A FOCUS ON GENERAL SPORTS
The car industry is one of the traditional main players in sponsorship having invested in sport heavily from the 1960s onwards. To a large extent, the industry’s sponsorship expertise was gained through its partnerships in motorsports, where car manufacturers have been important suppliers.
Indeed the industry is virtually embedded in a symbiotic relationship with motorsports teams and supplies engines, parts, technical assistance and, in many cases, production vehicles. This report, however, specifically excludes motorsports because car industry backing for the sector is so big that it would require a separate report in itself. Also, the very high levels of investment in motorsport would skew the results to such a degree it would make it more difficult to understand what the industry is doing outside motorsport.
Despite the popularity of motorsport, it is a minority interest and it is important to understand how the motor industry is targeting the population as a whole through sponsorship.
SPORTS SPONSORSHIP NOW WORTH $1.28 BILLION
This report, which analyses 503 deals across the world, shows that the car industry is now spending $1.285 million on general sports. What is of particular interest is that some of the biggest deals in the industry are very recent, notably Toyota’s Olympic TOP sponsorship, Chevrolet’s shirt deal with Manchester United and Nissan’s investment in both the UEFA Champions League and Rio 2016.
Having suffered more than most following the 2008 global financial crisis, it suggests that in marketing terms at least, the industry is showing a renewed confidence.
SPONSORSHIP IN THE CONTEXT OF CAR INDUSTRY UPHEAVAL
The car industry is arguably entering the final phase of a period of consolidation among traditional western marques with most of the volume producers now part of a small number of major groups. On the whole these brands are being marketed globally and with supply still outstripping demand and margins tight, the fight for market share remains intense.
The next period of development in the industry will be governed by the likely expansion of Chinese and Indian manufacturers, which could send further shock waves through the industry.
The emergence of the major Japanese marques in the 1970s and 1980s had a huge impact on the US and European manufacturers. Likewise, South Korea’s Hyundai group has added a new major global player in the past two decades. With Chinese and Indian manufacturers such as SAIC, TATA, Chery, Wuling and Mahindra to name a few, having a vast domestic market to build on, it is inevitable that these groups will be looking to play an increasing global role.
The impact is, of course, two-way. While these emerging groups are likely to take western market share, the report shows that Chevrolet’s sponsorship of Manchester United is mainly focused on brand development in Asia and there are also major sponsorship investments from the likes of Ford and Mercedes in China.
The report shows that on the whole the emerging groups from China and India are doing little more than dipping their toes in the sponsorship market so far. Indeed Volvo, now owned by China’s Zhejiang Geely Holding Group, has actually cut back on sponsorship spend in the past few years. On the whole, Chinese and Indian brands are simply not yet in a position to take major international rights and the sponsorship culture in their domestic markets is not yet developed. It is, however, almost inevitable that such groups will respond to activity from western brands in the future to safeguard their markets and expand abroad – this is a question of when rather than if.
CAR SPONSORSHIP STRATEGY PATCHY
Despite analysis suggesting that emerging manufacturers are still some way behind in terms of sponsorship maturity, analysis of the deals among current major global brands points to a mixed approach in terms of sponsorship strategy.
What is noticeable, however, is that some other manufacturers appear to be operating on a much more ad hoc basis, with rights clearly being determined at local level. Such companies might argue that their approach is down to not seeing sponsorship as a key marketing tool or that local subsidiaries are free to create their own strategies based on their in-depth knowledge of specific markets. Despite this, there are numerous instances in the report where strategies clearly have no global consistency.
SOCCER, OLYMPICS AND GOLF TAKE HALF SPONSORSHIP SPEND
Being the world’s number one sport by a big margin, it is hardly surprising that soccer takes more than a third of the sponsorship spend from the car industry. What is unusual in sponsorship analysis reports is to see golf and Olympics so highly ranked. The Olympics are largely accounted for by Toyota’s major TOP sponsorship agreement with the International Olympic Committee, but golf has managed to attract a range of sponsors, predominantly among the luxury car sector, suggesting that the sport’s image really has moved on and is attractive to companies seeking a modern image for their products. Other major recipients include basketball, American Football, tennis and US College sports, which have witnessed several very large deals in recent years.
GM AND TOYOTA BIGGEST SPENDERS ON SPONSORSHIP
General Motors is the biggest spender on sports globally with an annual rights budget estimated at $235m, followed by Toyota on $207m. Hyundai and Volkswagen follow with $171m and $164m respectively. GM’s biggest spending brand is Chevrolet, and this is largely down to the $80m per year deal with Manchester United. Apart from its giant Olympic deal, Toyota’s investment is spread widely across 78 properties globally.
In terms of sponsorship, Audi has become the most dominant brand in the Volkswagen group, whereas both Hyundai and Kia spend highly on sport although Kia has a larger number of properties in its portfolio, with a particular emphasis on basketball.
USA BIGGEST SPONSORSHIP MARKET FOR CAR INDUSTRY
Not surprisingly, the USA is the biggest sponsorship market with a total estimated spend of $333m. Global sports properties follow on $255m with the UK in third place on $124m, although this is largely down to the Manchester United/Chevrolet deal, which is global in terms of activation objectives. Germany accounts for $90m of spend and interestingly China is next on $86m. As discussed, a significant portion of that investment is from western brands, with only joint venture company FAW-Volkswagen’s major basketball deal showing a major commitment from a domestic company.
OPPORTUNITIES FOR GOLF, TENNIS AND SAILING RIGHTS HOLDERS
The report shows that major manufacturers have identified the luxury car market as by far the most profitable. The sector is dominated by the trio of German brands: Audi, BMW and Mercedes as well as Lexus and Cadillac in the USA. However, Ford, Citroën, Hyundai and Alfa Romeo are developing models to compete in this space where Volvo and Jaguar are also minor players.