· Michelin maintains top spot for brand value and strength, despite 9% brand value decrease to US$7.2 billion
· Tires sector hit by Chinese slowdown, 7 out of 10 brands in ranking losing brand value
· Continental brand worst hit, brand value down 28% to US$3.4 billion
· Japan’s Sumitomo sees highest brand value increase, up 33% to US$801 million
Michelin defends its title as the world’s most valuable tire brand despite a 9% decrease in brand value to US$7.2 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
In addition to calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
This year, Michelin also retains its title as the world’s strongest tire brand with a Brand Strength Index (BSI) score of 86.30 out of 100 and a rating of AAA. Michelin is the only brand in the ranking to score a AAA rating and its BSI is well clear of second ranked Bridgestone, with a BSI of 78.10 out of 100.
Tire sector deflates across board
Over the last year, the tire sector has suffered significantly, reflected in the rankings with seven out of ten tire brands losing in brand value, notably: Continental (brand value down 28% to US$3.4 billion), Goodyear (down 10% to US$1.9 billion) and Hankook (down 8% to US$1.5 billion). This trend can be attributed to market uncertainties and a drastic change in customer demands. China, the world’s biggest car market has experienced a sharp downturn in car sales, which saw a decline in 2018 for the first time in 20 years. Additionally, consumer behaviour has shifted, with more customers favouring retreading as opposed to brand new purchases. Retread tires are growing in popularity thanks to their cost efficiency, environmental friendliness and quality performance. This has of course meant that industry margins have taken a huge dent. The imposing threat of American restrictions on foreign import competitors is also a matter of concern, as the industry prepares itself for President Trump’s proposed 25% tariffs.
Alex Haigh, Director, Brand Finance commented:
“Brands in the replacement auto-parts industry - from tire component makers to local garages - are bracing themselves for President Donald Trump’s tariffs on imported Chinese materials and goods. Hefty levies have already amplified the costs of steel and aluminium products, and more tariffs could affect a whole range of other items these companies develop and sell. The bulk of this will be felt in the year ahead by those dealing in tires, rear-view mirrors and windshield wipers.”
Two brands buck the trend
Italy’s Pirelli and Japan’s Sumitomo are the only two tire brands in the rankings to see noteworthy increases in brand value, up 6% to US$1.6 billion and up 33% to US$801 million respectively.
Pirelli and Sumitomo’s strong performances are driven by their commitment to diversification and efforts to differentiate their brands from competitors. Sumitomo has significantly increased its sales revenue over the last year, reporting a 16% rise, which has been boosted by the acquisition of UK-based wholesaler Micheldever Tyre Services Ltd, in a further boost to its European offering. Sumitomo has also been working with Dunlop (brand value up 1% to US$2.0billion) to open a new European Development Centre focused on product innovation and tire development.
Milan-headquartered Pirelli has positioned itself as a premium and powerful brand, renowned for its partnership with the Formula One World Championships to sponsoring wider sporting events including football, baseball and sailing. This strategic diversification combined with its strong Italian heritage has resulted in the successful differentiation from its competitors, and thus a boost in brand value.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest automotive industry brands. The most valuable automotive industry brands in the world are included in the Brand Finance Automotive Industry 2019 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Automotive Industry 2019 report.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.