Markham Lee_

Brand Names: Important, But Not Key to Investment Decisions

I would disagree with the notion that American cars are popular overseas, and would instead say that there are some instances where American cars do quite well overseas but they aren't a dominant brand world-wide.

Yes you do see a lot of Ford Mondeos in the U.K. (they're as ubiquitous as Accords) but the overall mix is heavily slanted towards the European brands.

Ditto for a lot of other countries, you may see an American model doing well but not enough (for me anyway) to say that foreigners prefer American.


-M

Brand Names: Important, But Not Key to Investment Decisions

First thanks for reading (as always).

Deep Value: I think that if you have two companies selling similar products and company A cannot demand either a higher premium and/or has customers who will refuse to buy the products of company B, then you cannot say they have the stronger brand.

Now it's hard to make general statements without having a specific product in mind, but really you need to have both: pricing power and customers who will refuse to patronize the competition. A truly strong brand should be one where the customer is more concerned about the product attributes then price, and has little to no interest in dealing with substitutes.

Perhaps the best example is what many people say about BMW drivers: "they would rather drive used BMWs then new models of other car makers".

As for GM you have a company that people see as the low cost provider, a company that doesn't exactly hold the public's confidence with respect to being a leader in automotive technology. So the car starts out at a deficit because some will be more skeptical about then they would a Honda or Toyota Volt.

Working out a partnership where it's quietly sold under a stronger brand name isn't a bad idea.

-M