Badge engineering or rebadging is the application of a different brand or trademark to an existing product (e.g., an automobile) and subsequently marketing the variant as a distinct product. Due to the high cost of designing and engineering a new model or establishing a brand (which may take many years to gain acceptance), it is less expensive to rebadge a product once or multiple times than to create different models. The term is an oxymoron in that little actual engineering takes place.
The term originated with the practice of replacing an automobile's emblems to create an ostensibly new model. Differences may be confined to simply badges and emblems, or may encompass minor styling differences, as with cosmetic differences to headlights, tail lights, and front and rear fascias. More extreme examples involve differing engines and drivetrains.
Now common, Badge engineering is distinct from platform sharing as an automobile platform may be used with many different applications via actual engineering: such as using a single platform as the basis for sedan and sport utility vehicle model variations.
"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. The Chairman and CEO of the company, Charles W. 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. Production was stopped for two days so Nash emblems, hubcaps, and radiator shells could be exchanged on all unshipped Ajax cars. Conversion kits were also distributed at no charge to Ajax owners to transform their cars and protect the investment they had made in purchasing an automobile made by Nash.
A later example was Wolseley Motors Limited after it was bought out by William Morris. After World War I the "Wolseley started to lose its identity and eventually succumbed to badge engineering." 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."
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 GMC, and a Cadillac 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 no longer badged as Daewoos. Instead, 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.
In Japan, Toyota, Nissan and Honda used this approach to expand vehicle production by offering one car at multiple Japanese dealerships. Toyota took the Corolla, which was exclusive to Toyota Corolla Store locations and sold it as the Toyota Sprinter, which was exclusive to Toyota Auto Store locations. Nissan followed suit with the Nissan Cedric, and sold an identical bodystyle of the Cedric, called the Nissan Gloria, and sold the Cedric at Nissan Bluebird Store, while the Gloria was sold at Nissan Prince Store. Honda also pursued this marketing approach with the Honda Accord, sold in 1984 at Honda Clio locations and sold it as the Honda Vigor at Honda Verno locations. The difference to this method as opposed to the North American and European implementation of selling one product under different brand names with minor changes to exterior bodywork, the Japanese sold the same car under the same brand name, with a different model name.
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. Another example would include the Mitsubishi GTO/3000GT, that in the North American market, was sold as a Dodge Stealth.
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, or the joint venture of Mitsubishi and Chrysler resulting in the short lived Diamond-Star Motors .
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 Sprinter/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, GMC Yukon 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 brand compared to Chevrolet, while Cadillac was considered the luxury brand.
The business strategy of Volkswagen is to standardize platforms, components, and technologies, thus improving the firm's profitability and growth. For example, Audis uses components from their more pedestrian counterparts, sold as Volkswagen Group's mass market brands. As an effort to place Audi as a "premium" marque, Volkswagen introduces new technologies in Audi-branded cars before fitting them to mainstream products (such as the Direct-Shift Gearbox). Nevertheless, platform sharing is most "incestuous" at Volkswagen with the examples of the basic A platform serving the Golf, Jetta, New Beetle, Audi TT and A3, SEAT Leon and Toledo, and Škoda Octavia while the "top end" D platform includes VW Phaeton, Bentley Continental GT, and the Audi A8 in aluminum.
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 drivetrain and is based on the same platform as the Toyota Camry (and from the 2013 model year, on the stretched version used by the Avalon); the Lexus LX is an upgraded rebadge of the Toyota Land Cruiser, and the Acura TSX is a rebadge of the JDM Honda Accord.
Another notable examples is Ruf Automobile, which manufactures cars using the badge engineering method, but their method is 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. Because of this, Ruf becomes a popular substitute for Porsche for some toy model manufacturers and video game developers who are unable to acquire the rights to the Porsche brand.
Problems and controversy
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. For Toyota, "Camry's reliability and quality - and Lexus' dealership experience" helped the Lexus ES succeed in the market, but it reinforced negative connotation that Lexus vehicles being largely more upmarket Toyotas.
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. entered into a recession, the Big Three automakers discontinued brand divisions as a cost-cutting measure. General Motors discontinued the Pontiac models in 2010 (which was done earlier when the Oldsmobile brand in 2004), and Ford sold its Volvo division (which was previously a separate carmaker in its own right) 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 also 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.
Models produced under licence
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).