Category Archives: Design

Viva Geneva: Karl kicks out the concierge

Brands, Design, Motor shows, , , , , ,

If the underlying importance of the high-performance cars at the 2015 Geneva motor show was to point the way for electric powertrains, the fundamental theme of the show as a whole was even more real-world: how the mainstream brands are re-emerging.

Whereas a year ago the brands in the squeezed middle were focusing on countering the the premium brands with their own premium strategies, they’ve instead rightly addressed the fundamentals. In today’s market that means confident, well-designed, well-executed product in the right segments, giving them relevance in a market turned upside down by the explosion of the German premium brands over the past few years. Cars people want, not brand-stretching super-deluxe specifications, quilted leather and VIP concierge services.

Renault-Kadjar-Live-Geneva-2015-00Renault, which had a desperate few years, now looks one of the most convincing mainstream brands. Geneva saw the launch of its Kadjar crossover, effectively a version of the massively successful Nissan Qashqai cloaked in Renault’s latest and very agreeable design language. Alongside the smaller Captur crossover, Clio hatchback and Twingo mini car, it’s got the important mainstream market segments covered – and with attractive new product.

Renault’s alliance partner Nissan is also looking very healthy. It Geneva-2015-Nissan-Sway-Concept-03showed a mini concept, Sway, which is the basis of a replacement for the dowdy Micra and would complete a range differentiated by characterful design. Like the latest Qashqai, it’s a distinctive rather than disturbing like the Juke, but it still clearly says Nissan.

Nissan’s struggling upmarket brand Infiniti also looks rejuvenated, with two production-ready-looking concepts – the Q60 coupe and the more important Q30 compact crossover. That’s a model for a segment every volume carmaker needs to be in, and could be the car to finally give the company some meaning and a foothold in Europe.

maxresdefault-3SEAT has had a tough time since 2008, with an over-reliance on a bankrupt domestic Spanish market and a newly inherited position as VW Group’s bottom-rung brand thanks to the gains made by Skoda. But it’s got decent product again, and the sharply styled 20V20 SUV concept signals a wave of new SUVs which will add vital volumes. Like the Sway, it takes its brand’s existing design language and moves it on to give a clear and confident brand statement. That’s good design. Skoda’s new Superb, also revealed in Geneva, does exactly the same.

This is about having confidence in the brand: understand what you are, understand your strengths, and set about developing products which reflect that and a design language to articulate it.

Geneva2-Viva-1_3217646cThe star of the show? In this context, no contest: Opel’s new mini, Karl (Vauxhall Viva in in the UK). Opel has got a bigger job than most in re-setting itself and defining its mission. It can’t be premium but it mustn’t become merely a producer of commodities. The Karl/Viva is punchy looking, has an excellent interior, the equipment list of a £20,000 Audi, high-tech low-emissions engines, good quality and an impossible-to-ignore base price of about €9500.

But it’s not a cheap car. It’s a statement of the new Opel brand: excellent engineering, emotional design and high technology for everybody.

A car for the real world. A car with confidence.

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Do Keep Up, Honda

Brands, Cars, Design, , , ,

keep up honda campaign (3)Honda has a new TV ad. Called Keep Up, it champions the company’s commitment to innovation. It’s typical of Honda’s TV spots – arresting and engaging. But it also encapsulates the problem at the core of the business. Honda makes some brilliant, technically advanced cars. But it makes some very dowdy ones and those are the ones it sells – in dramatically falling numbers.

Honda doesn’t seem to know what it is. And if you don’t know what you are you can’t know how to market yourself. You could argue that Honda doesn’t truly have a brand. And this is a huge problem – because today’s car market is all about brand. Nobody makes a truly bad car any more: a Skoda is a VW is an Audi. So brand is the differentiator.

In recent years Audi, BMW and Mercedes have invaded mainstream territory with smaller, more everyday products, and ultra-low interest rates mean almost anyone can now get into one of their cars. At the same time the ‘value’ brands like Hyundai and Kia have marched into the mainstream. The result? A very squeezed middle.

