Automobile Manufacturing

Our Approach

In order to meet the special demands of the automobile industry, Simon-Kucher & Partners founded its Automotive Competence Center in 2000. In numerous projects for clients in the automotive industry, we have answered the questions above, made recommendations, and created the decision-making principles needed to solve problems. It is nearly impossible to get a grip on the "value" element with classical marketing tools. Our extensive experience in the automobile industry has provided us with the know-how needed to develop specially customized analysis tools.

We use proven techniques of indirect questioning such as Conjoint Measurement (ACA, CBC, CVA) and decision support systems designed for each specific problem. The latter are made available to the client on request as permanent marketing tools. The systems we develop help identify the optimal sales incentives for servicing vehicles throughout their life cycles. For more detailed information, please request the Automotive Competence Center's brochure.

Challenges for the industry

After years of growth and despite a good level of capacity utilization, the automobile industry in Europe will be confronted with stagnant or even shrinking markets in the future. Nevertheless, most manufacturers continue to strive for terrific growth, which can only be achieved by increasing market share in this type of destructive competition. In general, progress has been made over the last few years in the area of cost efficiency.

That potential has largely been exhausted. However, market potential has never been fully exploited. Purchasing decisions are being made more frequently on the basis of "soft" factors such as brand or design. Any of the product's purely technical competitive advantages are short-lived because competitors are ever quicker to close the gap. Increasingly tighter markets and ambitious volume goals are forcing manufacturers to employ sales incentives on a greater level. On average, 15-18% of the vehicle's list price is used today for this purpose. The trick is to implement existing financial resources very carefully and as efficiently as possible.

When combined, the circumstances described above present an enormous potential danger to the profits currently being realized by most manufacturers. It is very tempting to tighten the screws on prices in order to achieve target quantities, but this would set a downward price spiral in motion that would ultimately damage the entire industry. These problems have a particularly explosive effect against the backdrop of the euro, with its price transparency and pressure to harmonize prices.

Solutions through Consulting Services

The right marketing decisions must be made in order to operate successfully in this highly competitive market. Perceived customer value plays an even greater role here leading to many important questions. Some of the key issues to consider will be:

• What are the decisive factors in the purchase decision for a car?
• Which of the following factors (products, services, sales methods) should be improved or further developed in order to increase value-to-customer as effectively as possible?
• What is the customers' willingness-to-pay for these improvements / developments (ideal basis for valid target costs)?
• How does the price-sales ratio look for automobiles today and in the future (by country, market segment etc.)?
• What are the price elasticities of model series and individual models?
• What is the optimal price positioning for the entire brand, for model series and for individual models given the objectives being pursued (profit and/or volume)?
• What does our brand stand for? Where does the customer see us compared to the competition? Is it necessary to reposition ourselves? Is it even possible?
• What is the optimal brand strategy? Can a brand premium be achieved in the market? How high is this premium?
• What is the optimal difference in price between similar brands, model lines or different engine types?
• Can a price premium be charged for a particular body type (station wagon, convertible, coup etc.)? If so, how high should it be?
• How great is the internal cannibalization in reaction to our price or product measures?
• What volume is gained from / lost to the competition through our price measures?
• What is the best strategy for options (standard equipment and/or packages)? What is the optimal price positioning for them?
• What is the best service strategy? How does the optimal price positioning look?
• What is the best spare part strategy? How does the optimal price positioning look?
• How does the optimal euro / international pricing strategy look? Is a price corridor necessary? If so, at what price level and corridor width?

go to the top ...