Automotive inSIGHTS 1/2007 - Roland Berger

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4 | Automotive Insights | News Teaming up to exploit potential Automotive OEMs and dealers can achieve more if they work together Carmakers are dissatisfi ed with the performance of their sales organizations, dealers complain of dwindling sales and pressure on margins. So how can the two sides collaborate to deliver sales numbers that are acceptable to both? Roland Berger Strategy Consultants has identifi ed three potent strategies. 1. Lay a firm foundation for success To do so, both sides must be prepared to give each other insight into how things work "on the inside". Successful OEMs make top sales executives spend several days a year experiencing everyday working life at one of their dealers. Conversely, the managers of car dealers should also gain hands-on experience of manufacturers' sales planning and network development activities. The second step toward superior collaboration is to establish a sales planning process based on partnership. For OEMs, this means planning annual sales for individual market areas in line with realistic potential, and working with dealers to clarify how targets are to be met. Together they implement binding development plans. 2. Live brand messages While automakers manufacture vehicles, customers buy brands. The actual vehicle and its fi ttings and features is merely one way of injecting life into the brand, of making the brand tangible. Advertising and communication are another way to achieve the same goal. The most important thing, however, is that all staff who interface with customers must live out the defi ned brand values day in, day out. 3. Improve processes at the point of sale In eight out of ten cases, poor performance by dealers is what prevents cars from being sold. Professional dealer behavior is therefore the key lever to signifi cantly boost sales – apart from launching new models and expensive marketing campaigns. OEMs should there - fore help their dealers to concentrate on the most important processes. Sales promotion campaigns, for example, can be made more effective merely by planning, communicating and implementing them jointly. A new study ("Automotive Sales Champions", see right) will identify the levers for more successful cooperation between dealers and OEMs. Books & Studies Mastering Automotive Challenges The automotive industry is currently experiencing a period of wide-spread changes: the disappearance of traditional markets and customers, intensifying competition, increasing innovation and product complexity, and structural changes in the automotive value chain – to name just a few. Mastering Automotive Challenges provides comprehensive and practical guidance for managers, showing them how to tackle necessary action, benefi cial for day to day management. The key issues facing managers are laid out, followed by case studies which show how these challenges can be successfully overcome. Mastering Automotive Challenges is a must-read for any manager within the industry. Automotive Sales Champions Famous cars: 007‘s Aston Martin DB 5 They were sold by millions: The Aston Martin DB 5, gunmetal gray, fi tted with machine guns and ejection seat was a big success in Corgi Toys 1965 range of model cars. The driver made all the difference: Q gave the original car to 007 to help in his fi ght with "Goldfi nger". Since then, boys around the world think of the Astons as the ultimate in cool. In recent years Aston Martin launched an astonishing offensive of new models. The V8 Vantage, the V12 Vanquish S and the DB 9, heir of Sean Connery‘s car. This spring the fans of the British brand are eagerly expecting the new Vantage roadster. And again Aston Martin became the company car at MI 6 – the latest 007 is driving Aston Martin DBS, a thoroughbred sportscar, in "Casino Royale". Ultimately cool: 007 with DB5 The Automo tive Compe tence Center of Roland Berger Strategy Consultants together with IBM is conducting a study on excellence in sales. Questions looked at: How to improve operating effi ciency, how to exceed the expectations of customers and dealers, how to turn excellence into market share gains. Results are due out in May 2007. Interested in the book? Mail to dana_rehfuss@ de.rolandberger.com
Low Cost Cars | Automotive Insights | 5 Low cost cars: The early bird catches the worm A market study by Roland Berger Strategy Consultants found that production of entry-level cars will grow by four million units by 2012. Yes, you can do it! Renault's Dacia Logan was the fi rst model to show Western Europeans that it really is possible for them to build cars at a profi t in the low cost car segment. It defi nitely makes economic sense to take a closer look at this segment. A recent market study by Roland Berger Strategy Consultants found that annual production of entry level cars (A/B segments) will grow by four million units between now and 2012. Fresh demand is springing up not only in emerging markets such as China and India, but also in the richer western nations, where the cost of buying and running a car has signifi cantly outstripped income growth. Carmakers that res pond swiftly to this trend can look forward to signifi - cant market opportunities. Low cost cars are defi ned as automobiles that sell for under EUR 10,000 (or under USD 10,000 in the USA). The auto industry is currently witnessing developments that have already been experienced by the aviation, hotel and textile sectors. With the mid-range price segment shrinking, companies can only earn money on ex pensive premium offerings or in the low cost segment. Incumbent OEMs can rise to the challenge at the low end of the market by basing their strategies on three key strengths that we refer to as car, care and core. Car: Vehicles themselves must, of course, be adapted to market conditions. They must be based on shared global platforms and modules used in other models, must also have low cost features and be built at low cost locations. Care: Finance, insurance, repairs and maintenance, warranty fulfi llment and mobility guarantees – these and other services that are especially important for low cost vehicles allow established manufacturers to score over their rivals from emerging markets. Core: This term refers to the brands that OEMs have cultivated over decades – the core values that encompass the product itself (car) and the related services (care). Another advantage is the broad customer base that reinforces the brands of traditional OEMs, whereas automakers that originate from emerging markets are only now beginning to develop their brands and nurture customer loyalty. Making an acceptable profi t with vehicles in the low cost car segment requires a new and different approach and mindset for most incumbent OEMs. Our research shows six paradigms to make this strategy work: > Ensure independence from complex and costly corporate structures > Limit dependency on brands > Stick to basic functionality and don‘t overdo the features: "value for money" is the key > Operate a global low cost strategy in development, sourcing and production > Target markets such as China, India, Russia and Brazil, where market conditions and the "rules of the game" vary > Establish potential partnerships to cover all the core competencies required for a low cost car strategy, including leveraging shared (low cost) components and infrastructure. This is vital to keep a cap on costs Selecting the right target market and gaining an in-depth understanding of changing consumer behaviors and pre- Car costs vs. real wage index in Germany (%, base year 1999 = 100) 125 120 115 110 105 100 95 Car costs Note: Price index based on operating/purchase costs of passenger cars Source: German offi ce of statistics; Global Insight Wages 1999 2000 2001 2002 2003 2004 2005 Dacia Logan: Proves that European OEMs can build low cost cars, too
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Automotive inSIGHTS 1/2007 - Roland Berger

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