Tag Archives: Brands

Chevrolet – that’ll be the Daewoo…that I die

chevrolet-logo-grillThis week’s resignation of Chevrolet’s global marketing boss, following the resignation of the brand’s European head, is an interesting step. As one of the team who launched Daewoo in the UK, I was sad to see Chevrolet pulled from the region recently by its parent General Motors, which incorporated Daewoo into the Chevrolet brand after acquiring the Korean company in 2001.

After all, Daewoo had had a great start in the UK, Europe’s second most important market. The product was several model cycles past its use-by date but a no-dealer, customer-first strategy provided real brand values and record market share for a new entrant – immediately placing it ahead of Hyundai, Mazda and Volvo – and inspired success in Europe.

The rationale for dropping Chevrolet in Europe? It was losing too much money. It was seen as having too much overlap with the Opel and Vauxhall sister brands. Volumes were too low. True, but these were largely the results; the cause was a failure to develop the right product and build a brand for Europe.

While Daewoo had become synonymous with quality customer service, Chevrolet was known more for being American. The big, brash, chrome-lined Americana image didn’t fit with compact, Korean-made value products, and the fact that these sat in the same line-up as Corvettes and Camaros with old-world V8s presented a chasm for consumers to cross.

Some have suggested that a value brand simply wasn’t right for the company, which has wanted to take the the Opel and Vauxhall products upmarket to fight the tidal wave of new models from the German premium brands. But VW Group has done just fine with Skoda book-ending a brand portfolio with Bugatti, Bentley and Lamborghini. The truth is that GM didn’t develop distinctive product and failed to present a coherent brand.

It’s ironic that Daewoo, which had come to Europe as an independent in the mid-1990s, taken on the establishment and leap-frogged its Asian value counterparts has – under the ownership of an automotive giant with three-quarters of a century’s experience of operating in Europe and with an established brand name – sold just one vehicle for every five clocked up by Hyundai and Kia.

But the ultimate irony is that, having developed a modern, lean and fit-for-purpose approach as Daewoo, Chevrolet has been driven to virtual extinction in Europe while a bankrupt GM Europe has emerged from global recession and Eurozone collapse with great-looking product.

Dropping Chevrolet in Europe may be the best decision for GM financially, and perhaps inevitable in a European market which has shrunk so alarmingly. But with all the places at the premium table taken and no value offering, the lack of strategic investment in the Chevrolet brand will surely prove to be a cause of regret.

Things are different today from when GM acquired Daewoo – excellent product is now a given. But that simply means that the brand is even more important, because it’s the differentiator, the I-want-one factor – something GM will be up against when it aims Opel and Vauxhall at those beautifully honed brands at BMW, Audi and Mercedes.

Hyundai needs to avoid joining the mainstream

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.

The elastic brand – Land Rover’s model explosion

Land-Rover-defender-concept-DC100-smallI read today that the replacement for Land Rover’s Freelander will drop the model name and become part of a growing Discovery family. So far so simple – Land Rover already has a confusing brand and model name structure and that’s about to get much more complicated, with the reported intention to diversify its combined Land Rover/Range Rover offering to as many as 15 distinct variants. That could be stretching it a bit.

Time was when Land Rover meant the iconic Defender, now 65 years old and about to be retired in its current form. Then came the Range Rover, which originally had hoseable seats but now comes with ones which will massage you and competes with luxury limousines from Cheshire to China. And as it’s gone upmarket it’s become a brand in its own right. However, the car shares the brand’s name, whereas the models which have moved into the space underneath the flagship, the Sport and the Evoque, are separately identified. Meantime Land Rover’s Discovery has also become something of an icon.

So a strategy of rationalising a rapidly growing range into three model lines – Defender, Discovery, Range Rover – will make sense. It’ll also help maintain the integrity of brands which could be at risk of being diluted by the race for sales growth and the drive upmarket.

However, it doesn’t tackle the issue of an increasing overlap between the models. There is little, it seems, that the new flagship Range Rover does that the new Sport can’t do. At the same time the new Sport will have a seven-seat option which, combined the availability of a four-cylinder diesel engine, jars with its Sport tag – surely practicality should be the preserve of the Land Rover brand, where the Discovery already does practical-meets-cool. Even more so when the next generation, based on the Range Rover, will have the inherent quality at the top end to satisfy all but those who simply must have the Range Rover badge. There’s even talk of a seven-seat Evoque, a car whose success is based purely on style over practicality, to the extent of publicising that it was designed with the help of an ex-Spice Girl.

Of course Land Rover can charge more for products with the Range Rover badge and achieve bigger margins. But, especially when you have brands founded on integrity and now luxury, it’s a dangerous play to let sales growth and diversification steer the brand rather than the other way round.

Land Rovers and Range Rovers are fantastic products but there are few bad cars these days. Mainstream carmakers have introduced premium products, and premium brands have launched downsized models. An already super-competitive market has converged. As a result, brand differentiation and relevance has become the key to consumers.

Land Rover and Range Rover has always had more of that than any other car company. Its challenge now will be to preserve it.