my turn


Latest Shifts In Automotive Industry Will Have An Effect On Brand Value

As I walked around Cobo Hall at the North American International Auto Show, several themes stood out to me that I believe will have an impact on consumers' relationships with the world's top automotive brands. At this time last year, brand loyalty was eroding for many reasons, mostly economically driven.

This year at the Auto Show, the emphasis on cars (rather than trucks) and technology stood out to me, as I also pondered the might of Chinese automakers and their short-term and long-term impact on the industry, the strength and impressiveness of the Korean market, the sea-change luxury brands are experiencing and the impressiveness of how quickly Chrysler has turned things around.

I think it is safe to say that if you were to ask any automotive pundit 18-24 months ago, "Will Chrysler make it?" the predominant response would have been -- no way! Last year, Chrysler was nowhere to be found in Millward Brown's BrandZ Top 100 rankings. While quality and perception of the brand will need to continue to improve, it will be interesting to see if the impressive new Jeep Grand Cherokee, Chrysler 300 and Dodge Durango along with a concerted marketing effort will enable Chrysler to mimic the branding success of the Korean auto makers, Hyundai and Kia, in the next 24 months. Hyundai and Kia's styling, content and value/price point were exceptional at this year's Auto Show.



I used to watch Toyota for trends. Now, I think Hyundai is the carmaker to watch. The success of the Veloster is something we want to track as it may provide insight into where Hyundai takes the brand and how accepting the U.S. consumer is with Hyundai leading the way in styling and creativity. BrandZ Top 100's prediction last Spring was that Korean brands will increase pressure on mid-market leaders, and that certainly remains true. Although not in the BrandZ Top 10 Cars list yet, I suspect that Hyundai and Kia's significant advertising investments leave the two brands extremely well-positioned, and the sharp styling and competitive prices, coupled with long-term warranties, create a value proposition that appeal to recession-weary shoppers.

As the BrandZ Top 100 report points out, value-seeking shoppers are driven by features and technology these days. The interest in less expensive brands may signal a shift in consumer attitudes where prestige at almost any price becomes less desirable than more tangible benefits, such as improved performance for a reasonable price. While demand for status brands won't disappear, its center of gravity may shift to fast-growing country markets, like China, the largest automotive market in the world.

How the industry handles this and what the individual automakers do to accommodate this growth will have some impact in the next few years but a significant impact over the next 10 years. Decisions on road infrastructure, alternative fuel vehicles, dealerships, safety and environmental standards will immediately impact what the automakers can and will do. An unaddressed or unforeseen issue (war between China and Taiwan) could create a hiccup that ripples throughout the industry.

That said, I keep waiting for China to make a splash in the U.S. It feels like it has been talked about for years, but I believe they are at least 10 years out, maybe 15, before they sell anything in volume, which is very telling. Entering the U.S. auto market and maintaining presence is very, very difficult (ask Fiat, Suzuki, Mitsubishi or even Saab, Saturn, Hummer, Pontiac). Low price cars will always be welcomed but if there are no dealers to service them and the quality is suspect, they will not succeed. China will get here and I suspect they will be successful but they may be a generation away.

All and all a good first step in helping us leave behind the turmoil and uncertainty of the last few years. But questions remain and memories linger -- so let's hope that the answers lead to bigger and better days ahead and the memories are useful reminders of what not to do ever again.

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