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Bibendum Builds Momentum as Michelin Becomes World’s Most Valuable Tyre Brand

05 March 2018
This article is more than 6 years old.

· Michelin brand value grows 30% to US$7.9 billion in latest Brand Finance Tyres 10 ranking

· Japanese brands slip as Bridgestone, Yokohama and Sumitomo all fall in value

· Chinese tyre brands gain traction as they begin to challenge for top ten ranking

View the full list of the 10 most valuable tyre brands of 2018 here

Michelin has become the world’s most valuable tyre brand following 30% brand value growth to US$7.9 billion over the last year according to the latest Brand Finance Auto & Tyres 2018 report. It overtook Bridgestone (down 6% to US$7.0 billion), which slipped from first to second place in the annual Brand Finance Tyres 10 ranking.

As well as being the most valuable brand, Michelin is also the strongest. Its Brand Strength Index (BSI) score was up a sector-leading 6% to 86.9 out of 100. The corresponding brand rating improved a notch to AAA, making Michelin the only tyre brand with a clear triple-A rating.

Sustainability and technology initiatives have strengthened the Michelin brand, including a concept for a 3D-printed tyre that can be adapted to road conditions and never needs replacing which was unveiled last summer to widespread acclaim. Michelin tyres also performed well in motorsport, winning at the Le Mans 24hr race and being used in Formula E, which is itself becoming a desirable place to showcase technology for leading car manufacturers.

Alex Haigh, Director of Brand Finance, commented:

“A strong brand is about more than marketing. Michelin has started direct sales of tyres to customers through retail outlets and the internet, a move that helps build a direct relationship with consumers, and allows the company to collect valuable data. It is also widening its sub-brand portfolio, allowing it to sell price-competitive tyres and premium ones without cannibalising market share.”

Japanese Brands Slip
The world’s biggest tyre company by market capitalisation, Bridgestone, dropped to second place. Bridgestone was not the only Japanese brand to lose value, with Yokohama down 18% to US$0.8 billion and Sumitomo Rubber Industries down 62% to US$0.6 billion. A weak domestic market affected all three producers, while value gains from stronger sales growth in North America, Europe, and Asia were partially offset by a weaker yen.

Chinese Tyres Gain Traction
At the same time, Chinese companies have appeared as successful challengers to the established players in the tyre industry. Although mainland Chinese brands are still outside the top 10, the largest ones, such as Linglong and Sailun Jinyu, are making their mark, and given their current brand value growth, should make a successful entrance to the top 10 as early as next year.

View the full Brand Finance Auto & Tyres 2018 report here

ENDS

Note to Editors

Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands.

The Brand Finance Auto & Tyres 2018 report includes three key league tables:

1. Brand Finance Auto 100

2. Brand Finance Auto Components 10

3. Brand Finance Tyres 10

Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.

More information about the methodology as well as definitions of key terms are available in the Brand Finance Auto & Tyres 2018 report.

Data compiled for the ranking tables and report is provided for the benefit of the media and is not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts

Penny Erricker
Communications Executive
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.

Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.

Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Definition of Brand

Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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