So life has become extremely hard for the likes of Ford, Opel/Vauxhall, Renault, PSA Peugeot-Citroen and the Japanese carmakers. But where the European brands are rethinking their relevance, the Japanese – with the exception of the now half-French Nissan – are not. Honda in particular.

surtees_2_jan_1967Which is odd, because it’s Honda which has the heritage and the soul to register with customers. There was the tiny but brilliant S600 sports car and the Z microcar. There were the rising-sun liveried F1 cars and world championships for Ayrton Senna and Alain Prost. There was the NSX – a non-images-23vulgar supercar – and the screaming S2000 roadster. There was the pioneering of variable valve timing, hybrids and now hydrogen fuel cells. There was Asimo the robot, and even a new kind of business jet.

And yet customers carried on buying run-of-the-mill Civics and perhaps a lawn mower. The engineering wasn’t working. If it was part of the brand it was a part which didn’t matter to the people actually buying the cars.

The result? A nose-dive in sales since the premium brands re-shaped the landscape. Honda now has a market share in Europe of just 1.0%. That’s behind Suzuki and only just ahead of Mitsubishi. Like Toyota and Nissan, Honda has a European factory, yet it has just a quarter of their shares. And it has been trampled by new brands like Hyundai and Kia, which together have almost six times Honda’s share. Something has gone very badly wrong.

A lack of diesels – ironic for a business with engines at its heart – and a strategic cut in R&D spend following the 2008 crash have hit Honda hard. But the problem is more fundamental than that.

2015-honda-jazz-01-1Honda will say that it’s about to reborn, with a stream of new product. This week at the Geneva motor show it will have a new high-performance Civic, a new-generation hybrid NSX supercar (effectively a Porsche 918 for not much more than 10% of the cost), a production version of its fuel-cell vehicle, a new Jazz supermini and a new HR-V small SUV. But it’s only the latter two which compete in volume segments of the market.

2015-Honda-HR-V-rear-viewAnd the design of the Jazz and the HR-V, like the Civic Tourer, is ungainly, clumsy and dated. That won’t matter to the typical Honda customer, but Honda needs new customers. And new customers will not be persuaded by product like this. Design is now a prime brand communicator. In the years since Honda’s R&D cut consumers have become much more design-literate – the advent of the iPhone saw to that – and car companies have become much bolder.

To be successful today a car company needs a strong, clearly articulated brand. But the brand has to be underpinned by the product – cars which people want. Only then will the engineering credentials and brand messaging count. If the product’s not right the messaging has nothing to adhere to.

So the advertising, like the engineering, currently exists in isolation. It’s great. It wins awards. But it won’t sell cars. Sadly, for business with such a pedigree, it’s Honda which hasn’t kept up.

Kia – the power to surprise, the power to disappoint

Brands, Cars, Design, , ,

kia-kx35-concept-1A Kia concept, said to preview a China-only SUV model, at a second-tier Chinese motor show. Hardly big news, especially as the industry was focused on the Los Angeles show at the time. But the Kia KX3 unveiled in Guangzhou show a few days ago is an interesting product for what it says about the brand.

Its front-end styling has the same basic form as a Porsche Cayenne, the SUV which saved the German carmaker, accounting for half its volumes and becoming a talisman for the brand in China.

Kia, like its Hyundai sister brand, has been a revelation in the last few years, growing phenomenally and producing very well designed products. It’s secret has been to add good styling to the value brand proposition. But it’s an overstretch for Kia to try to assume some of Porsche’s cachet.

And there’s a very good reason not to ape Porsche design: the Cayenne’s unloved styling was a direct result of applying iconic 911 design language to a front-engined, four-door car for the first time. And the 911’s styling was borne out of the rear-engine layout, meaning that it could have a very low bonnet line. This resulted in a unique – and aesthetically problematic – form in which the Cayenne’s headlights sit above the radiator grille, giving a bug-eyed, ungainly look. There’s been no other car like it. Until now.

