Tesla has overtaken traditional giants Toyota and Mercedes-Benz to become the world’s most valuable automotive brand. A report published last week shows that the value of the electric car brand has surged 44% since last year, to $66.2bn.
That puts it clear of 2022 leader Toyota, which has dropped to third place in 2023 after its value tumbled 18% from $64.3bn to $52.5bn, and Mercedes-Benz, which stayed in second place despite losing 3% to $58.8bn.
The ranking is compiled by global brand consultancy Brand Finance. It’s the first time it has been topped by a brand that does not make vehicles with petrol and diesel internal combustion engines (ICEs).
Like many companies, Mercedes-Benz has announced it will phase out ICE production in the next few years, in favour of electric vehicles (EVs). Toyota’s plans are less clear — one reason for its loss of brand value.
Former CEO Akio Toyoda recently stated that the industry was wrong to tie its future so comprehensively to electric power and should keep open other propulsion options, including hydrogen, synthetic ICE fuels and hybrid vehicles, which use a mixture of ICE and EV power.
In a world where EV sales are accelerating faster than anyone anticipated, Toyoda’s successor, Koji Sato, who took over on April 1, has tried to reassure the market that Toyota is fully committed to EV development. However, having been an early leader in the technology, the company is fighting perceptions that it is now playing catch-up.
UK-based Brand Finance bases its ranking on the market value of a brand to its owner. Measurements include actual and forecast earnings, brand strength and reputation, market share and brand royalties.
This is the second successive year that Tesla’s value has grown 44%. In 2021, it was $32bn. The growth is despite questions about the safety and reliability of some of the technology in Tesla cars. It is very much seen as the brand of the future.
It is also boosted by the perceived market value of its sustainability credentials. At $17.8bn, this value is more than double that of second-placed Porsche’s $8.1bn.
The Brand Finance report says: “Tesla reported record profits in 2022, more than double 2021’s profits, and exceeding expectations of most analysts. Tesla’s brand value growth is correlated with strong growth in its operations, and scaling up the production of vehicles, particularly Tesla’s best-seller, the Model 3.”
Below the top three, BMW and Porsche have each climbed one place, to fourth and fifth, worth $40.4bn and $36.8bn respectively. Volkswagen (VW) drops two places to sixth, after shedding 17% to $34.0bn. The top 10 is rounded out by Honda ($24.2bn), Ford ($22.3bn), Hyundai ($15.9bn) and Audi ($13.9bn).
No Chinese brands make the top 10 but that could change very soon. BYD, which sells only EVs, jumped to 12th place this year, from 19th in 2022. Already strong in its domestic market, it is eyeing international expansion, especially into Europe.
The fastest-growing brand this year is Chinese. Sokon more than doubled in value to $739m, which placed it in 83rd place.
Access to affordable, convenient transport, rather than vehicle ownership, is becoming more important
Overall, though, says Brand Finance valuation director Alex Haigh, it’s been a disappointing year for automotive brand values. It’s the first time since 2017, when Brand Finance launched its ranking, that aggregate brand values of the top 100 have fallen — from $611bn to $600bn. Of the 100, 68 lost value.
One reason, he suggests, is that many young people in wealthy parts of the world “are falling out of love with cars”. Access to affordable, convenient transport, rather than vehicle ownership, is becoming more important. Then there’s inflation, rising interest rates for car finance, volatile fuel prices and the high price of EVs — all of which are discouraging consumers from buying.
Nor does it help, says Haigh, that motor companies are spending less on advertising and brand promotion. In 2016, these accounted, on average, for 8% of revenue. Now it’s 6%.
Haigh says: “This drop has come due to increased demands on research & development and capital expenditure, as most manufacturers invest heavily in the EV transition. Pulling back from promotional spend could, though, be sacrificing a long-term benefit for the category on the altar of short-term cost-saving.”
The VW group, whose brands include VW, Audi, Porsche, Skoda, Seat, Lamborghini, Bentley and Ducati, has the most valuable portfolio, valued at $99.3bn. Toyota, which owns Lexus, follows with $63.2bn, then Mercedes-Benz ($58.9bn), BMW ($43.8bn) and Honda ($26.8bn).
Among automotive components brands, Denso, from Japan, is rated the most valuable, at $4.5bn. Hyundai Mobis comes next, at $3.6bn, then Toyota ($2.7bn), Magna ($2.6bn) and Valeo ($2.4bn).
Michelin ($7.9bn) tops the tyre charts, followed by Bridgestone ($7bn), Continental ($4.1bn), Goodyear ($2.2bn) and Dunlop ($2bn).
Among mobility companies, Uber is the runaway leader, valued at $23.3bn. There’s a huge drop to Enterprise ($7.7bn), Hertz ($3.7bn), Lyft ($2.8bn) and Avis ($2.5bn).
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