· Germany’s top brands are led by automobile sector with BMW, Volkswagen, Porsche, and Audi all growing strongly
· Deutsche Telekom stands out as Germany’s most valuable brand from outside auto industry
· Smart accelerates as fastest-growing German brand, following 94% year on year increase
· Porsche is Germany’s strongest brand, earning an AAA brand rating
Mercedes-Benz grew its global brand value by 18% to €37.3 billion, taking pole position as Germany’s most valuable brand, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Mercedes’ surge in brand value was driven largely by a big increase in forecast revenue as car sales grew by 8% to 2.4 million vehicles. As a result, Mercedes jumped from 3rd to 1st in the Brand Finance Germany league table (extended from 50 to 100 brands for the first time) and also became the world’s most valuable automobile brand.
Mercedes has particularly focused on sales into China, with a 28% increase from 465,000 cars in 2016, to 595,000 last year. Mercedes has strong brand recognition in China, where it is identified as an aspirational auto brand, offering both a high-status and high-quality product. China offers further significant growth potential for Mercedes, as it is now the world’s largest automobile market.
Globally, Mercedes refreshed its iconic G-Class last year, a luxury sports utility vehicle which has sold approximately 300,000 vehicles over the last 40 years. The G-Class represented a signature Mercedes product based upon reliability and dependability, with 80% of the vehicles still in service. In addition, Mercedes is also enhancing its broader product range, moving towards electrification and using new technologies for in-car controls, including digital touchscreens and speech control for various features.
David Haigh, CEO of Brand Finance, commented:
“Mercedes-Benz invented the automobile and is now leading the industry with a brand strategy focused on re-inventing the automobile through electrification. Their global brand success has been driven by the introduction of a new generation of vehicles led by their renewed foray into SUVs and smooth evolution of new technologies to move away from traditional internal combustion engines.”
Recording only slight brand-value growth, BMW (up 2% to €35.5 billion) fell from first to second place on the ranking of Germany’s most valuable brands. Overtaken by Mercedes, BMW has also dedicated significant resources to prepare for the gradual obsolescence of the traditional internal combustion engine. This corporate strategy is not yet paying strong brand dividends, despite the introduction of BMW’s electric i3 and i8 vehicles with very distinctive styling.
Behind BMW and Mercedes, Volkswagen (brand value up 29% to €28.6 billion) achieved strong brand value growth last year with improved revenue forecasts. In addition to their marquee Volkswagen brand, it also benefits from being part of the larger Volkswagen Group. The company is particularly looking to improve the relationship across its family of brands as part of its medium-term strategy plans. As part of this broader vision, the corporate leadership recognises that each brand benefits from membership of the Volkswagen Group community, allowing expertise to be shared amongst the brands for their collective benefit, while also presenting specialised features and brand attributes to customers.
Deutsche Telekom’s brand stands out
In third place, Deutsche Telekom (up 5% to €34.1 billion) is Germany’s most valuable brand from outside the auto industry. Its reputation as a reliable telecommunications provider in Germany has led to success beyond German borders, as it extends the business across Europe and North America. In Europe, the 5G revolution will be the next territory in which Deutsche Telekom could further dominate. Deutsche Telekom is not only building a reputation as a leading technology company which continues to invest in cutting edge infrastructure, such as the new fibre-optic cabling throughout its fixed network. It is also broadening its brand appeal by using the memorable magenta colour for brand communications, creating products and services, such as Magenta ONE and its fashion and accessories range.
Smart accelerates as fastest-growing German brand
Smart (up 94% to €1.5 billion) is the fastest-growing brand in the Brand Finance Germany 100 league table. The automobile brand, owned by the same parent company as Mercedes, is a new entrant in the top 100 this year, entering in 49th position after a year of remarkable brand value growth. Consumers globally have been attracted to the urban convenience of Smart cars, which combine exceptional fuel economy with a high degree of manoeuvrability.
Porsche is Germany’s strongest brand
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Along with the level of revenues, brand strength is a crucial driver of brand value.
According to these criteria, Porsche (brand value up 47% to €16.2 billion) is Germany’s strongest brand, earning a brand strength rating of AAA. The high-end car brand benefited from the successful launch of a new hybrid model, the Panamera 4 E-Hybrid, focused on combining both sustainability and high performance. Porsche’s brand value has grown remarkably quickly over the last year and continues to have strong growth potential with the promise of further sports models following on from the Porsche 918 Spyder.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 100 most valuable brands in Germany are included in the Brand Finance Germany 100 2018 league table.
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 is available in the Brand Finance Germany 100 2018 report.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand 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 is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
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 rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables 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, 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 Brand revenues are discounted post-tax to a net present value which equals the brand value.