Skoda- Cinderella of automotive branding?

(image: youtube.com)

Last time we took a look at one of the most disastrous examples of the latest history of automotive branding. Now, we will take a look at very successful one, a company called Skoda, car manufacturer from my home country, the Czech Republic.

In the US, you probably haven’t seen a Skoda before or even haven’t heard of it. They are not officially distributed here and technically they cannot be even driven in the country since they have not completed the required crash tests and other important paperwork (although they would be more than fine).

Over the past 25 years, Skoda experienced a rise like no one else in the business…

Over the past 25 years, Skoda experienced a rise in the business which no other similar automotive company encountered. From a post-communist rejected joke brand it has become a respectable player on the market in the high-quality VW concern. (well, VW’s reputation in the States has been very bad over the past few months but still, in Europe, it is one of the most successful companies – people just do not care about the Dieselgate that much – since about a half drives diesel cars…)

When the Iron Curtain fell, Skoda cars were considered as a joke in the West…

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Skoda is the third oldest European automotive company, after Mercedes-Benz and Peugeot. In the 1920’s and 1930’s, Czechoslovak cars like Skoda or Tatra, were considered as one of the best innovative cars made in the world. Unfortunately, WW2 and recent arrival of communism stopped the fruitful era and cars became worse and worse. When the Iron Curtain fell, the typical Eastern sales markets were gone and all the export companies had to face new challenges in the West. Competing against well-established companies for a not-a-long-ago centrally planned manufacturer was a difficult task: cars (for example Favorit 136 in the picture above) were considered to be a joke and people just did not want to buy them. Skoda was about to bankrupt.

However, the Czechoslovak sinking ship was attractive for many foreign investors. Cheap labor force, decades of automotive experience and strategic position in the center of Europe were the strengths of this investment. Skoda had two major bids from known big foreign car companies – French Renault and German Volkswagen.

Renault wanted to use existing facilities for building their small cars – in other words, suppress or even erase the Skoda brand. Volkswagen however, wanted to keep the Czech brand and just use the investment for improvement of the quality and subsequently the image of the company. No surprise that in 1991, the western neighbors of the Czechs, Germans, won the contest.

Volkswagen’s new branding “Skoda-Volkswagen Group” helped to change the old company image

 

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First years were not impressive, the new models were just optical improvements of the old ones and still, the brand image was kept in mind as “unreliable”. That’s why Volkswagen used branding – SKODA – Volkswagen Group. So suddenly, it was not an Eastern-European joke anymore – it was co-produced by perfectionist Germans. Not only that they saved a tradition of car manufacturing in the country, but also attracted many other automotive companies to the Czech Republic, such as Hyundai, Citroën or Toyota. Now, automotive industry in the Czech Republic is the most important one of the entire economy with the second largest production per capita in the world (after the Slovaks – brothers, with whom the Czechs shared one country for over 7 decades)

At the turn of the millennium, Skoda had three models to offer, all built on the high-quality VW platform, but different characteristics – focused on the inner space and clever flexibility of interior. That is when they used their slogan – SIMPLY CLEVER. And the sales went up – for many people, VW cars were just too cold and too “German”, Skoda cars used new interesting colors and innovative design – a lot of people saw a soul in the car. And now, some Skoda models are even more popular than their VW brothers.

Would Skoda’s enter to the US market help the declining popularity of VW products?

(image: autoforum.cz)

After the recent scandal with the diesel engines, VW’s brand perception has noticeably decreased in the US. It would not be a bad idea of the VW managers to consider selling Skoda cars in the US too, especially the new SUV model (above) which is coming up next year. It would be a completely blank sheet of brand image with hardly any VW connection and overall, European cars have a good reputation. Furthermore, Skoda is a very successful brand in Asia, especially China and India, and premium models of VW concern such as Porsche or Audi, has already established a name in the country. So after entering American market, VW concern would still keep their sales high and also used another their brand for a lucrative market.

Have you heard about Skoda before? What do you think, should VW consider expanding this brand overseas to the US?

 

TOP 5 worst examples of premium automotive branding

If you buy a cheap car and the image of its brand is not very good, you do not usually care since it is not an exclusive automobile.  These attributes are more likely to be connected with premium and luxury cars – that is the segment where brand image is taken the most seriously.

