Industry

Ferrari is world’s strongest auto brand, 7 brands from India in Top 100 list

by Autocar Pro News Desk Feb 17, 2017

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Ferrari has extended its brand strength advantage over second-placed Porsche. Its brand value is also up, increasing 40% to US$6.15 billion. Toyota remains the most valuable auto brand, with a value of $46.3 billion

Italian sportscar manufacturer Ferrari is the world’s most powerful auto brand and is among the top 10 strongest brands from any industry. This finding comes from the latest global brand study conducted by valuation and strategy consultancy, Brand Finance.

Ferrari’s brand strength has improved by three points this year to 92, leading to an upgrading of its brand rating to the maximum AAA+ designation. Porsche is the second most powerful auto brand with a score of 86.

The strength of Ferrari’s brand is all the more remarkable given its increasingly commercial approach and improving revenues. Former chairman Luca di Montezemolo enforced a strict production cap of 7,000 vehicles, convinced that this was essential to maintaining perceived exclusivity and brand strength. However, since Sergio Marchionne took command, and particularly since Ferrari’s IPO, a less puritanical approach has been employed. The annual production cap has been raised to 9,000 and a new Ferrari land is set to open at PortAventura in Spain on April 7. This increased commercial exploitation of the brand has seen brand value surge 40% to US$6.15 billion this year.

Commenting on Ferrari’s numero uno position, Brand Finance CEO David Haigh said, “The fact Ferrari has boosted revenues without compromising brand strength suggests that it has found the perfect formula to sustainably exploit brand equity to maximise shareholder value.”

Overall, the most valuable auto brand is Toyota. Its brand value has increased by 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 last year. Toyota was recently overtaken by Volkswagen AG as the biggest auto manufacturer by unit volume (Toyota sold 10,175,000 units in 2016 to Volkswagen AG’s 10,213,486) but Volkswagen’s sales are split between multiple brands including Volkswagen, Audi, Lamborghini, Skoda, SEAT, Porsche, Bentley, Bugatti and Ducati motorcycles.  

Volkwagen’s flagship VW brand is growing strongly, up 32% to US$25 billion. Despite ongoing legal cases, VW is rebounding rapidly from the damage caused by the emissions scandal that broke in late 2015. This reputational recovery is clear from a 6-point improvement in brand strength, making VW the third strongest auto brand in the world. European sales rose in 2016, while sales in the increasingly critical Chinese market are up over 12%.

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Seven Indian automakers in Top 100 auto brands 
The Top 100 list of automotive brands includes seven Indian automakers, starting with the country's largest carmaker Maruti Suzuki India. The company, which currently has an overwhelming 47.65 percent share of the passenger vehicle market, has risen seven ranks from the 2016 study to take 34th position in the 2017 study. Its brand valuation is up 14.85% to US$ 2.54 billion from US$ 2.2 billion last year. 

Mahindra & Mahindra has also posted a smart rise in its latest ranking, improving 9 places from 54th in 2016 to 45th this year. As per Brand Finance's latest valuation, M&M's brand value has risen 31% year on year from US$ 1.58 billion last year to US$ 2.07 billion in 2017.   

Hero MotoCorp, the largest two-wheeler manufacturer, takes 60th place in the Top 100 list of global automakers, rising six positions over its 2016 ranking.

The Pawan Munjal-led company is working to build its in-house R&D capabilities that can support all current two-wheeler platforms and indigenously develop new products and innovative technologies that can define its future growth. Currently, the company is understood to be in the process of upgrading its expansive portfolio of motorcycle and scooter models from BS III to BS IV compliance to meet the April 1 deadline. 

Tata Motors stays put at No. 65, a position it held last year too. Expect the company, which is driving new brand and product initiatives this year, to post an improved ranking in 2018. Tata Motors yesterday announced a partnership with Microsoft for enhanced connectivity in its future cars. The first such product is to be revealed on March 7 at this year's Geneva Motor Show. And, in the Top 500 Valuable Global Brands list, the company ranks at No. 103, down from No. 82 it was at in 2016.

Bajaj Auto has jumped five ranks to take 68th position this year. The Pune-based company is the first two-wheeler manufacturer in India to have completely upgraded its existing portfolio of close to 20 motorcycle models to BS IV emission norms.

The company has recently launched its fastest and most powerful motorcycle, the Dominar 400 model based on a KTM-derived single-cylinder, 375cc engine. While the model is performing decently well in the local market, the new brand marks an attempt to branch out in the direction of the entry-level premium midsize motorcycle market. Analysts say that market acceptance of the Dominar 400 will further improve margins for Bajaj Auto.

Ashok Leyland, placed at No 90, has dropped two positions from its No. 88 slot last year. The Chennai-based commercial vehicle manufacturer, which currently has an 18.31% market share in the domestic market, is working on an aggressive new product development programme and also expand its manufacturing footprint abroad.  

TVS Motor Co at No 97 retains the same position this year. The Hosur-based company, which enjoys a strong reputation in the local market for its R&D-driven, quality and value-for-money products, is understood to be working with BMW Motorrad under an alliance with the German motorcycle maker. The company is expected to now soon roll out the single-cylinder, 313cc, BMW G 310 R, the entry-level midsize motorcycle in India. While the model will mark TVS-BMW's assault in that market segment, it is also aimed at helping BMW Motorrad recover its lost market share to KTM in Europe. 

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Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s 100 most valuable auto brands are then ranked and included in the Brand Finance Auto 100.

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