As the great and good of the auto industry meet in Paris, leading brand valuation and strategy consultancy Brand Finance, reveals what their brands are worth.
Toyota Tops the List
Toyota has reinforced its position as the world’s most valuable auto brand. Its brand value increased 23% year on year to a total of US$43 billion, extending its lead over second placed BMW from US$2 billion to US$8 billion.
The Japanese giant continues to hold onto its position as the world’s biggest car manufacturer by volume. Toyota shipped 6.69 million units to VW’s 6.66 million in the first eight months of 2016. It is in the top ten of advertising spenders in the US from any industry and invested 1.6% of revenues on marketing, advertising and sales promotion in 2015. This investment is clearly paying off, with revenues increasing 50% since 2010 (90% in the US). The popularity of services such as Uber is aiding Toyota for now, with Prius the model of choice for many drivers with the ride-sharing service.
Emissions Scandal sends VW into Reverse
Volkwagen had held the ambition of unseating Toyota in the battle for volume dominance but its turbulent year has seen its desire to take the top spot put on hold for now. The impact of the emissions scandal has been clearly reflected in the brand value of VW, which is down 39% to US$18.9 billion which sees it drop out of the top five for the first time since 2010. Fortunately other group brands have been unaffected, with Lamborghini and Bentley growing by 22% and 16% respectively. Meanwhile Audi has dropped just 2%, a result solely down to the strengthening dollar over the last year; when measured in EUR, Audi’s brand value has in fact increased.
Ferrari Remains Most Powerful Car Brand
Ferrari, MINI and Volvo show minor declined in brand value terms from 2015 to 2016, also as a result of exchange rate changes rather than fundamental performance. Ferrari remains the world’s most powerful car brand and after last year’s successful IPO, continues on a track to value growth.
Hyundai Down More than 50%
Hyundai is the worst performing of any major auto brand this year. Brand value has more than halved year on year. Korean car brands historically stole a march on western rivals via innovation, efficiency and exceptional labour relations. Hyundai is now plagued by labour unrest with 50,000 union members downing tools in September in the most recent incident. This disruption and sluggish sales are hitting the bottom line; Hyundai posted its tenth consecutive profit drop for the April to June period this year.
Harley Revs Ahead Fueling Investor Interest
Harley Davidson is the most valuable motorcycle brand with a brand value in excess of US$5 billion following 18% year on year growth. Brand strength is undimmed too, having been upgraded from an AAA to AAA+ rating this year. These figures may well please KKR, the private equity house rumoured to be targeting Harley for a buyout. However there are challenges ahead, the strength of the US dollar and falling margins, amongst them.
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.
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 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 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.
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.