By on November 20, 2008

Brand management can be so easy. Take car brands. You take a good clear look at your portfolio, you write down in simple language on one piece of paper what positives, negatives, and potential of each brand. Kill the brands that are below par, lack a USP (Unique Selling Point) and/or wouldn’t fetch chump change on the market. At least, that’s what I’d do with Seat, Lancia, Maybach, Daihatsu, Kia (or Hyundai?), Mercury, Dodge, Pontiac, Cadillac, Hummer, Saab, Vauxhall. Did I forget anything? Yugo, girl! Yes: Tony Fixed It Again, this time for good. Fiat, bless their soul, has decided it will close down the Yugo brand. Just-Auto reports that, contrary to previous plans, Fiat will not do a Dacia. The Balkan factories will be used for low-cost manufacturing, and nothing else. Serbia is grieving: apparently, Yugo was one of the (few) things that held Yugoslavia together. Anybody who ever sat in a Yugo or God forgive, ever drove one, rejoices. The Topolino, a two-cylinder urban competitor to the Smart and the iQ, will be built in Yugo’s former Serbian digs from around 2012. Also, Serbia has high hopes to join the EU, sooner or later. Life goes on, often better than before, after you cull a sick brand.

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22 Comments on “Fiat Kills Yugo. Dozens Bummed....”


  • avatar
    NickR

    I guess this scotches the Yugo versus Trabant comparo I was so looking forward to.

  • avatar
    garllo

    I’m SOOOOOOOOOOOOO disappointed!!-not really

  • avatar

    @NickR: there’s still time – hurry!

  • avatar
    pleiter

    A friend of mine and myself test-drove a Yugo when the Yugo first came to the U.S. The tester had a few hundred miles on it. We drove it around the block, got out, looked under the car and Yup, it was leaking oil, right at the drain plug.

  • avatar
    KatiePuckrik

    Mr Schwoerer,

    I’m a little curious as to why you’d kill “Vauxhall”. The “Vauxhall” brand sells Opel cars in the UK. It has pretty much the same line up as Opel (bar a few differences). The Opel brand is not used in the UK, therefore, there is no cannibalisation. The reason GM keep the Vauxhall marque around is because it sells well in the UK (In the 80’s GM tried to push the Opel brand in the UK and failed. The UK market stuck with the Vauxhall marque).

    If you were to cull the “Vauxhall” brand, thousands of UK consumers would leave to other brands (very possibly outside of GM) leaving a massive crater in GM’s sales figures (The UK is GM’s biggest market in Europe). This means that GM would have to go through the headache of building a new brand up from scratch, up to the levels of the “Vauxhall” brand which you killed.

    Why go through all that hassle….?

  • avatar

    The Yugo has definitely been a plus for humor and art cars. In 1995, the Yugo Next Exhibit made the rounds, including DC’s Union Station, where I saw it. A NYC art teacher had purhcased 40 Yugos for the price of a new one, and had his students reinCARnate them. There’s a yugo piano, a yugo cigarette lighter, a Yugo toaster, and numerous others. for pics, go to motorlegends.com, and click on “art cars”

  • avatar

    In the mid-90s a NYC art teacher bought 40 Yugos for the price of one new one, and had his students reinCARnate them. There’s a yugo toaster, a cigarette lighter, a yugo piano, etc. you can see them all on my website, motorlegends.com, click on art cars.

  • avatar
    akitadog

    David Holzman, I saw that art exhibition at Union Station as well, back when I was in college, and thought it was amazing. As well as the ones you mentioned, I also remember the Yugo fooseball table and the Yugo mini movie theater.

  • avatar
    Martin Schwoerer

    Katie,

    are people really that superficial? They actually buy a car because of a meaningless brand? Are they that thick? I mean OK, about 30% of the population of any place is thick, at least that’s what I say, but don’t you think Vauxhall is a bit of a joke? They don’t even sell Vauxhalls in Ireland or Malta anymore, not that that proves anything.