Porsche-Cayenne-S-E-HybridThe original Cayenne’s looks were universally unpopular. They’ve been refined but whether you like them or not is not the issue. The point is that they were, and remain, a must for Porsche in communicating its brand: the Cayenne may have been a heavy, high-centre-of-gravity beast but its engineering and dynamics were as cutting-edge as those of a 911. It was an SUV but it was a Porsche. Aesthetics had to be secondary. The design of the Kia KX3 has no such rationale.

Kia has been a revelation in the past five or so years, growing phenomenally and producing very well designed products. In a visionary move, in 2007 Kia recruited the European designer of the iconic Audi TT, Peter Schreyer, to head its styling. He’s since become the boss of all Hyundai-Kia design and the most senior non-Korean in its business globally. In so doing the management has elevated the brands and created a compelling combination of the rational and emotional.

1bUnder Schreyer, Kia has been a triumph of unexpectedly confident, contemporary, original, perfectly proportioned designs – ironically everything that Porsche design is not and cannot be. This is especially true of the Sportage, which the KX3 is, in reality, thought to be previewing.

Now they’re trying to differentiate Kia from Hyundai, especially in design terms. They want to add more emotion and sportiness, and a stronger design signature. But the best brands are aligned with great original design: think Apple. And they give consumers what the consumers don’t know that they want: again, think Apple. Allowing the Chinese market to define wider product and design strategy would be a mistake.

Kia is on the rise. It’s just been ranked 74 in Interbrand’s 100 Best Global Brands, with brand value up almost 500% since Schreyer’s arrival. It’s fulfilled the brand message ‘The Power to Surprise’. But if the KX3 signals the next design phase it also has the power to disappoint.

Large MPVs – the next big thing?

Brands, Cars, Design, Motor shows, , , , , , ,

Renault-Espace-0Large, stylish MPVs could be making a comeback. At the recent Paris motor show Renault relaunched the Espace as a bold, well designed MPV-cum-crossover, and Ford showed the latest S-Max, which will be a recipient of the company’s new Vignale luxury trim and concierge service.

The premium brands are making moves too: Paris saw the launch of the production BMW 2-Series Active Tourer, a compact MPV, while Mercedes – which replace the MPV-style A-Class with a conventional hatchback a couple of years ago – reaffirmed its interest in that segment by revealing a new B-Class.

That the two German premium brands are investing effort into MPVs is significant, but they may be missing an opportunity beyond the compact, higher-volume segments. Large MPVs are a neglected niche: after Toyota introduced the innovative and stylish Previa in the mid-1990s, the territory was commoditised by the mainstream brands, with utilitarian van-based models and products marketed as bland school-run devices offering space but no character and a mediocre driving experience. MPVs had become merely ‘people carriers’.

SUVs then entered the marketed. They were premium. They needed to be, because of the cost of the four-wheel-drive technology and – starting with the first BMW X5 – the additional cost of engineering decent handling into a heavy, high-centre-of-gravity lump. But more importantly the SUV concept was American, so they were marketed as lifestyle vehicles, recreational tools. They enhanced your life rather than announcing to the word your grim acceptance of its responsibilities.

Of the premium brands only Mercedes persevered with the large MPV, but its products have remained van-based. So Renault may have hit on something with the new Espace. Not everyone wants an SUV – Audi Q7s, BMW X5s and Mercedes MLs have begun to symbolise some of the less appealing characteristics of the monied middle-classes. And very few need off-road capability.

2015-volvo-xc90-steering-wheelI was with a Volvo strategy guy at Paris and it got me thinking. I’d probably buy an S-Max if it had a different badge. I’d almost certainly buy the Espace if they produce it in right-hand drive. But I’d far prefer it with a Volvo badge.

Volvo can carry off a contemporary interpretation of a large, MPV. It has the brand-width to do it (unlike Jaguar, another near-premium brand, which can stretching itself to SUVs but no further). An MPV would suit Volvo’s brand values and its design aesthetic. Volvo is about stylish functionality – vehicles with a purpose but also a personality, confident but classless, luxurious but life-2015-Volvo-XC90-interior-controls-press-imageenhancing. And its products are increasingly about cabin design – supremely comfortable but understated, ergonomically intelligent, with natural materials, authenticity and the influence of Scandinavian home interior trends. What better medium to express this than an inherently spacious, light and flexible MPV cabin?

