Wednesday, May 16, 2007

A Look At Brand Value In The Auto Biz

Business Week has an interesting story in its current issue that deals with one auto manufacturer's struggle to improve its brand image and highlights the value of having a good brand in the auto biz. Before I tell you the companies discussed, take this little quiz:

How are the following manufacturers ranked according to J.D. Power's 2006 Initial Quality Study?

  • Honda
  • Hyundai
  • Toyota

Drum roll, please.....

  • Hyundai (3rd)
  • Toyota (4th)
  • Honda (6th)

But Hyundai's higher finish in this study doesn't mean consumers are feeling the same way. Business Week reports that just 23% of all new-car buyers in 2006 even considered a Hyundai, while 65% considered Toyota and 50% considered Honda.

Even worse for Hyundai is the implication is that its brand actually hurts its ability to sell its vehicles. Apparently, an ad agency bidding for Hyundai's business ran a test on Hyundai's new Veracruz crossover. As Business Week reports: "When a group was shown the vehicle without any identifying logos on it, 71% said they'd buy it. Once the Hyundai logo went on, however, that dropped to 52% [while] a Toyota logo lifts intent-to-purchase by more than 20%."

Looks like it's one thing for a company to improve the quality of its product above its competitors and another thing altogether for that company to actually convince consumers to vote with their wallets for their brand. It can take years to build a good reputation in the auto industry, and--barring a public relations disaster--would probably take years to lose a good rep as well.

1 comment:

Todd said...

Well, in the 2007 study, Hyundai finished 12th, tied with Kia and right at the overall industry average, with 125 "problems" in the first 90 days after purchase per 100 vehicles. In the 2007 study, Honday finished 4th and Toyota was tied for 6th.