There have been a few branding own goals in the history of premium cars…

But are all the premium cars branded right? Of course not! In the history of automotive industry there have been a few total own goals where the brand of car products did not correspond with the philosophy of the company’s brand. There is my TOP 5 list of the worst branded premium cars in the recent history.

5. Bentley Bentayaga

(image: forbes.com)

This car has just been unveiled to the market so we still cannot say from any tangible data if it is successful or not, however there has never been a car made by this aristocratic British manufacturer that stirred up the waters like this one. Bentley is long known as a very conservative producer of big luxury limos with hardly any attention to new technology and new trends. And that is why their customers (for instance Jay Leno or Her Majesty the Queen Elizabeth II.) like them – they hadn’t changed their car philosophy for decades – unlike their German rivals. When couple of years ago, under the new ownership of VW, Bentley introduced the Continental model, which was basically a Volkswagen with a Bentley badge on it, their diehard fans did not like it much, but still, it was a big luxury car with a couple cows on its seats and half the Sherwood Forest as the door trim. With the new Bentayaga though, it is already over the top. The car is not only hideously ugly, but also it completely does not fit to the Bentley brand. It is an SUV – and that is enough. This relatively new segment might be appropriate for brands like BMW or Mercedes and in the early 2000’s it saved Porsche from bankruptcy with their new Cayenne. But as a Bentley it is seriously uncool. It is like going for a hike with tailored suit and spats. Yes, Bentley might attract new customers from China or Middle East but, more importantly, it can dilute its brand.

4. Jaguar X-Type

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To see the other example, we will stay in Great Britain. And we don’t have to go that far, we will take a look at another premium car manufacturer which supplies the Buckingham palace – Jaguar. But unlike the Bentley, which wanted to expand in luxury segment with an off-road SUV, the “Jag” in 2001 was trying to put its brand on an entry-level car. That time, Jaguar was owned by Ford – a company which honestly has never been very successful in managing other car manufacturers under their ownership. Jaguar was not an exception and it is no surprise that today it has a new owner (Tata from India) and it is doing much better. The Jaguar X-Type was supposed to bring new customers to the brand – especially younger drivers. The reason why this model was so unsuccessful was that it was not a real Jaguar. The engine, electronics, dashboard…it all came from Ford Mondeo (Ford Fusion in the US) – a car which was a lot cheaper. The other problem was that the design was too old fashioned – yes, as a traditional English producer it is good to maintain the looks but still it looked way to obsolete to attract younger customers. If you take a look at the brand new cheapest Jaguar- the XE – it is both modern and classic design. Many of the old X-types are now in the used car lots with a very low price tag – simple reason why – nobody wants them.

3. 2002 BMW 7 Series

(image: motortrend.com)

When it comes to the BMW brand, the pulse of many car lovers speeds up – the mix of luxury and performance is just hard to dislike. In the 80´s and the 90´s, the 7-series was the flagship of the brand – with slightly sportier characteristics than their too comfortable and lazy Mercedes rivals. With the sleek looks with sharply designed front grill it was one of the best looking premium cars on the market. So many BMW fans could just not believe their eyes when the successor was released back in 2002. Sharp elegant lines were gone and replaced by futuristic bubble-looking shape, the interior looked like it was transformed from a star ship of 23^rd century and with more weight it lost its sporty appeal. Suddenly, all the Third world dictators, mobsters, politicians and sportsmen stopped buying the 7-series and switched to the competition. The face-lifted version was introduced quite early, in less than three years, and the old designer was fired. Now, the new 7 series looks quite better and promises BMW even better tomorrows. Nice job!

2. Ferrari Mondial

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There is probably no premium car manufacturer in the market which gives such attention to passion, history and tradition like Ferrari. This little Italian sports car company produces couple of thousands of cars a year, all handmade, and does not want to hear a word about things like emissions, economy, electromobiles and so on. Their aim is to produce beautiful and fast cars. In the 1980’s though, there was one model that did not really fit it – the Mondial – it was neither beautiful nor fast. Ferrari wanted to put its precious logo on a more affordable car which its owners could drive it more on a daily basis and with more passengers and luggage and also give the driver the performance feeling of an Italian exotic car. Ferrari failed in both of these goals. Firstly, the car was very uncomfortable – it was very small inside and for a daily driver’s car not very reliable. And because it was quite big for a Ferrari, it was not fast either. Basically it was an overpriced 4-seater Fiat coupe with a prancing horse logo, which was slower than way cheaper Volkswagen Golf GTI. Ferrari now produces a car for 4 people – ironically called “for four – FF” – but it is spacious, fast, exciting and desirable – it somehow blends in to the whole Ferrari brand philosophy. So although the Mondial was a terrible effort, Ferrari learned a lesson.