Volvo’s boss recently said that until 2020 it will only replace existing models. That’s a pity, because there’s a gap in the market and a brand fit. And if Volvo were to fill that gap it would challenge the German big three by setting a trend rather than merely offering an alternative to a product type already offered by the competitors. Which would make the brand far stronger.

 

More Discovery, less Land Rover

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The replacement for Land Rover’s compact, family-friendly model, the Freelander, was announced this week with a new name – the Discovery Sport.

lr_ds_statics_07Pulling the Freelander into the Discovery range is a sensible move for the Land Rover/Range Rover brands. It rationalises the model ranges, and it co-opts a name which has assumed sub-brand status thanks to the Discovery’s combination of modern but uniquely Land Rover looks and unbeatable functionality. The intention is clear from the oversized ‘Discovery’ bonnet badging where ‘Land Rover’ used to sit.

The new Discovery Sport has been engineered and packaged to provide more space than the outgoing Freelander, including a third row of seats, in a barely-bigger footptint. That’s clever. And it manages it while looking sleeker, more premium and completely contemporary.

But in doing so it leaves behind the Land Rover design language which has helped make the existing Discovery a brand icon and a statement of resolute differentiation from SUVs produced by other brands, which are mass-adopting a lower, less utilitarian look. The exterior styling also has a lot in common with Range Rover’s urban, fashion-oriented Evoque model, and plenty of similarities with the Evoques’ big brother.

It even shares that Range Rover’s Sport tag. This merges and confuses the two brands. But, more importantly, sportiness has little if any relevance to Land Rover. It’s diffuses the brand.

So what makes the Discovery Sport a Land Rover? And what will make the Discovery replacement a Land Rover? It’s no longer the styling – if anything, Range Rovers now have the more utilitarian body shapes. And it’s not the core value of functionality – after all, the Range Rover Sport also offers seven seats.

The increasingly high price point for Land Rovers doesn’t help. At launch – with only one engine, taken from the existing car – the Discovery Sport will cost from £32,000 to £43,000. A few options and the price will creep towards £50,000. That’s well into Porsche Macan territory – an SUV which is sporty because the brand dictates it.

Compare Land Rover’s price positioning with, say Audi’s. Equivalent versions of its Q5 SUV range top out at £37,500. OK, it’s not a Land Rover – but if the unique identity of the Land Rover brand is diluted then so is the emotional appeal of its products. Which is where Audi, BMW and Mercedes come in. They’ve aggressively targeted every market segment, especially SUVs. They’re premium but they’ve opened themselves up to everyone rather than adopt exclusive pricing. They’re a threat, the more so as Land Rover becomes more premium and less obviously functional.

Land Rover makes excellent cars. Sales will continue to grow in the short-to-medium term. But it has serious brand challenges. It should ensure that sales ambitions don’t shape the brand, and that Land Rover’s brand differentiation, achieved over decades of leadership, is both preciously preserved and clearly stated. That starts with the design of the product, but with the Discovery Sport it has become more generic. In the long term that’s going to help Audi, BMW and Mercedes more than Land Rover.

 

 

New Volvo XC90 – not close enough to the edge?

Brands, Cars, Design,

That design is increasingly a core brand communicator for car companies is underlined by Volvo’s new XC90, revealed this week.

2015-Volvo-XC90-First-Edition-GrilleThe XC90 has become the car which underpins Volvo’s brand. The concept of an SUV sits more comfortably with Volvo than with any other company: good SUVs should be true lifestyle vehicles, where substance is never beaten by style, and in which everything serves a purpose – one of which is, simply, making your life better. For the inventors of the well-made, classless, intelligently designed and extremely safe family box on wheels, the XC90 articulates the brand better than any other model could.

