Cutting on cost is something all industries aim for. Producing a product at a lower rate not only decreases the budget but also increases profit margins. The automobile industry is no different. Automakers are always on the lookout for ways to decrease production charges. This is a two-way street as both the manufacturers and consumers can benefit from it.
Low production costs means automobiles can be sold at relatively low prices. Speaking of cost cutting-methods in the automobile industry, car rebadging has been an effective technique used by manufacturers for years. Let’s learn about car rebadging in detail.
What is Car Rebadging?
Rebadging, also known as badge engineering, is the process of applying a different brand to a current product. The product is then sold as a distinct commodity. In simple words, the car rebadging process can be defined as a car manufacturer taking another manufacturer’s car and selling it under their name as their own.
Car manufacturers opt for rebadging as it is a cost-effective method. Some leading automobile brands have been known for using rebadging. With electric cars now taking over the market, we’ll have to see how rebadging will come into play. Let’s go through the advantages and disadvantages of car rebadging.
ADVANTAGES OF CAR REBADGING
Car rebadging can be beneficial for manufacturers and their customers. Listed below are some of the advantages of car rebadging:
- Reduced Costs – Cost cutting is the main reason for car rebadging. There is a whole process of research and development that goes into car manufacturing and naturally, it is costly. However, there will be no need for research and development in an already manufactured car. Car manufacturers prefer to invest in small equipment to modify the cars rather than starting from scratch as the latter can be costly. Reduced costs will lead to enhanced sales.
- Success Partners – When a rebadged car is sold as a distinct product, it cashes in on the gained goodwill. The goodwill gained by the car over the period of time is then enjoyed by another brand.
- Economies of scale – Economies of scale refer to reducing costs by producing more of the product. Rebadging helps increase production by using the existing parts. The result is lowered car prices for the consumers.
DISADVANTAGES OF CAR REBADGING
While the advantages of car rebadging can be intriguing, there are some disadvantages as well which are listed below:
- Brand image – One major disadvantage of car rebadging is that it can affect the brand image. You can come across a car that is a carbon copy of another brand so things can get confusing. In the long run, car rebadging can backfire.
- Lack of innovation – The automobile industry or any other industry for that matter, needs innovations to attract more customers and stay relevant. Customers are on the lookout for unique features such as modern car safety features along with others. They can miss out on the must-have car features as rebadging can put a halt to innovation.
Rebadging Strategies
Car rebadging is solely done for economic reasons as they are a viable option for manufacturers to save money. It is usually done by using one of the following strategies:
BRAND EXPANSION
In brand expansion, one automobile manufacturer borrows the model of another manufacturer and launches it under its brand name. Brand expansion is usually done as an exchange. A simple example of brand expansion is if a manufacturer needs muscle cars and another one needs SUVs, they can trade the models and rebadge them.
A good example of brand expansion happened in the 1990s when Honda didn’t have a strong SUV lineup. As a result, it went to Isuzu and sold their Trooper and Rodeo (formerly MU) as the Honda Passport and Acura SLX/Honda Horizon. Isuzu on the other hand didn’t have a people mover. It took Honda’s Odyssey and sold it as Isuzu Oasis.
JOINT VENTURE
A joint venture occurs when two or more car manufacturers join hands to develop a vehicle to fulfil the needs of their respective lineups. All brands involved can then sell the vehicles under their name.
MARKET LOCALISATION
When a large corporation launches its car under different brand names, it is called market localisation. This mainly occurs when a certain car has locally made a market of its own. It is a viable option to cash in on the popularity of a car and enhance commercial prospects.
WHAT IS PLATFORM SHARING?
Platform sharing is a term that might come across frequently when talking about the car rebadging process, however, it is different from car rebadging. When multiple auto manufacturers use the same components in one or more of their vehicles, this is known as platform sharing. To put it simply, platform sharing refers to the structure of a car; the chassis, which helps to give each type of car an individual, distinctive look, even if all cars use the same components. You can also hear about things like the axle, drivetrain, suspension and floor pan for platform sharing.
Although the idea of “platform sharing” doesn’t always apply to identical frameworks, other components like the engine are also frequently shared among different automakers.
This was everything about the car rebadging meaning, procedure and uses. The process has been going on for years and the reason behind it might make sense from a manufacturer’s perspective. A sudden increase in demand or the changing market dynamics can also prompt automakers to go for car rebadging rather than starting the whole process from scratch. The outcomes of the process can be beneficial for both manufacturers and consumers making it a win-win situation.
That said, if you are looking for unique vehicles at reasonable prices, check out these used cars for sale in the UAE and have your pick from a large variety of vehicles listed.
Stay tuned to UAE’s top auto blog for information about car manufacturing processes and more.
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