1. Volkswagen Phaeton

(image: autocar.co.uk)

The Germans like their cars and from the technical point of view they all are usually a masterpiece. The VW Phaeton as a flagship of the brand was no exception. Big powerful engine, nicely crafted luxurious interior with a lot of hi-tech bells and whistles and very good performance figures. On paper, it sounds like this car is one of the all-time greats. So why did I choose it as the worst example of automotive branding? Despite the recent emission scandal, VW is considered as a respected German producer of quality-made cars for middle class. But it was just not clear to anyone why VW wanted to expand to the luxury segment. There were couple of reasons – VW already owned Audi and it could have been a rival to some of its products. Secondly, VW has never made a premium car and it might not have experience with making such products. But the main reason was simpler – VW is Volkswagen – which in German means “People’s car”. Hitler wanted to make car in 1930’s which could be affordable for anyone – that is why it is called Volkswagen. And it sounds so weird owning a premium luxury car with a name which refers to affordability and simplicity. The price of a used model now is even 15 times lower than its original showroom price tag.

As a product, a car can be excellent, but the brand can change it all…

And that is the power of brand. The performance can be excellent, even the looks is not that bad, from every tangible way it looks perfect and the marketing department just expects profits. But at the end it is a massive failure. A lot of car manufacturers do not realize that all their new models represent their company and their brand – and if the marketing director does not take this problem seriously, not only can he lose with the brand of the car but also as a brand of the company.

What do you think is the worst example of automotive brand? Which car should be on the list according to you?

Why is the brand one of the most important aspects of a car?

For some people it is just a means of transport, for other it is the extension of their personality. We spend a lot time in our cars and often the type of car reveals a lot about his owner…

(photo: Edbolian.com)

Would you imagine owning a generic car?

 

Do you distinguish cars only by their looks and technical aspects or do you sometimes go way deeper into the intangible aspects of our vehicles?

 

Imagine if car brands were people, how would you characterize them? Who is an alpha and who is a shrinking violet?

“Next to our homes, cars are probably the second most important possession which requires high-involvement buying decision”

It does not matter what brand of milk or cheese we buy but there is no doubt that almost everyone enjoys buying their cars. It happens only once in a couple of years and requires more time and even more complex decision made by a lot of people in a case of a family for instance. Just our place to live is the more expensive and longer-lasting purchase. So there is no surprise that even people who are not considered to be so called “petrol heads” (people who love cars) choose carefully what car they buy. How is that possible? When you drive a car, you are usually hidden inside and no one sees you (unless you buy a convertible of course).

In some countries, for example Germany, car is considered to be a very important part of one’s personality. It does not only show the person’s social status, his or her taste and lifestyle, but also success in life. If there were two doctors with identical qualification – one drives Mercedes and the other drives “just” Volkswagen – people would rather go to be examined by the second one because he definitely is the better one if he can afford to drive this car.

“Expensive doesn’t necessarily mean premium.”

For many people a car is of course just a way how to get from point A to point B. All cars can do it. Some cars go faster, some are more comfortable – but why to pay for almost the same quality a different price? We can see a perfect example at Lexus. In North America Lexus is considered to be a very popular car of premium segment. Good reliability, Japanese engineering and good price. But why is an equivalent BMW or Mercedes at least 20 percent more expensive? And why in Europe for example Lexus is struggling? The same can be said by other premium manufacturers popular in US (Cadillac or Infinity). The reason is that there is no valuable brand behind it.

When you buy Mercedes-Benz or BMW, you don’t buy just the car, engine, leather upholstery and performance. You enter to the VIP group of the owners. You buy the logo, you buy the history behind it, the flair, passion, pedigree. You own a luxury car from Germany. Japan just does not fit here. The ownership makes you feel special. And that’s what automotive branding is all about…

In the next blog posts I will focus on examples of the biggest fails and successes in automotive branding.

And what about you?  How important is a car to you? Write me your opinion to the discussion below.