05-volvo-xc90So the XC90 is the right vehicle to be leading with as Volvo effectively relaunches itself with a wave of new models. But the exterior design of the car, so vital to making a big brand statement, is not quite as well resolved as it should be, given the car’s ambassadorial role. Head-on and tail-on it does the job. In a nod to the past, it’s boxy, yet unlike previous Volvos it’s relatively cluttered. But more toyota-land-cruiser-v8-03importantly it’s a tall car and looks it: the beltline is low and flat, with almost no rake. And there’s little tension in the surfacing. The effect is that in profile and front-three-quarter views it lacks forward motion and dynamism. It’s reminiscent of the utilitarian Toyota Landcruiser V8. Which isn’t where Volvo needs to be.

Does this matter? After all, shouldn’t a Volvo should be happily understated, not shouty? Even coolly smug that it’s not a be-chromed Mercedes M-Class, an aggressively squat BMW X5 or a blacked-out Audi Q7?

Yes. But Volvo is talking about taking on the big premium brands. And it’s opening the order books with a limited edition version at a price of £68,000 (Euros 85,500), ahead of sales of a range starting at £45,000. Compare those figures with BMW’s brand new X5, which starts at £43,000 and tops out at £64,000 for a 402bhp petrol M sport derivative as opposed to the limited-edition Volvo’s 225bhp diesel engine. And the range-topping hybrid XC90 will push the ceiling higher. Leading with a loaded limited edition is a clear strategic move to establish Volvo in consumers’ minds as a confident, premium, aspirational brand. However, in doing that it’s trying to leap from sub-premium – an uncomfortable place where the brand has been locked into for years – to super-premium in a single move.

The issue here is not so much the size of the leap but that it’s not necessarily in the right direction. Volvo shouldn’t be trying to take on the German establishment directly. Its brand relevance is that it’s different and occupies a lateral space; a sudden vertical move undermines this uniqueness. At these price levels people buy on what a brand says about them, and a Volvo should say independent thinking and practical luxury for real, smart people at sensible prices. Not necessarily a 1400-Watt audio system and a crystal glass gear shifter.

Volvo has said that the exterior design of the next new model, the S90 executive car, will be edgier. It will need to be. Because while the brand should remain authentic and eschew ostentation, it needs a 100% confident design language to support a more aspirational price and brand positioning. That will help it take on the establishment from a position of difference and greater strength.

There’s not much amiss with the new XC90. But unlike Mercedes, BMW and Audi, with their huge model ranges, every new Volvo has to be bang-on and express the brand perfectly.

Volvo has shown how to combine practicality, cutting-edge technology, uncluttered design and Scandinavian character into interiors which are perfectly resolved. They’re not only a welcome change from those of the German brands but are world-leading. If it can make its cars as confident and satisfying to behold from outside as to sit in and to use, then it will be able to compete better emotionally as well as rationally.

Geneva brand digest #4: Qoros Hatch – the most significant car at the show

Brands, Cars, Design, Motor shows, ,

One final brand thought on Geneva: what was the most significant car at the show? Renault’s re-born and RWD Twingo? Mercedes’ high-tech C-Class? Citroen’s unique C4 Cactus? BMW’s first FWD car and MPV, the Active Tourer? VW’s e-Golf? Peugeot’s newly crowned Car of  the Year, the 308?

qoros-3-hatch-Geneva-2014-03No – none of those. But, like the Golf and the 308, it was a humble compact family car. The most significant new car at Geneva, from a brand perspective, was the Qoros 3 Hatch. Why? Because it begins to move China on from being the car market which drives the global industry to being a marketer of cars we’d actually drive.

Qoros, a curious-sounding JV between China’s state-owned Chery and the Israel Corporation holding company, was launched publicly at Geneva 2013, showing its production-ready Sedan and ‘concept’ Hatch and Estate versions. Quality was extremely good, styling conservative.

qoros-3-hatch-foto_5Yet this is good design – form has met the function of expressing solidity, integrity, an engineered product. It reassures. The cars have shoulders, a stocky stance. There are no design gimmicks. They look substantial, not Chinese: from a nation which until recently produced blatant copies and cheap crash-test-failing boxes with bizarre names, this is a very necessary brand message. The products say “VW”, not “Great Wall, “Gleagle”, “Roewe” or “King Long”.

