By on September 13, 2010

Wolfsburg must be fuming. Among all the good news coming in from all corners of the earth, there’s a market that insists on being the proverbial thorn in their side. That’d be my little ole Brazil, which is, en passant, the world’s fourth largest. And it’s a market where Volkswagen has been nearly forever. Well-known Brazilian automotive journalist Fernando Calmon, writing for the just-auto website, reports a major shakeup in automotive brand values in Brazil (can you feel the ground shaking a little?). Mr. Calmon, citing the Brand Finance consultancy, reports that the most valuable car brand in Brazil is…

Fiat.

Yes those little Italian rascals have taken over from VW and GM. The study refers to 2009 and Fiat took first place among car makers by default. It retained the 10th place (among all brands present in the Brazilian market, not just cars), it earned in 2008. GM, however, which had ranked 8th in 2008, dropped to 13th in 2009. The big shocker though was perennial leader VeeDub. Its fall was even worse than Chevy’s. Just two years ago it was 4th. Last year it was just 12th. Brand equity of all car makers depreciated faster than a new car driving off the dealer’s lot. Only Fiat held its value.

Among the reasons for VW’s fall from grace is the trouble facing its mission critical Gol. Market leader for the past 23 years, it was totally re-skinned, re-engineered and re-launched last year. As a result, improved sales, the chance to overtake Fiat and again be on top, but then…disaster! 4 recalls in little more than a year really took its toll on the little car.  Red card for the Gol. These troubles no doubt helped pave the way for Fiat’s mission critical Uno. The Gol is now in the fight of its life for first place. Among other cars in VW’s lineup, most are underperforming. Just the Fox is conquering sales. The recently launched Amarok may well be a flop. Mr. Calmon also notes that VW is having difficulties with its dealer network. Complaints and unhappy customers abound.

According to the Mr. Calmon’s report, GM’s woes are of a different nature. First off are worried Brazilian consumers concerned over headquarter’s bankruptcy and subsequent nationalization. That can take the luster off many a brand. Also cited are persistent complaints over perceived drop in quality. Call it a perception gap, but Brazilian consumers are calling it like they see it. When GM do Brasil’s products came from Opel, Brazilians were proud to drive the bowtie’s offerings. Now that they are all being substituted by a more easterly source of engineering, color Brazilians unimpressed. So negatively impressed that it has precipitated the General’s downfall. Chevy has announced measures to correct this though that remains to be seen. Not to mention to be felt by the Brazilian consumer.

The Brand Consultancy study rings true. It reflects what’s going on in our market. A unique, a little offbeat market that is, nonetheless, one of the world’s most important. Not only in terms of size, but also in potential for growth. Makers should be wary and judiciously study what’s going on here. An important part of their future is here. This market is slowly, but surely maturing. It is also becoming less and less tolerant of mistakes and blunders.

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7 Comments on “Brazil: VW And GM Squander Brand Equity...”


  • avatar
    John Horner

    ” … VW is having difficulties with its dealer network. Complaints and unhappy customers abound.”
     
    Wow, just like in North America. What is the consistent factor in both markets? Ah, yes, decisions made by top management to when in doubt, stick it to the customer.
     

    • 0 avatar

      It’s a shame really.

      Case in point. I have a Renault Logan. It’s been quite a headache. Had to change the tank, the temperature sensor has gone bad 3 times, it’s had aceleration problems 2 times, it’s had a partial engine rebuild, it needed to change the front shock absorbers with just 20 000km.

      But, the dealership has been fantastic and the maker has stood behind its product, changing everything necessary, without delay or shenigans.

      Result, I entertain the idea of buying another car from Renault. Having heard the horror stories friends have had at VW, I won’t be coming by their dealers anytime soon.

  • avatar
    kaelepulu

    I enjoy your Brazil market updates. I was lucky enough to work on program there 10 years ago.  Lovely country and dynamic market.  Thx.

    • 0 avatar

      Thanks for the support and interest!

      And you’re absolutely right. This market is in a flux. The Japanese, the Koreans and the Chinese are coming strong. Into the meat of the market. Let´s see how the established brands react. One thing is sure. It’ll be interesting.

    • 0 avatar
      Robert.Walter

      Thanks for the series, I enjoy it too.

      Re. the new entries into the market, I can’t see were the customer will do anything other than benefit from this… this will cause the ‘old boys’ to drop their prices and clean up their acts!

  • avatar
    joeaverage

    Yeah – keep the Brazil/South America stories. I think the larger picture (than just the USA perspective) is valuable.

  • avatar
    Ronman

    Great Insight Marcelo….


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