It’s called “Shelf Space” and it’s pervasive in retail…Look at all the motor oil choices offered to consumers…It’s all basically the same product…The trick is to fill the shelves with YOUR products leaving no room for a competing product…
As others have pointed out, it’s mostly about market share. I worked for Outboard Marine Corporation at one time and their Johnson and Evinrude outboard motors were identical except for the shrouds covering the engines and the paint job. There was even a Sears model, and an ELTO brand (Evinrude Light Twin Outboard). It was the result of having two companies merge in the past and their wide dealership presence resulted in big market share.
When you get too many competitors you do end up competing with yourself, and profits go down. Hence GM dropping Olds amd Pontiac.
One step up from badge engineering is upgrading one model to a more luxurious execution, while using the same innards. This allows good reliability, cost reduction, and simplifies parts distribution. Your average rapper may not know that his Cadillac Escalade is really a quieter Chevy Suburban. The Japanese caught on quickly by introducing the Acura brand from Honda, the Lexus from Toyota, and the Infiniti from Nissan. It’s interesting that in Europe there is no Acura brand but the Legend is sold as the Honda Legend.
In the appliance industry, Whirlpool bought up Maytag, Magic Chef, Amana, Roper and others. When they bought Maytag, the first thing to go was the Newton, Iowa Maytag plant and most of the Maytag designs which were having reliability problems. Whirlpool now has many brands with slight differences in looks and features, but with essentially the same innards. We have a Kenmore Fridge, which is really an Amana, which is a face-lifted Whirlpool.
General Electric has a similar brand stable with Hotpoint, Coldspot, Inglis, and other names with different positions on the price and feature spectrum.
There is a concept called “Brand Essence” and it represents the goodwill and public image attached to a brand in the eyes of the public. Volvo has great brand essence, in spite of the fact that from a quality, safety and reliability point, they are no better and mostly worse than much cheaper competitors. The new Chinese owners knows this and are putting a lot of money into development to keep capitalizing on it.
OK, OK. Will you please just take a Chevy then and put an Oldsmobile name on it. I won’t own a Chevy and my wife thinks Buicks are for old people. What am I supposed to do?
Uncle Turbo. please explain Lexus to me?
Lexus is Toyota figuring out how to do a single additional premium brand in a way that makes folks want to pay extra because they get something extra. No simple rebadging, everything’s either an upgrade, or a chassis that doesn’t exist as a Toyota.
Scion is Toyota NOT figuring out how to add a ‘hip’ brand, good vehicles, had an initial ‘buzz’ about them, but they haven’t maintained it.
If you are going to lose business, you might as well lose it to yourself. Toyota used to be one brand, and now they are 4 brands.
4? Toyota/Lexus/Scion/?
@keith - I’ll make a stab at explaining Lexus. Back in the '90’s the Japanese car makers were getting a good reputation for making high quality cheap small cars. MB, BMW, Audi, and American manufacturers dominated the high priced and high profit car market. So, Toyota came up with Lexus (Honda started the Acura brand, and Nissan started Infinity). Actually I think it was an Infinity model that rivaled MB so closely and proved to be even better quality that really “proved” that Japanese car makers could compete head to head with MB and Cadillac.
Luxury car buyers were reported to need special “pampering” that a Honda or Toyota dealer just couldn’t live up to the luxury buyer expectations. Therefore luxury brand names were created and Lexus, Acura, and Infinity were born. I think if Toyota could have provided the required pampering they would have not gone with a Lexus brand. The Toyota Avalon is very much the equal of a Lexus, but being sold at a Toyota dealer means it’s base price is somewhere between a Camry and equivalent Lexus model.
The objective is to have a product to sell at two different price points in the market. Say Company “T” (for example) has developed a car they know they can manufacture at a cost to them of $20,000. They want to sell this car both to middle class buyers as part of their “T” line, and upscale buyers as part their upscale “L” line. One technique would be to simply call it an “L” Universal say, and sell it for $25,000. They’d make $5000 profit on each sale, and both middle class and upscale families might well buy it at that price. But this pricing would undercut the price of the other “L” 's for sale by Company T. Who wants to buy an L for $50,000 when they can buy one for $25,000? No good. So T ponies up another $2500 and puts in leather seats with butt warmers and power windows and sells this car as a L-Delux (say) for $45,000; and they sell its twin in the fabric seat with no butt warmer and manual window version as a T-Familia (say) for $25,000.