IMG_0502And now that suggestion of substance has been made real. Sitting unheralded behind the production-ready Hatch on the Geneva stand was a semi-naked Sedan showing its crash structures. The car not only got a five-star rating in the Euro NCAP crash-test, but achieved the best score of any car in 2013. That takes a clear vision, commitment and investment.

Geneva brand digest #2: Toyota Aygo, Citroen C1, Peugeot 108 – small cars talking big

Brands, Cars, Design, Motor shows, , , ,

The Geneva launch of the three mini cars jointly developed for Toyota and PSA Peugeot-Citroen was interesting not just to see how they’ve differentiated them in styling terms. Their execution tells us a lot about the brands whose badges they wear.

They may be diminutive, low-priced and low-profit products, but they’re a valuable entry point for new, younger buyers, offering the opportunity to grab customers at the base of their car-buying curves.

images-10So much so that Toyota’s version, the Aygo, is intended to be a halo car for the brand. It effectively spearheads a new Toyota brand message of Fun, but it also spells out a new daring in the company. The Aygo is certainly the most distinctive of the trio. Sharp-edged, geometric feature lines come together in an X-shaped front-end graphic extending from the bottom corners of the nose right up to the wing mirrors, and along with some other plastic parts it can be chosen in a range of colours. This is Toyota trying so hard to break out of the rut of bland, commoditised design that it’s willing to engage in jeopardy – witness the Go Fun Yourself strapline used on the Geneva stand – and even risk alienating some buyers. It’s something the company can’t do in a single move with staple volume sellers like the Auris and Avensis. But if the Aygo’s a success it will allow Toyota to progressively introduce more risky design.

images-11Citroen is in almost the opposite situation. Launching its cartoony C4 Cactus concept-car-for-the-road at the same time, its C1 alternative to the Aygo inevitably doesn’t have the same halo mission. As a result it lacks the confidence of the Toyota and the coherence of the Peugeot’s version, the 108. Citroen has a wonderful brand heritage of free-thinking innovation, idiosyncrasy and design flourishes, which it’s redeployed in the Cactus and the DS ranges. But it also has to market pain-et-beurre cars, and to do so cheaply to make them attractive. The C1 is symptomatic of this split personality, its front end a confusing mash-up of cutesy oversized lamps and Citroen’s new signature slim headlamps.

Peugeot_108_GenevaThe Peugeot 108 may be more conventional but it’s more successful. Peugeot has a new-found confidence, with good design and excellent quality now extending across a young vehicle range, so it’s transplanted those values into the 108. It wants to be taken seriously so has used the car to give us a large-car-in-a-small-car package, with plenty of options focused on luxury and technology, giving a visceral quality to a sophisticated-looking city vehicle.

These three cars are being produced in the same factory but despite fundamentally being one vehicle they’re remarkably distinct. The Toyota and the Peugeot, however, share something which elevates them – they project a clarity of purpose and a fit with a wider corporate vision. In brand terms, that’s essential.

Is Audi sacrificing brand equity for volumes?

Brands, Cars, Design, , , , ,

audi-nanuk3_1024-940x628The shape of the car market has changed completely in the last decade. It used to have a bulging middle, stuffed with the mainstream makes, and with premium and value brands occupying the poles.

Now it resembles an egg timer. The middle has been squeezed to within an inch of its life, by aspirational value brands from one direction and acquisitive premium brands from the other. Ford, Vauxhall/Opel, Peugeot, Renault, Honda and Toyota have had their market share ripped apart by Skoda, Kia and Hyundai, and BMW, Mercedes and Audi.

No brand comes close to Audi in shaping this new landscape. The company has embarked on an explosive product diversification programme, offering everything from a supermini to a supercar, with around 50 key model variants including crossover versions of all its volume products. It plans to increase to 60 variants by 2015, partly by entering some of the few segments it’s not already in, with Q6 and Q8 crossovers, a version of VW’s Up! mini and even a people-carrier. Audi’s value to VW was evident at the recent Frankfurt motor show, where it was given its own hall, separate from the one accommodating the group’s seven other brands, where its segment-busting mentality and naked ambition were shown by an off-road supercar concept.

