ™ global report that have not recovered in brand value to their pre-recession levels.

And although the Car Category's BrandZ™ Top 10 has improved in Brand Power, the BrandZ™ measurement of brand equity, it lags in the Top 100 overall. On a Brand Power scale where an index of 100 is average, the brands in the Car Category Top 10 score 123, compared with a score of 170 for the Top 100 overall.

A key reason that the Car Category's Top 10 underperforms against the Top 100 in Brand Power is that the Car Top 10 divides into brands that score high in different areas, a component of Brand Power, and those that don't. High scorers include Audi, BMW, Mercedes-Benz, Toyota and VW.

Brand Power for these brands is close to that of the Top 100, while the other car brands score closer to the average. Brands with higher different scores are more attractive to consumers and create greater affinity.

Ironically, one of the causes of the decline in difference for some brands is that carmakers are producing the best cars ever. These improvements in engine performance, safety and design, have left consumers less clear about some of the distinguishing brand propositions.

In fact, car brands that have a strong differentiating proposition (stand for something unique) have twice the valuation of less differentiated brands. Differentiated brands also grew 10 percent in value over the past 10 years, compared with an average 5 percent decline in value for the less differentiated.

More significantly, brands that score higher in Brand Power also are high in Brand Value. Stated another way, high Brand Power drives high Brand Value.

High Brand Power drives high Brand Value

Future View

  • With the emergence of the sharing economy, cars are one piece of a more complicated mobility jigsaw. The ultimate questions car brands need to answer are: What is the value proposition for cars? And will car brands drive that proposition, or technology companies like Google or Apple?
  • The winning brands will rapidly evolve the ownership experience from an occasional transaction to one where there is a genuine and ongoing relationship between brand and customer. The experience will touch all aspects of the relationship, to the core of what ownership means, which could be weekend access to a variety of cars.
  • Brands also need to ask: What will the real estate look like? What will be the role of the dealership? How will a brand attract customers to the purchase funnel? How will brands differentiate?

Up 3%

Cars - Top 10 Total Brand Value
$143.6 BILLION

Category Definition
The car category includes mass market and luxury cars but excludes trucks. Each car brand includes all models marketed under the brand name.

BrandZ Top 100 2015

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic

Methodology and valuation by Kantar Millward Brown

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