Volkswagen & Hyundai Play “Who’s the Sponsor”

 

South Korean car manufacturer Hyundai and German car manufacturer Volkswagen find themselves at odds recently following a Brazilian TV advertisement by Hyundai.  Volkswagen, since the Fall of 2009 has been the exclusive automotive partner to the Brazilian National Team while Hyundai has been a major sponsor of FIFA since the 2002 World Cup co-hosted by Japan and Korea.

[youtube http://www.youtube.com/watch?v=kdi8ay9Lld8?rel=0]
Their respective sponsorship agreements define the dispute over the ‘Hexagarantia’ TV spot.  The advertisement features a Hyundai promotion whereby if the Brazilian National Team wins a record sixth World Cup title, then Hyundai will extend their standard five year warranty into a 6 year warranty for any Hyundai cars sold between January 1st and July 14th of this year.

Volkswagen has now sought clarification from Brazil’s national federation, the CBF, prompting the World Cup hosts to contact Hyundai directly, requesting the South Korean car giants to pull the ‘Hexagarantia’ ad immediately.

It has been a week since the CBF made the intellectual property complaint and Hyundai’s website for the promotion is still up and running with the video still up on youtube. With so much money involved through both companies it’s not surprising that Volkswagen is taking this issue very seriously.  Beyond the fact that they have $30 million invested over 5 years in the partnership with the Brazilian national team, they have invested billions in building their brand in Brazil evidenced by the fact that their Gol model  has been a 26 year consecutive best-seller. Combine that with the fact that VW is Brazil’s largest auto manufacturer as well as the countries biggest automotive exporter and you have what appears to be a very effective corporate strategy.

Naturally with such a high market share in the South American country, seeing an infringement on a major, if not the biggest sports sponsorship agreement among their marketing properties, would force an immediate response.

On the other side of the coin, Hyundai is a major World Cup sponsor meaning that it is one of the few companies able to leverage World Cup logos, images, mascot, trophy etc and it pays a hefty price for the privilege. Volkswagen may pay $30 million over 5 years, but Hyundai pays that much each year for the FIFA sponsorship rights

Clearly both competitors have a vested interest in both the region and the upcoming World Cup and neither seem likely to simply concede defeat on this matter.  An interesting detail in the ad is that technically Hyundai does not use a CBF logo or name, neither does it use any images or likenesses of Brazilian national team members past or present. What it does do is use the Brazilian national team performance in the World Cup in conjunction with a promotion obviously intended to boost sales over a specified period of time.

This may seem like a gray area, but technically the performance of the team could be interpreted as a product of the team, falling under the intellectual property belonging to the CBF which Volkswagen, as previously established, has the sponsorship agreement on.

Despite this, in the ad the Brazilian national team is being leveraged in conjunction with its World Cup performances, does this mean Hyundai’s agreement supersede Volkswagen’s when two agreements overlap?  It seems relatively easy and simple to say no based on the facts so far, but what about the fact that almost every national team has an automotive sponsor? Is it out of the realm of possibility that federations have similar caveats in their contracts like Volkswagen’s with Brazil, in that “the team will travel on a Volkswagen coach.”?

If this is the case then how does Hyundai’s World Cup Sponsorship trumps those agreements when they provide transportation for all the team buses for the tournament including promotions for these buses?  The logical argument is that Hyundai’s sponsorship deals with the implementation of transportation during the events placing the applicability of the singular automotive sponsorships outside of tournaments.

It seems ironic that this kind of intellectual property dispute is occurring between two massive automotive manufacturing firms rather than smaller guerilla-marketing based firms. Vicente Rosenfeld, FIFA’s consultant responsible for brand protection, has had to do more than 30  events across Brazil to explain the marketing rules.  Rosenfeld explains that”FIFA is asking for fair play: a clean game inside and outside the fields.”

Has Hyundai played a clean game with Volkswagen or have they crossed the line?

Reporting on the business side of the world's game.