It’s not only the largest of the premium makes by volumes; it outsells Fiat and Citroen, and is within 0.5% of Peugeot and Renault. And now it’s become the UK’s fourth-largest seller, behind just Ford, Vauxhall and VW. The fact that it’s achieved this without a single model in the top 10 emphasises its incredible spread. CEO Rupert Stadler’s recent comment that Western Europe’s market won’t recover before the end of the decade must have felt like a stab in the eye to the beleaguered mainstream brands.

An extraordinary success then. But the future may not be quite as simple: it will be a challenge to maintain brand equity as a result of shifting into so new market segments and growing so fast. Yes, Audi benefits from the scale of VW Group, meaning that it can develop high-quality products economically and price them competitively, so it will continue to churn out very good cars at affordable prices.

But the company has built its business on being premium and aspirational. Its ubiquity means it’s no longer truly aspirational and, by definition, it’s not exclusive: while the exceptionally low interest rates of the last few years have helped grow sales they’ve also helped commoditise the the productsA few years ago owning an Audi meant independent thinking and cool Bauhaus understatement; now it means nothing in particular.  If a brand is present in every part of the market including all the mainstream segments, conquesting business from the mainstream brands, can it continue to perceived as premium?

It will be interesting to find out, and only the customer will decide.

Hyundai needs to avoid joining the mainstream

Brands, Cars, Design, , ,

2015-hyundai-genesis-rendering-1-1While the rise of the premium brands seems to have defined the changing dynamics of the car industry in the last decade, the growth in stature of the value brands is a more remarkable story. Hyundai and Kia in particular.

It’s much harder to grow a brand upwards from a budget baseline than it is for a brand to apply premium qualities to more functional vehicles as BMW, Mercedes and Audi have done. And Hyundai and Kia have done it without the resources of an existing group.

The Korean group has experienced phenomenal growth, with a doubling of European sales since 2008. Both brands have reeled customers in with competitive pricing and long warranties, and it’s easy to understand why the value brands have prospered in the years since economic meltdown.

But it’s not all about value. In a visionary move, in 2006 Kia recruited the European designer of the iconic Audi TT to head its styling. He’s since become the boss of all Hyundai-Kia design and the most senior non-Korean in its business globally. In so doing the management has elevated the brands and created a compelling combination of the rational and emotional. They now effectively offer what Toyota did a decade ago – reliable, hassle-free motoring for ordinary consumers – but with added style. And remarkably they’ve now comfortably overtaken the Japanese giant in Europe: Hyundai’s market share this year is 3.5% and steady, Toyota’s 4.0% and falling. Kia’s is 2.8% and climbing, giving the pair a combined 6.3% of the market, 50% more than Toyota.

And now Hyundai has become one of the world’s 50 most valuable brands according to the Interbrand Best 100 Global Brands index. To put that in perspective, we’re talking companies in all sectors. Companies like Coca-Cola, Google and Apple. Hyundai’s rank is 43, putting it ahead of Sony, Facebook and Heinz.

In automotive terms it’s just one place behind Ford at 42. It’s seventh out of all automotive manufacturers, with Toyota, Mercedes, BMW, Honda and VW the only other brands to beat it. Over the last five years Hyundai’s brand value has grown 96%, mirroring sales.

Like sister brand Kia and Skoda, Hyundai now wants to sell its cars more on quality and less on value. It wants to raise perception and prices, to create more profit. But like the premium brands moving into mainstream territory it faces the possibility of losing some its brand relevance. Unlike the premium brands however, when the value brands move towards the mainstream they risk becoming merely part of the squeezed middle to which they currently offer such an appealing alternative.

Hyundai’s challenge now is to grow sustainably: to retain brand differentiation and to nurture a strong enough brand personality to avoid joining the mainstream.