    I don’t mean to disrespect any real British brands; I hold the old ones in great regard as well as the many new ones such as Conran, Pret a Manger and whatnot. But what would a true slogan for Vauxhall be? “Owned by the U.S., designed by Krauts”? Oh and by the way, Yugos will probably continue to be sold in Egypt.

  • avatar
    billc83

    Collectors, take note! Residual values of Yugos could skyrocket! Original, unmolested examples could get top dollar at the next Barrett-Jackson auction!

  • avatar
    Kroum

    You’d think true car enthusiasts should like diversity. “Fiat, bless their soul, has decided it will close down the Yugo brand” – Martin, did you place a bet or something? Can’t really understand why you sound so excited.

    Keep in mind I am not arguing Fiat’s decision. If that’s what makes business sense for them, then that’s what they’re gonna do. Nor do I mourn the loss of Yugo. I just fail to understand the excitement.

    Same goes for most of the brands mentioned – if there still exist, there must be a reason. Otherwise I could argue that TTAC should be closed down because there are dozen automotive websites with higher Alexa rankings. Or argue that since you only write in English you are a market-centric brand and should die.

  • avatar
    golden2husky

    Katie,

    are people really that superficial? They actually buy a car because of a meaningless brand? Are they that thick? …

    Surly you jest. You really don’t think all the hoards of suburban housewives bought BMW’s for their handling characteristics, do you?

  • avatar
    toxicroach

    They have brands for a reason.

    I suppose in a perfectly rational world in which everyone fully investigated every purchase, you could sell cars with no badges except for LUXURY SEDAN and 7 PASSENGER SUV written on the side in 60 point helvetica font, but in the real world people use brands to make assumptions and statements. If you’re family has been happy with the Vauxhall label since before grandpa went off the fight the Nazis, why change?

    It should also illustrate how hard you have to go out of way to get people to bail on a brand once its established.

  • avatar
    cjmarsh26

    I see why the Yugo was not too successful in the United States because of the parts where falling off and the quality wasn’t too good neither.

  • avatar
    Mrb00st

    Yugo? Why don’t Weallgo?

  • avatar
    alanp

    Remember the movie “Drowning Mona” where everyone in the town of Verplanck drives Yugos? Including the police!

  • avatar
    KatiePuckrik

    @Mr Schwoerer,

    Golden2husky illustrated my point beautifully.

    If you think brand is meaningless, then you can’t understand how valuable “branding” is!

    Does everyone who buys Land Rovers, buy them because they want to go off-roading?

    As TTAC has pointed out, “brand” is one of the most valuable weapons in a company’s arsenal. People buy Toyotas for their reliablity, even though Hondas (pound for pound) are more reliable. The brand is a customer’s assurance of particular values. So, if the “Vauxhall” brand gives UK customers the assurance of a trusted make, what’s the problem?

    As for “Vauxhall” being “a bit of a joke”. In 2007, GM sold 426,826* cars in the UK. A conservative estimate would be 300,000 of those cars were Vauxhalls (So, 126,826 of those sales were SAAB’s and Chevrolets. Highly unlikely). Now let’s conservavtively estimate that each one of those cars cost £10,000 (the price of a cheap, low range Corsa). That makes the “Vauxhall” brand worth £3bn, in the UK.

    So if it IS a joke, it’s a bloody valuable one!

    So, you still haven’t presented a logical argument for culling the “Vauxhall” marque….

    * = http://www.gmeurope.com

  • avatar
    Martin Schwoerer

    Wow Katie, you’ve just solved GM’s problems!

    (I hope I’m not hurting anybody here, I am intentionally flippant but don’t mean to sound cynical).

    But really, according to your method of calculation, the various GM brands together could be well worth fifty billion GB Pounds. Assuming that markets in the long term return to the mean, you’d be well advised to buy equity in GM.

  • avatar
    KatiePuckrik

    Mr Schwoerer,

    I recognise that my method of calculation is crude, but it still doesn’t detract from 2 salient points:

    1. The Vauxhall brand is still too valuable for GM to kill it. GM needs all the (profitable) sales it needs. So, to kill a brand which is bringing in profits doesn’t make sense.

