Friday, March 20, 2009

Car brands fail the crash test

Oh no, not more recession stuff! ‘Fraid so.

These are extraordinary times we are going through and a total contrast to the free spending, confident and carefree times we were enjoying only a year ago. Following are some chilling statistics regarding the state of the world’s auto brands mixed with a bit of crystal ball gazing.


I predicted in this blog before Christmas 2008 that Chrysler would become a big casualty and it looks increasingly as though my prediction will come true. The company lacks the ability to secure sufficient finance to guarantee a future beyond the first few months of 2009 and has few new models with which to secure an ‘exciting’ rating and win back buyer interest and respect for the brand. GM on the other hand may just be saved by its radical restructuring of recent months into four core brands, its more adventurous new model line up and last minute dash for credibility in the hybrid stakes.

So which other car brands are in strife? Hummer is up for sale. Daimler has a (worthless) 20% stake in Chrysler and is struggling to make money as a result of model succession issues and having no small engines. Smart is down to one model and is losing sales to the Fiat 500 and Toyota’s newly released iQ city car. GM’s German brand Opel may be forced to consider an alliance with BMW and Daimler. Aston Martin’s sales down 28% and Land Rover sales down 30% in 2008. Will BMW be forced to collaborate with its arch enemy Daimler or will it look to Italy? In Australia the gas guzzling Holden Monaro is no more. Lancia’s much vaunted UK launch has been cancelled. Luxury brand Maybach is to be killed off in 2012. The hi-performance Dodge Viper sports car brand is up for sale and unwanted. Honda’s much publicised $200m annual budget Formula 1 team is no more. And Tesla, one of the electric technology saviours, is delaying a much needed new model as it struggles to find $400m in new funding.

But wait, haven’t we been here before? Memories come flooding back from 2005 when MG Rover in the UK went to the wall crippled by funding issues, serious mismanagement, unwanted cars and terminal clashes with unions, which tarnished forever the once illustrious BMC and Leyland brands. To add insult to injury MG, that most loved of British sports car brands, is now in Chinese hands, owned by Nanjing Automobile for which the media is not predicting much success.

And what happened to all those other UK car brands that disappeared over the years? – AC, Alvis, Armstrong Siddeley, Austin Healey, Berkeley, Bond, Daimler, Gilbern, Hillman, Humber, Jensen, Jowett, Morris, Reliant, Riley, Singer, Sunbeam, TVR, Wolseley and many more...

So what does all this mean? For the car industry brands it heralds a potentially lengthy period of brand rationalisation:

> Model brands will disappear eg Viper (Dodge), Solstice (Pontiac), Monaro (Holden), Fairlane (Ford Australia)

> Manufacturer brand mergers and acquisitions eg Tata take over of Land Rover and Jaguar, Nanjing Automobile acquisition of MG, Porsche take over of VW, BMW-Daimler merger?, Chrysler-GM merger?

...and some may go to that big car yard in the sky eg Maybach, Chrysler?, MG?

What does this mean for branding consultants? Probably a lot of work to reinvent/reposition car manufacturers, power up the electric/hydrogen/fuel cell revolution; create new super economy city car sub-brands; define the newly expanding hybrid sector; put new spin on economy motoring, green credentials and the new ‘post combustion engine’ lifestyle era, and rush out and buy an expensive carbon fibre road racing bicycle.

Tony Heywood is an international branding consultant and founder of Heywood Innovation in Sydney and co-founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

Share on Facebook