· Toyota remains Japan’s most valuable brand, rising 7% to a brand value of US$46.3 billion
· Subaru is Japan’s fastest-growing brand, doubling its value in a year
· SoftBank’s ambitious expansion sees its brand value surge 26% to US$20.6 billion
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. A brand’s strength is assessed (based on factors such as marketing investment, familiarity, preference, sustainability and margins) to determine what proportion of a business’s revenue is contributed by the brand. This is projected into perpetuity and discounted to a net present value to determine the brand’s value. The 50 most valuable Japanese brands are included in the Brand Finance Japan 50 league table.
Toyota has once again reinforced its status as Japan’s most valuable brand, up 7% to US$46.3 billion. Profitability remains strong and, at the date of valuation, most recently reported revenues were up 32% on the same period the year before. It is also Japan’s most powerful brand, with a Brand Strength Index (BSI) score of 83.
Toyota was recently overtaken by Volkswagen as the biggest auto manufacturer by unit volume, selling 10,175,000 units in 2016 to Volkswagen’s 10,213,486. However, because Volkswagen’s sales are split between multiple brands, while Toyota’s production is much more concentrated around the core brand, Toyota remains the world’s most valuable auto brand.
Toyota does operate a handful of distinct brands of its own, however. First among them is Lexus, though its performance this year (down 3% to US$4.8 billion) leaves something to be desired. Lexus’s sales were down last year; the brand has been hit by the success of Tesla, which operates in exactly the same segment of the market. In a very short space of time Tesla has captured significant market share due to both its innovative hybrid technology and its brand image (i.e. that it is for wealthy, discerning, environmentally-conscious drivers). Lexus has outwardly appeared relaxed about the challenge, suggesting that demand has been driven by novelty and that customers will return to Lexus, but a greater focus on innovation, and communication of that innovation, could be key to long term brand value growth.
After Toyota, the two most valuable Japanese auto brands this year are Nissan in 3rd and Honda in 4th place, valued at US$24.8 billion (+39%) and US$21.3 billion (+10%) respectively, however, the auto marque to watch this year is Subaru – Japan’s fastest-growing brand. Subaru doubled its brand value to US$8.1 billion in 2017, rising to 16th place. In the past year, Subaru’s producer underwent a rebranding process, dropping its 60-year-old name Fuji Heavy Industries for Subaru Corporation, strongly reinforcing the brand’s presence. Last year’s record sales also fed into the brand value increase. Subaru sold 1,065,000 units globally in the past financial year, up 11.1%, breaking the 1 million watershed for the first time.
Next to automobiles, TMT brands are among Japan’s most valuable, with the NTT Group dominating the industry. It defends second place in the Brand Finance Japan 50 ranking, with a brand value of US$40.5 billion, up 28% year on year. Originally dealing in telecoms infrastructure, over the years the NTT Group has successfully adapted to the digital market and now provides a wide range of sought-after IT services. The NTT Group is the world’s leading brand in colocation operating over 240 data centres worldwide, while NTT Security’s annual Global Threat Intelligence Report is one of the key analyses of the global trends in cyberattacks and of their impact on business and politics. As the data market expands, the demand for NTT Group’s services can be expected to bring the brand continued financial benefits.
Two other big brands from the TMT sector also make it to the top 10 this year, registering significant growth, with au up 32% to US$16.9 billion, and SoftBank’s brand value reaching US$20.6 billion, following 26% surge. SoftBank’s ambition to ever increase its global reach and lead technological innovation is often attributed to the charisma and determination of the brand’s founder and CEO, Masayoshi Son. In the past year alone, SoftBank has made a number of bold moves towards expansion, buying famous chip-maker ARM, increasing its share in Nvidia, and investing in promising companies like Britain’s Improbable, India’s Paytm, and China’s Didi. The recently launched US$93-billion SoftBank Vision Fund, which raised the impressive starting capital among a wide range of stakeholders from the Saudi government to the American giant Apple, will manage some of these newly acquired stakes as well as seek new interests in disruptive tech businesses.
After several years of stagnation, Nintendo is the fastest-growing among TMT brands, up 73% to US$4.7 billion. Nintendo made a comeback with its new console, Switch, which is proving an immense hit after a decade since the launch of the brand’s last similarly successful product – Wii.
Note to Editors
Brand values are reported in USD. For conversions into JPY, please consult the hover over the ‘i’ button on the web version of the table and select.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations 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 nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation 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.