    2. Even with my crude maths, the point still remains the same. GM’s brands DO still have value. If GM went bankrupt, people would still clamour to buy up the brands. Look at it another way. If Ford went under, the “Ford” marque would still be valuable, even though the rest of the company was worthless. This is because “Ford” is still a brand which people recognise, hence, companies would want to get hold of that and stick it on their cars.

    If you think brand is just a meaningless name, then you couldn’t be further from the truth.

    Here’s another example:

    The Toyota Aygo and the Citroen C1 are re-skinned versions of EXACTLY the same car (bar the diesel engine). Yet, on the used car market, the Citroen C1 will depreciate (far) more than the Toyota Aygo. Why? Because it has a Citroen badge on it and Citroens depreciate fast, whereas the Aygo has a Toyota badge on it and will hold its value better. Even though, they are the same car.

    For the record, I still believe in Toyota, Honda and Nissan’s model of organically growing a brand, rather than having a family of marques (i.e GM). But GM isn’t in a position to pare marques down. They’re fighting for survival, as it is. So, they’d have to work with what they have and if a brand sells, use it!

  • avatar
    menno

    I have to go with Katie on this one, Martin.

    Interestingly, Canada also has a similar situation with GM (especially with Pontiac) and specific vehicles for Canada only are manufactured (often in the US after the Auto Pact came into effect in 1965).

    Also the story about the Toyota Aygo & Citroen C1 are interesting because, in the US, The Pontiac Vibe and Toyota Matrix are essentially the same car (Pontiac version is slightly reskinned but essentially it’s 95% Toyota and all of the mechanicals are Toyota). Exact same story – the Pontiac resale value dumps, while the Toyota soars.

    My wife’s best friend needed a reliable used car after a divorce and I helped her locate a used, Toyota built Chevrolet Prizm (i.e. Toyota Corolla) which was about 2/3 the price of the Toyota badged car.

    My parents bought a Mercury Villager used; it was somewhat cheaper than a used Nissan Quest at the time. Same exact scenario.

    As for dumping Hyundai?! C’mon, Martin! Hyundai are the 5th largest automobile manufacturer in the world! I could (almost) see rationalizing the cars all as Hyundai, and losing Kia, but then again, Kia is only 50% owned by Hyundai so in order to do that, Hyundai would have to convince the other 50% to sell out; as profitable as Kia are, I don’t think so!

  • avatar
    Martin Schwoerer

    Here’s what Rob Golding of just-auto.com has to say about GM’s branding woes, and about Vauxhall:

    “The whole process of branding in Europe has been strange. GM has for years owned Vauxhall in the UK and Opel in the rest of Europe. The ranges have converged to the point where there is little difference between them other than the badge. GM could so easily have halved the cost of brand development thirty years ago by shelving the Vauxhall name and burnishing Opel. Instead it convinced itself that Vauxhall was too well established to risk change.

    The simple truth – which could have been confirmed by any random group of UK dealers was that the British market is only too eager to buy cars that are visibly German in origin. Vauxhall cars are good. As Opel cars they would have done better. And GM Europe would have been within a breath of generating an Audi-type success before Audi did it themselves.”

  • avatar
    KatiePuckrik

    Mr Schwoerer,

    What do you mean “As Opel cars they would have done better”? I told you that they tried to push the “Opel” brand during the 80’s and it failed. The UK public stuck with Vauxhall. So that statement doesn’t make any sense.

    As for what Rob Golding said, it just mirrors EXACTLY what I have said in my previous posts which was “It’s better to organically expand a marque, than growth through multiple brands (i.e growth by acquisition), but GM didn’t and now they have to work with the situation they created.”. If Europe was a small, fledging market, then GM could afford to mess around with the branding. But the fact is, europe brings in money for GM, especially at a time when GM needs all the profits it can lay its hands on.

    So, where is the sense in messing around with branding in a market which brings in money (at a time when the parent compay needs money), when the current system is working OK?

    Maybe, if GM are deep in the black, then maybe they can afford to look at the “Vauxhall” marque. But until then, it makes no sense to kill it.

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