The other day, I was attracted to a story on the Automotive News website that carried the headline “Toyota overtakes BMW as most valuable global car brand.” Okay, I thought, that’s pretty interesting. All those recalls a few years ago don’t seem to have dented Toyota’s reputation, and the culture change pushed by president Akio Toyoda is getting traction.
Then I read a little further along and discovered that Toyota’s (TM) move to the top of the heap was mostly attributed its big position in hybrids that were said to be gaining favor with value-conscious consumers who wanted to save money on gas. Hybrids like Prius were “reinforcing the experience of the brand” and magnifying what is “special and different” about Toyota.
Well, I’d always thought of Toyota as big and populist in its approach to the market, trying to appeal of the greatest number of people. “Special and different” sounded to me more like Subaru than Toyota. As to whether hybrids appeal to value-conscious consumers, most studies have shown that it takes years to amortize the hybrid price premium with savings at the gas pump.
Still, the ratings were accompanied by some pretty impressive numbers-crunching, so I decided to read on.
Why had BMW dropped into second place in the 2013 ranking? According to the survey, it was because of the lack of new model launches in 2012 compared to previous years. The automotive brands that grew the most in the ratings, I was informed, were the ones that launched the most models. I was surprised to hear that, so I emailed a friend at BMW to get a list of its 2012 launches. Here it is:
3 Series Sedan
5 Series Active Hybrid
3 Series All Wheel Drive
3 Series Active Hybrid
640i Gran Coupe
X3 with N20 engine
X6 M LCI facelift
7 Series LCI
7 Series Active Hybrid LCI
Looks like BMW was pretty busy in 2012.
There were some other oddities as well. Mercedes and Honda (HMC) ranked third and fourth in brand strength, but Nissan pulled in to fifth place, which must have been a delightful surprise to CEO Carlos Ghosn, who has been pushing to raise Nissan’s reputation from its current status as a discount brand. And price-leader Hyundai grabbed ninth place, just behind premium-priced Audi and ahead of premium-priced Lexus.
By now you’re wondering who conducted this study and how the rankings were determined. It was pulled together by marketing consultant Millward Brown, part of advertising giant WPP and based in London, which claims to work with 90% of the world’s leading brands on strategy and performance. As for those precise-appearing numbers on which the ratings were somehow derived, they came first from interviews with more than one million consumers globally and, second, from an analysis of the financial and business results of each company.
Just for fun, I decided to compare those Millward Brown findings with two other brand ratings. First up was another London-based shop, Brand Finance, which calls itself the “world’s leading brand valuation consultancy.” I don’t really understand how it compiled its own ratings, but here is its verbatim description: “The methodology uses a discounted cash flow technique to discount estimated future royalties, at an appropriate discount rate, to arrive at a net present value of the trademark and associated intellectual property: the brand value.”
Different strokes, similar results: Toyota also claimed the top of the car-brand heap in Brand Finance’s global ranking, but BMW slipped to third place, overtaken by up-and-coming Volkswagen. I was surprised to find that Honda, whose brand adorns high-performing motorcycles, outboards, jet airplanes, and lawn mowers in addition to cars, was ranked behind Mitsubishi, whose vehicles have been struggling in the U.S for years. And Peugeot, which has cratered along with the European car market, had a solid lead on Chevrolet and Audi in the Brand Finance rankings. But perhaps I shouldn’t be surprised after being faced with the following glaring inconsistency: Recently bankrupt General Motors (GM) came out ahead of Mercedes-Benz’s corporate parent, Daimler.
My confusion growing, I sought clarification from perhaps the best known brand stature survey, the one conducted by Interbrand. Yet another London-based outfit, Interbrand also describes itself in superlatives as the “world’s leading brand consultancy.” It bases its rankings on three factors: financial performance, the brand’s importance in the purchase process, and a mathematical calculation. This third rating is derived by grading the brand on 10 individual attributes on a scale of one to 100. Sounds like a lot of numbers are being used to dress up subjective opinions, but never mind.
On Interbrand’s list of the Top 100 global brands, Toyota completed a trifecta by again gaining the top car slot, and BMW once again finished third, this time behind Mercedes. But Honda climbed back into fourth place over VW, and Porsche, possessor of the richest profit margins in the business, fell behind Ford (F) and Hyundai.
My head spinning from all these global brand mathematics, I finally retreated to a familiar and long-trusted source: Consumer Reports. After phone interviews with 1,764 adults, CR developed its 2013 Best Car Brand Perception Survey to reflect how U.S consumers view a car brand in seven categories: safety, quality, value, performance, design/style, technology/innovation, and friendly/green. CR assigned a score to each brand — at the same time warning readers that perception is not the same thing as reality: “Perception is often a trailing indicator,” and “every product line has a spectrum of performance — not every model represents the brand’s best efforts.”
It won’t be much of a surprise to learn that Toyota was still number one with CR’s survey subjects, and Honda was number three, but Ford claimed the second spot and Chevrolet was now fourth. Revealing the importance of safety to the CR respondents, Volvo placed sixth despite its outdated product line and moribund sales performance. And there were other oddities as well: Dodge, which CR’s own test drivers have dismissed as clunky and substandard, finished ahead of Lexus and Subaru, while Lincoln and Chrysler came in behind Smart, which has been a resounding flop in the U.S.
What lessons, if any, did I learn from this exercise? One, while I love lists and rankings (and have even composed a few of my own), they should be viewed with a skeptical eye; two, numerical ratings have little value if the logic on which they are based is skewed; and three, common sense is often a better guide than arbitrary evaluations. Besides, after all this analysis, I still don’t know what about Toyota is special and different.