All material subject to strictly enforced copyright laws. © 2022 Managing IP is part of the Euromoney Institutional Investor PLC group.

Which are the most powerful automobile brands and why?

Sponsored by remfry-sagar-400px.png
selective between black and white cars

In the fourth article from an exclusive series on the automotive industry, Bisman Kaur of Remfry & Sagar discusses brand value in India

Understanding automotive brand value

In the Forbes' 2020 list of the World's 100 Most Valuable Brands, technology brands dominate with a 20% share. However, 11 automotive brands make the list too – Toyota, Mercedes-Benz, BMW, Honda, Audi, Porsche, Chevrolet, Ford, Lexus, Hyundai and Volkswagen. The majority trace back their origin to more than a century ago; what's more, though all sell the same product (unlike tech brands Amazon, Google, Facebook etc.), each brand has a distinct personality.

So what makes automotive brands so powerful and enduring? Studies reveal that consumers undertake substantial research before purchasing a car as it is often perceived to communicate its owner's sense of self-worth (second only to a home). Research also suggests that when a consumer attempts to match a brand with personal aspirations, lifestyle or emotional imagery conveyed via advertising is not the driving factor. Rather, auto brands are evaluated in terms of their reputation for "product excellence relative to their total cost of ownership." Such reputation is pegged to actual consumer experiences of the underlying product. Thus, unlike categories such as retail, or consumer goods, building brand reputation in the automotive sector is a lengthy and complex affair. Equally, once consumers form a positive association with a brand, and experience its performance over time, the value associated with the brand also lingers and endures – so much so, that it is then perceived to imbue models both old and new.

Indian narrative

Narrowing focus to a single jurisdiction – India – its most valued brand (source: Brand Finance) in 2020 is the Tata group, a multinational conglomerate with origins in 1868, the country's largest automotive manufacturer (dominates the commercial vehicle segment with a more than 40% share), and owner of the iconic British company Jaguar Land Rover.

The Mahindra Group, which like Tata is a diverse business with an automotive arm, is India's seventh most valuable brand. Interestingly, it is a pioneer in the field of electric vehicle technology with India's first electric car Reva in its stable. Reva was launched in 2001 and sold worldwide – customers in 26 countries (especially in the UK, where it was named G-Wiz) have driven it more than 200 million kilometres, absolutely emission free. Mahindra rebranded the car as e2o in 2013 and has since introduced an electric powered rickshaw (tuk-tuk), three wheeler, sedan and cargo van.

The third mention of an automotive brand in the survey comes in at number 19 – Maruti Suzuki – which deserves elaboration.

Before 1982, India was a closed market and choice of vehicle was usually limited to the bulbous Ambassador (manufactured by Hindustan Motors) or a version of the Fiat 1100 (manufactured by Premier Automobiles under licence from the Italian carmaker). That year, a joint venture agreement was inked between the government owned Maruti Udyog and Suzuki Motors of Japan which marked an inflection point. The demand for cars was pegged at 40,000 units a year in 1983, however, with the introduction of Maruti's first model, known as the 800, the passenger vehicle market in India surged 275% over the next four years, and demand has continued to expand ever since. Today, India is the fourth largest automobile market and all major auto brands have a presence in the country; yet, even three and a half decades later, more than half the number of cars sold in India continue to wear a Maruti Suzuki badge.

The statistics are interesting. In 2020, the share of Maruti in the passenger car sales market was 53.1%, Hyundai's and Mahindra's was 17.6% and 6.5% respectively. Tata followed with a 4.8% share, Toyota was fifth with a 4.1% share, behind which was Honda at 3.7%. No other automaker in the world's largest vehicle markets has matched Maruti Suzuki's dominance in India. Nor has the gap in market share between the top two players in any individual market been as wide.

How does Maruti account for its enduring primacy? Is it its first-mover advantage? Local sourcing and economies of scale? Perhaps it is the continuous launch of new products to meet consumer expectations as well as its unmatched nationwide, extensive service network – no mean feat in a country with the world's seventh largest land mass. Also, the Indian consumer is extremely cost conscious and wants world class products at Indian prices. Ever since it launched the small, superior, reliable and affordable 800, Maruti has always tapped very well into this sentiment.

Powerful brands always grow

The next chapter in automotive brands will belong to the makers of electric and autonomous vehicles – Tesla recently overtook Toyota in market valuation (though not in sales). In news from India, in 2019 Maruti Suzuki and Toyota began a partnership that would equip Toyota with the ability to come out with frugal compact cars and Suzuki to benefit from Toyota's technological edge in making hybrid and electric vehicles. At the moment, India's electric vehicle market is just taking off (autonomous vehicles are some time away) and is miniscule compared with markets in China, Europe and the US. Tracking brand value in this context should make for an interesting exercise in the days ahead.

kaur-bisman.jpg

Bisman Kaur

More from across our site

Sources say it’s become harder to get ex-parte injunctions in patent suits at the Delhi High Court, but that the forum will remain a top pick for IP cases nonetheless
The UPC held a pilot training system for its new IT system in London last Thursday, June 30, and a full programme will follow later this year
In-house sources say clarity on what counts as lawful access to data will be key to the success of the UK’s new copyright exception
The attitude of ISPs continues to shift following a copyright claim filed at the England and Wales High Court
The EU is seeking to create a single market for data and trade secrets owners will need to prepare early, according to IP lawyers at Osborne Clarke
In-house and private practice counsel discuss issues with pre-grant opposition in India, including the rise of non-speaking orders and straw man filings
The US Supreme Court rejected an appeal on American Axle, dashing hopes of a judicial fix to patent eligibility uncertainty
The Copyright Office refused to grant protection on the basis that the authorship couldn’t be distinguished from the final work produced by the program
COVID vaccines top Clarivate’s new brands list; Fed Circuit reverses Coca-Cola’s TTAB win; Skechers sues Brooks; USPTO to retire Public PAIR tool; CCB sees cricket complaint
Lawyers should pay attention to APJs’ questions and remember that PTAB proceedings aren’t jury trials, say former PTAB judges
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree