Badge engineering is an ironic term that describes the rebadging (that is, the replacement of the branding trademark) of one product (especially automobiles) as another. Due to the high cost of designing and engineering a totally new model, or establishing a new brand (which may take many years to gain acceptance), it is often more cost-effective to rebadge a single product multiple times.
The term derives from the trademark emblems fastened inside or onto the outside of the car. While differences were originally confined to the badges used on the model, more typically it involves slight styling differences, usually limited to the headlights, tail lights, and front and rear fascias. More extreme examples involve differing engines and drivetrains.
Badge engineering is now common, but it should not be confused with platform sharing within a company. Platform sharing is different from rebadging, as an automobile platform may be used in many different ways and applications, such as using a single platform to produce and sell a sedan and a sport utility vehicle. Two such products are different vehicles, whereas badge engineering involves the sale of essentially a single vehicle.
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"Probably the industry's first example of one car becoming another" occurred in 1926 when Nash Motors' newly introduced smaller-sized Ajax models were discontinued in 1926 after over 22,000 Ajax cars were sold during the brand's inaugural year.[1] Charles Warren Nash ordered that the Ajax models be marketed as the "Nash Light Six", a known and respected automobile brand that was the name of the company's founder.[2] Production was stopped for two days so Nash emblems, hubcaps, and radiator shells could be exchanged on all unshipped Ajax cars.[1] Conversion kits were also distributed at no charge to Ajax owners to protect the investment they had made in purchasing an automobile made by Nash.[3]
A later example was the Wolseley Motor Company after it was bought out by William Morris, 1st Viscount Nuffield. After World War I the "Wolseley started to lose its identity and eventually succumbed to badge engineering."[4] This was repeated with the consolidation of Austin Motor Company and the Nuffield Organisation (parent company of Morris) to form the British Motor Corporation. The rationalization of production to gain efficiencies "did not extend to marketing" and each "model was adapted, by variation in trim and accessories, to appeal to customer loyalties for whom the badge denoting the company of origin was an important selling advantage ... 'Badge Engineering', as it became known, was symptomatic of a policy of sales competition between the constituent organizations."[5]
Badge engineering often occurs when an individual manufacturer, such as General Motors, owns a portfolio of different brands, and markets the same car under a different brand. It may be done to expand the ranges of different brands in one market without developing completely new models, such as selling one car as a Chevrolet, a Pontiac, and a Saturn by GM in the United States. It may also be done to sell the same model in different regions and markets simply under a different name. For example, cars built by Daewoo, now owned by GM, are now only badged as Daewoos in South Korea and Vietnam. In other markets, they are now badged as Chevrolets. Similarly, in Australia and New Zealand, where Daewoo was unsuccessful, they are now rebadged as Holden models. The Australian car manufacturing industry experienced major badge reengineering during the 1980s and 1990s as part of the failed Button car plan.
Another way badge engineering may occur is when two separate companies trade off products that each brand lacks in its lineup. A prime example of this would be the first-generation Honda Odyssey being rebadged as an Isuzu Oasis because Isuzu needed a minivan, while the Isuzu Rodeo was rebadged as the Honda Passport because Honda had the need for an SUV.
Badge engineering may occur when one company allows another, otherwise unaffiliated, company to market a revised version of their product, as with Volkswagen marketing a re-skinned version of the Dodge Caravan or Chrysler Town and Country as the Volkswagen Routan.
Two different automakers can also pool resources by operating a joint venture to create a product, then selling it each as their own. For instance, General Motors and Toyota formed NUMMI. The vehicles produced from this venture (though not necessarily at NUMMI itself) included the Toyota Corolla/Chevrolet Prizm, and later the Toyota Matrix/Pontiac Vibe. Another example was the cooperative work between Volkswagen and Ford to create the VW Sharan, Ford Galaxy and SEAT Alhambra.
Badge engineering occurs in the luxury-type market segments. An automobile manufacturer will use a model from its mainstream brand, upgrade it with more features, technology, luxury and/or style, then market it as a more expensive model under a premium marque. The luxury models may have more than just cosmetic differences; they may receive improved engines and drivetrains.
An example of this is the Ford Motor Company taking its well known family sedan Ford Taurus, and selling it as the Mercury Sable, or a Ford Expedition being sold as the Lincoln Navigator. Another example is General Motors with its rebadged version of the Chevrolet Suburban, Tahoe as the Cadillac Escalade, and their rebadged version of the GMC Acadia and Saturn Outlook, the Buick Enclave. Buick and Oldsmobile were frequently considered GM's upmarket brands compared to Chevrolet and Pontiac, while Cadillac was considered the luxury brand.
