By Michael Shields, European Auto Correspondent
MONTREUX, Switzerland, June 29 (Reuters) - Pity the poor car maker without an alluring brand, because the divide between the haves and the have-nots is about to get even bigger, auto industry executives say.
European manufacturers of premium cars such as Porsche , BMW and Mercedes-Benz are speeding away from the mass car makers under attack from Japanese and Korean rivals, and the Chinese are looming in the rear-view mirror.
And the top-end companies are encroaching on small cars' terrain by launching scaled-down premium autos like the new BMW 1-series, the Mercedes A-Class or the Audi A3.
That means the brand names that fuel client demand are more important than ever before, executives said at an Automotive News Europe conference here this week.
"Brand, brand, brand is the name of the game," DaimlerChrysler head of corporate development Ruediger Grube chanted.
The biggest sin anyone could make at the German-American group, he said, would be diluting the prestigious Mercedes-Benz or luxury Maybach brand identity. He thus ruled out the idea of ever building Chryslers at a Mercedes plant or vice versa.
German luxury car maker Porsche -- whose shares have offered the sector's top total return over the past three years -- has a dream brand that offers the chance to charge prices and generate margins that rivals can only dream of.
"Two hundred kg of raw steel in a BMW is worth more than 200 kg of raw steel in a car from General Motors or another mass manufacturer. And 200 kg of raw steel in a Porsche is worth more than in the others combined," noted Martin Leach, the head of Italian sports car maker Maserati, part of Ferrari.
BRANDS ON THE BRAIN
"The remarkable thing is the focus on brands," one investment banker at the meeting said. "You would not have heard this 10 years ago."
At one stage, brands used to assure consumers that they were buying a solid car rather than a lemon. But with all car makers' focused on ensuring quality, brands have become even more of an emotional avenue to get people to buy.
But consumers are demanding more car for less money, putting pressure on manufacturers and suppliers who are trying to defend margins as slack demand and over-capacity weighs on prices.
"The consumer is more and more in the driving seat, and we have seen nothing yet," said Garel Rhys, the head of Cardiff University's Centre of Automotive Industry Research.
"There is nowhere for the inefficient to hide."
Even luxury car makers are feeling the pinch, with the premium they can charge compared with a mainstream model having halved over the past 14 years, he said.
He expected more mergers to help consolidate the sector, noting "all hell breaks loose" every 30 years as car makers go into an acquisition frenzy, with the next wave due in the 2020s.
Some thought Chinese car makers like Cherry, Geely or Great Wall would soon emerge as predators to help gain global reach.
Even Toyota -- the Japanese juggernaut whose superior quality ratings have won it loyal customers and kept its need for margin-eroding incentives low -- has to improve its brand, said Takis Anthanasopolous, chief operating officer of Toyota Motor Marketing Europe.
Brand awareness among its customers lags those of big European players, he said, even though it has stepped up marketing efforts and sponsored Formula One auto racing.
Its luxury Lexus brand has also struggled to unseat top European names like Mercedes and BMW, he added, noting it had to improve its retail network to make serious improvements.