Is brand management really an automaker’s No. 1 priority?

Volkswagen "new" Beetle has a flower vase

In his rousing introduction to Auto Extremist’s annual “Brand Image Meter,” Peter DeLorenzo (2018) argues that “image wrangling is now the Number 1 priority in this business.” The reason is that a “democratization of technology and luxury” has leveled the playing field. This is not to say that design, engineering and product development are unimportant — just that brand management is the “most meaningful ingredient” in order for “the effort to come together.”

Peter DeLorenzo

I suppose that makes a certain amount of sense, particularly compared to 50 years ago. As a case in point, back then you wouldn’t expect that an upstart automaker could launch a successful luxury car brand from scratch. The technical barriers to entry were far too great, as even John Z. DeLorean discovered the hard way. That’s not the case today. Genesis and Tesla may have experienced a variety of problems in their formative years, but their very existence illustrates the sea-change that has rocked the American auto industry.

That said, DeLorenzo appears to be pushing his argument too far. Yes, brand management is important, but it has all too often become the tail that has wagged the dog. In other words, automakers have tended to place too much emphasis on branding at the expense of functional innovation.

A recent case in point was Volkswagen’s announcement that it was considering bringing back the Beetle. The goal is to inject “emotion” into a planned line of electric models, according to Car and Driver magazine (Stoklosa, 2018). Although few details have been offered besides the car switching to a four-door hatchback body style, it sounds like VW executives still view the Beetle as little more than a nostalgic styling exercise.

As discussed here, the “new” Beetle is a caricature of the qualities that made the original Beetle such a revolutionary car in the post-war U.S. automotive market.

Two generations of Volkswagen "new" Beetles

DeLorenzo (2011) partly recognized this in denouncing the 2012 redesign of the Beetle, which drifted so far away from the original that it should have been given a different nameplate. However, his perspective was tinted with Detroit groupthink:

“When the New Beetle was brought back over a decade ago its nostalgia factor was high but its real-world automotive performance was only so-so. And for the most part that was okay because people didn’t care, they were buying into an aura and that was good enough.”

I would suggest that playing the nostalgia card was not “good enough” if VW wanted to revitalize its 1960s reputation as a very different kind of automaker — one committed to an honest and practical product without the usual stylistic and marketing overkill that has dominated the American auto industry. The New Beetle turned out to be little more than VW’s quirky rendition of a trendy personal coupe — a subcompact Monte Carlo with a flower vase.

Automakers make these kind of fundamental mistakes when they place brand management over functional innovation.

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