Probably the most renowned example is Audi, a brand within the Volkswagen Group. While very few cars share the same bodywork, nearly all Audis use components from their more pedestrian counterparts, sold as Volkswagen Group's mass market brands. Although this has been a practice when Volkswagen first acquired Audi in 1964, through the last fifteen years the brand was shifted more up-market to compete with more luxurious Mercedes-Benz and BMW. As an effort to place Audi as a premium marque, Volkswagen frequently introduces new technologies in Audi-branded cars before fitting them to more mainstream products (such as Direct-Shift Gearbox).
Japanese carmakers have followed this practice of rebadging as well, such as Honda's Acura line, Nissan's Infiniti brand, and Toyota's Lexus marque, as the entry-level luxury models were based on their mainstream lineup. For example, the Lexus ES shares the same drivetrain and is based on the same platform as the Toyota Camry; the Lexus LX is an upgraded rebadge of the Toyota Land Cruiser, and the Acura TSX is a rebadge of the JDM Honda Accord.
Ruf Automobile manufactures cars using the badge engineering method, but their method is very unique compared to usual badge engineering methods. They build cars using their own-made parts instead of simply putting the badge. Examples of cars building in this method are CTR Yellowbird, CTR2, RGT and eRuf Model A, which are based on different generations of Porsche 911 series.
Although intended to save development costs by spreading design and research costs over several vehicles, excessive badge engineering can be problematic if not implemented properly. Having multiple car brands can greatly increase selling cost, as each brand must be marketed separately and often requires its own dealership network. Badge engineering can also hurt overall sales by resulting in "cannibalism" between two or more brands owned by the same company, by failing to develop a distinct image for each brand, or by allowing the failure of one version of a model to carry over to its rebadged "siblings." The failure of the short-lived Eagle brand sold by Chrysler is often attributed to it being crowded out by the company's other more established divisions and the failure to effectively incorporate the new marque into Chrysler's dealer network.
Origins of General Motors' badge engineering dates back to the early 1970s when the Chevrolet Nova compact was rebadged by the upscale Buick Apollo (Skylark after 1975), Oldsmobile (Omega), and Pontiac (Ventura II and Phoenix) divisions as entry-level cars. By the late 1970s, GM's downsized B, C, and D platform cars set the standard of the inevitable when badge engineering and platform sharing were fused together as a means to trim excess production expenditures - similar-looking bodystyles with distinctive appearances which was a trend throughout the 1980s. This trend continued with subsequent platforms from the J-car to its redesigned FWD full-size sedans. The ill-received Cadillac Cimarron is one of the most widely-cited examples of problems with badge engineering. The car was essentially identical to the Chevrolet Cavalier save for cosmetic differences, which resulted in poor sales, as the company found few buyers willing to pay nearly twice as much for a car that offered little more than the Cavalier. This resulted in damage to the Cadillac brand image. Other manufacturers have given badge engineered cars distinct branding and style, high-quality interior materials, wide range of convenience features, and performance powertrains, as these are key to distinguishing them from mass market equivalents and making these appeal to consumers; successful luxury cars following this formula include the Lexus ES, Acura TL, and Audi A3. [6] [7][8]
The Lincoln Navigator, derived from the Ford Expedition, proved very successful. However, the Ford Explorer-based Lincoln Aviator failed. The fact that the Aviator was virtually identical to the Navigator in all regards but size made it difficult to generate attention among potential buyers, and the Mercury Mountaineer had already proved sufficient to cater to buyers wanting a slightly more upscale alternative to the Explorer.
As the U.S. auto industry continues to flounder, discontinuing or merging one or more brand divisions has been floated as a cost-cutting idea the Big Three could implement. Some in the industry had, for example, suggested that General Motors discontinue its Buick and/or Pontiac lines (which was done earlier when the Oldsmobile brand was discontinued in 2004), and that Ford sell its Volvo division, which was previously a separate carmaker in its own right. GM phased out the Pontiac brand in October 2010, while Ford in March 2010 sold Volvo to the Chinese manufacturer Geely Automobile (after it had sold its other luxury brands of Jaguar, Land Rover, and Aston Martin). Its Mercury brand was phased out in December 2010.
In Indonesia, the Timor, derived from the South Korean Mazda 323-based Kia Sephia, proved very controversial. The fact that the Timor was not assembled in Indonesia, rather, it was imported completely built-up, stirred up annoyance among car companies, especially Toyota, which were producing many vehicles in the country.
A variant on rebadging is licensing models to be produced by other companies, typically in another country. One example of this is the British Hillman Hunter, which was license-built in Iran as the iconic Paykan, as well as Naza, building vehicles under license from Kia and Peugeot (Naza 206 Bestari).