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Toyota Brand Losing Value

But it could have been worse, study suggests.

by on Sep.17, 2010

The world's number one automaker suffers a sharp slide in brand value, according to a new survey.

With a record number of recalls, a grand jury investigation and a plague of lawsuits facing it, Toyota has seen a sharp drop in its ranking in the annual Best Global Brands study.

Conducted by the brand consultancy Interbrand, the latest survey found Toyota has dropped from 8th to 11th – with an even more significant loss in its actual brand value. By that measure, Toyota lost 16% of its value, according to the annual survey – more than other damaged brands such as Dell and Citi Services lost since the last Interbrand report.

“Although the Toyota recall caused the brand to lose 16% of its brand value, its long-standing reputation for reliability, efficiency and innovation helped it weather the crisis better than expected,” Interbrand noted.

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Nevertheless, only Harley-Davidson and BP, which was at the center of huge environmental disaster, did worse in the Interbrand survey than Toyota, which was once the envy of the auto industry and is now facing permanent damage from the massive recalls of the last 12 months.

By contrast, Goldman Sachs, which has faced sharp criticism in the media and on Capitol Hill, saw its brand value actually increase by 1%.

The annual ranking of the top 100 brands is based on the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand to continue to secure earnings for the company.

IBM, Microsoft and Google were among the leaders in Interbrand’s 11th annual ranking of the “Best Global Brands.”  Google saw a 36% increase in value over last year, bringing the brand closer than ever to rival Microsoft.  HP also entered the top 10 for the first time, having increased brand value under a new business model and brand platform.

But while high-tech is hot, Coca-Cola maintained its number one ranking on the list for the 11th consecutive year.

Among the leading automakers, Mercedes-Benz ranked 12th overall, gaining 6% in value on the Interbrand scale, while BMW ranked 15th, with a 3% increase in value.

“During a difficult year for the auto industry, Mercedes Benz and BMW were able to sustain and build their value through innovative design and a focus on delivering premium value vehicles with luxury features,” Interbrand noted.

Honda slipped two notches to 20th despite a small 4% increase in brand value.  Ford also slipped one notch to 50th – but it actually gained 3% in value, suggesting the power of creative marketing, said Interbrand.

“Using customer feedback, largely drawn from YouTube, Flickr, Twitter and Facebook to launch the 2009 Fiesta, Ford stands out as one of the best example of how to use social media.

Volkwagen gained two notches, ranking 53rd after a 6% gain in brand value.  VW’s luxury sibling, Audi, also gained two notches, at 63rd, with a gain of 9%.  And Hyundai also gained 9% in brand value but moved up four notches among the global 100 to 65th rank. Porsche stood at 72 after moving up two notches and posting a 4% gain in value in the survey.

“From real-time customer feedback through social media to increased transparency about corporate citizenship, brands were faced with a profound change in the way they relate to customers and demonstrate their relevance and value,” said Jez Frampton, group chief executive at Interbrand. “Despite this new paradigm of brand management, the advantages of building a solid brand remain.”

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