Ferrari loses branding ground to Germans, as F1 sheen wears thin

Brand Finance reviews car brands

As the world’s car companies gather in Geneva for the biggest event of the year, brand valuation and strategy consultancy Brand Finance has released its annual review of the state of their brands. Every year, Brand Finance puts thousands of the world’s top brands to the test. They are evaluated to determine which are the most powerful, and the most valuable.

The Passat has just been named car of the year, capping a successful year for VW in which brand value has increased 15 per cent from US$27 billion in early 2014 to over $31 billion today.

Toyota remains the world’s most valuable auto brand, with a brand value of US$35 billion. However brand value growth this year has been flat and Toyota is now at risk of being overtaken by all three major German auto brands.

Mercedes, BMW, and VW have benefitted from a rebound in demand in Europe and saw their brand values grow 13, 14 & 15 per cent respectively over the last year. BMW’s brand was also bolstered by the successful launch of the i8. BMW’s first attempt to bring the supercar into the 21st century has been met with rave reviews for its looks, driveability and innovative hybrid technology. Mercedes has also strengthened its brand by reinforcing a reputation for technological innovation. The brand’s total dominance of the 2014 F1 season vindicated the decision to stick with the sport and was a PR and marketing coup.

The opposite is true of Ferrari. For several years, Ferrari has been the most powerful brand from any industry. However it lost that title this year, in part due to the inability of Scuderia Ferrari to even mount a serious challenge in last year’s F1 season. The sheen of glory from its 1990s golden era is beginning to wear thin. Meanwhile the departure of Luca di Montezemolo heralds a slight change in strategy at Ferrari’s road car division. Montezemolo kept a strict cap on production to maintain the exclusivity of the brand. Since his departure, chairman Sergio Marchionne has suggested that this policy will be relaxed to boost revenues.

Many Ferrari owners and aspiring owners are extremely brand-conscious, making the loss of the ‘world’s most powerful brand’ accolade, which Ferrari has held for several years, a particularly heavy blow. Ferrari is still in a strong position. It remains the most powerful auto brand and its brand value has actually increased 18 per cent this year to US$4.7 billion. The new strategy to capitalise on the brand will certainly drive short term value but over-exploitation risks lasting damage.

Tesla is the sector’s top performer; its brand value has more than doubled, from US$1.2 billion in early 2014 to US$2.6 billion now. The falling oil price, reducing demand for electric vehicles, and recent stock price jitters make the coming year uncertain however.