Edmunds CarPool

They were BMW and Honda, as noted in this blog post, and I picked them because I felt they were two companies grounded in great engineering, as evidenced by their ability to consistently create cars that display quality, efficiency and excellent driver engagement.

Looking back, I've realized the term "brand equity" wasn't even a consideration when I called out BMW and Honda last year, but as I spoke with my colleague during the Detroit show I also realized that's exactly what both companies posses. In fact, I would argue they posses greater brand equity than almost any other vehicle manufacturers in the market (Porsche is right up there, too). And they possess great brand equity because of the consistently compelling product they've produced for longer than I've been alive.

(As an aside, this is where it gets frustrating when I hear GM reps expecting consumers to immediately embrace their vehicles simply because they have finally become competitive and worthy of consideration. Are GM's cars as good as the best cars on the market? In many cases, yes. Will that immediately change every American's perception of the company and have them streaming into dealer showrooms. Obviously not.)

So clearly brand equity (maybe I should specify positive brand equity) is critically important for long-term success, and it's also something a company can't create overnight. But is attaining positive brand equity a decades-long endeavor? Not necessarily.

Let's talk Mini. Mini has a long history in England and a somewhat shorter history in places like Canada and Europe because the cars were sold in those locations for several decades. But Mini existed for less than 10 years in the U.S. market, with its last official year of U.S. sales being 1967.

By the late 1990s, when the new Mini was being finalized and "in the know" car guys were anxiously awaiting its arrival, most Americans had little knowledge of (or interest in) the Mini brand. The first cars went on sale in mid-2002, and 7 years later Mini is one of the strongest brands in this country. Actually, I would argue Mini had extremely strong brand equity in this country within a couple years of its 2002 return to the U.S. How is this possible?

It's possible because Mini combined an exceptional product with a brilliant, unconventional (and largely guerilla) marketing plan. Yeah, they weren't carrying the baggage of decades of disappointing product, as some car makers do, but even the most optimistic Mini executives couldn't have confidently predicted the success of this brand in the U.S.

Is it a coincidence that Mini's is owned by BMW? I think not. BMW clearly knows the recipe for brand equity, and they made sure Mini benefitted from their decades of experience by producing both an excellent product and by working to raise awareness as quickly and effectively as possible.

But I would take it a step further. I would suggest a company like BMW is not only capable of rapidly creating brand equity where none existed, it can also shed decades of damaged brand equity in a remarkably short timeframe with that same combination of exceptional product and effective marketing.

As an example, let's take a car company that suffered from such poor brand equity in recent decades GM was forced to kill it 107 years after its creation -- Oldsmobile.

Every aspect of Oldsmobile, from demographic to image to name (OLDS-mobile?) was working against this brand before GM put a stake in it. But imagine a different fate for Oldsmobile. Imagine GM decides not to kill it but to give it away, and further imagine that BMW decides to scoop it up. Hard to imagine? Yes, but try.

The reasons BMW would or wouldn't take on Oldsmobile's problems aren't important here. What I'm arguing is the possibility that even a brand as damaged as Oldsmobile could find new life if exceptional product and effective marketing were brought to bare on it. I think such powerful tools, properly executed, could turnaround almost any manufacturer over a relatively short timeframe.

So the idea that brand equity is critical to success remains true. But conversely, I'm convinced the right combination of product and presentation can create brand equity in a relatively short frame, even for the most battered of brands. 

Put simply, if a company like BMW started cranking out Oldsmobile-badged product (imbued with the German automaker's penchant for driving nirvana and solid design), and if said product was combined with clever marketing to create awareness and erase a shaky past image, even Oldsmobile sales could turn around and find an entirely new audience -- just like Mini did in the U.S. I'm not saying it would be easy, but I think it's absolutely possible

Of course the reverse is true as well. Even powerful brand equity can be erased in a relatively short time by sub-par product and pointless, ineffective marketing. GM purchased a 50 percent stake in Saab in 1989 and took full control of the company in 1999. Ten years later Saab is all but dead despite having an incredibly strong brand equity for most of its 65-year history. GM's mis-management of the automaker is clearly the cause.

As I close I'd like to offer one more imaginary scenario. Let's say it's 2004, two years after Mini has been introduced to U.S. buyers and the same year Oldsmobile is scheduled for closure by GM. But instead of killing the brand GM is able to strike a trade with BMW -- the Oldsmobile brand for the Mini brand. Who knows, maybe the Quandt family at BMW decides to make a point about managing brand equity, and bets GM's board that they can be more effective with a dead brand than GM can be with a thriving one.

Now the fate of Mini (a rapidly growing and successful car company) is in GM's hands and Oldsmobile (a brand that is effectively dead) goes under BMW's umbrella. The bet between BMW and GM? In six years Oldsmobile's sales in the U.S. will be higher than Mini's. The winner gets 100 percent ownership and control of the loser's corporation. In my mind, despite the disadvantages facing BMW and the advantages facing GM, it would still be a close race.

It's six years later, 2010 in my imaginary world. Who wins? What if you extend the timeframe to eight or 10 years? Could Oldsmobile ever be a more powerful brand than Mini?