AM Online

Investor power drives carmakers’ brand portfolio strategies

Brand portfolio strategies have automotive companies in Europe and the US scooping up marques by the handful. This gives them instant access to new markets and the economies of scope can also bring economies of scale when components are shared.

However, joint ventures achieve the same ends – see the Peugeot/Citroën/Toyota 107/C1/Aygo project. It is more likely that brand portfolios are a way of containing that temperamental breed of company owner – the shareholder.

During the inevitable downturns in the business cycle, investor panic can set in and destabilize the company at its most vulnerable time. Having a brand portfolio smooths out the business cycle and spreads investment risk throughout the group of brands, thereby supporting shareholder sentiment.

Carmakers use the portfolio strategy to cover the market and stabilize total group sales. So Volkswagen has everything from value brands (Škoda) to premium (Audi) to luxury (Bentley). But the problems at Ford have cast doubt on this strategy...(story continues in October 20 issue of AM).

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