They don’t undercut the pricing of the L line, make a handsome profit of $27,500 each on those, and they are still selling an affordable new car in their middle class T line, making a tidy profit of $5,000 each on those. They sell to both markets, parlaying their R%D costs more effectively.
It is like shelf space in a grocery store, The greater your exposure, the greater the chance the item will be sold.
It was the Lexus LS400 that opened everybody’s eyes about the high quality of the Japanese cars. Mercedes was shocked, lost LOTS of sales the the LS. The Infiniti Q45 was well-built, but the bizarre introduction (commercials with trees, no cars) kept it in the also-ran position.
Nobody’s mentioned badge engineering at its worst:
Cadillac Cimmaron
@keith
Is absolutely right. “people” not cars are branded. Everyone wears the car they drive like a suit. They see themselves a certain way. We choose the color of something we see little of as we drive, why wouldn’t we choose a name. Automakers get that.
Car makers even rebrand cars that don’t sell, with a different name and grill, on the chance it was the name that caused the lack of sales. The Edsel ( mercury) wasn’t that bad a car, other then the grill and name. Style, color and names…how cheaply can the public be bought ?
“Nobody’s mentioned badge engineering at its worst:
Cadillac Cimmaron”
A case could be made for Fiat 127 ==> Yugo
@jtsanders I had a colleague some years ago who was one of the most rational engineers I’ve ever met. He did not know a lot about cars and he and his wife had always wanted a Cadillac. The Cimmaron was a dream come true until it started having all the hiccups and breakdowns the J cars were subject to.
@kengreen I respectfully disagree about your ideas of the Explorer SportTrak.
Our fleet has Rangers, Explorers and Explorer SportTraks.
If you put all 3 on a rack and look at the frame, suspension and steering components, you’ll see that the Explorer SportTrak really is an Explorer, NOT a Ranger.
The SportTrak has fully independent rear suspension, whereas the Ranger has the regular old live axle with leaf springs. The Ranger control arms are also different from the Explorer/SportTrak arms. The Ranger frame is also different from the Explorer/SportTrak frame. The Explorer/SportTrak interiors are very similar. The Ranger interior is much more basic and totally different.
I made the same assumption you did, until I started working on all of them.
@Ken Green
The Aerostar was a beast all its own I believe. It was a unibody design and did not share a frame with the Ranger/Explorer
Badge engineering is a great way to lower the costs for all models produced. GM got a lot of flak for this because so little was changed between models. Take the humble J car; Cavalier, Sunbird, Firenza, Skyhawk and Taa Daa Cadillac Cimarron. All 5 divisions of GM had this car. Most were pretty similar with minor trim and option variations. The Cimarron had, by far the best interior of the bunch. GM got tons of criticism for this. Compare this with Toyota. The basic Camry platform spawned the Camry, Avalon, and Solara Lexus ES cars plus the Highlander, Previa, Venza and Lexus RX SUV/minivan vehicles. Toyota used the good Camry chassis under lots of different vehicles most would never guess come from the humble Camry. If done right (like Toyota) badge engineering can work very well.
@Mustangman What you describe is not Badge Enfineering, but Platform Engineering. When Renault bought Nissan, their first move was to reduce the number of platforms Nissan had and start sharing with Renault. The result was a nice range of vehicles for both Nissan and Renault. When you drive down the street today in Paris you see all sorts of vaguely familair Renault cars.
Almost every large car company practices platform engineering these days. The new Chevy Camaro is built on the Holden Commodor (GM Australia) platform.
it seems like the height of “Badge Engineering” occured during the 1970’s. GM had 4 versions of the Chevrolet Nova (Oldsmobile Omega, Pontiac Ventura, Buick Apollo) that fooled no one. I can fully understand manufacuter using common parts, but, they should make them disctinctly different visually (like current Dodge Challenger, Chrysler 300 and Dodge Charger - all made on the same assembly line). the worst offender today is GM pickups; since 1973, both trucks were identical except for hubcaps, grille, horn button, dash board and tailgate. Why keep both lines? GM should have killed off Chevrolet Trucks and sold only GMC trucks at all of thier dealerships nation-wide. That would have made better sense than killing Pontiac.