Automotive

Enterprise growth strategy for automotive wholesale & retail company

Enterprise growth strategy for automotive wholesale & retail company

Stagnating vehicle sales and a fierce price war characterize the automotive sales and marketing environment in established markets. These threats were significant for an independent, multi-brand automotive company, operating at the customer end of the value chain (wholesale and retail). With margins and profitability under pressure, growth became even harder to achieve and investments required by manufacturers were difficult to finance.

While the OEMs continued to push for vehicle sales and the implementation of CI/CD and process standards, the independent importer and retailer sought new opportunities — operational improvements plus new sales and service formats.

Challenge
To meet shareholders' expectations on profitability and growth without harming the OEM relationship, the company needed a new corporate strategy. A balance had to be found between the metrics used by manufacturers to measure compliance and success as well as the financial targets and owners' expectations.

The company needed answers to a number of strategic questions:

What are the major trends that will transform the wholesale/retail landscape?
In which areas do we need new business models?
Where can we grow and what is the expected rate of return?
Where can we achieve quick wins to create the case for change?
How aggressive can our targets be, and how do we approach the transformation process?

Approach
A.T. Kearney brought together automotive experts from around the globe, who identified 12 key trends, which will shape the wholesale and retail landscape over the next 5 to 10 years. In parallel, the team developed a value chain model to highlight the areas that would be most affected. In addition the value chain reconfiguration framework was applied to identify upcoming opportunities.

Based on these two groups of strategy pillars, the team developed a strategic roadmap. Five steps characterized the first 4 months.

Results
The company is on track with its key performance indicators (KPIs) and is growing in size and profitability at the targeted speed. Specifically, the company is focused on:

Growing EBIT more than 50% within the next 5 years
Strengthening its position in the value chain by increasing emphasis on value-creating elements
Improving its organizational capabilities to leverage knowledge and capture synergies between the brands
Adjusting its performance management system to create transparency and map the progress of the new strategy

One year after the strategy definition, A.T. Kearney is still involved in helping the board bring the strategy to life in key areas, including

Detailed strategy definition on “choice” strategy pillars, such as frameworks for Retail Excellence (see below) and Retail Strategy
Due diligence for potential acquisitions
Implementation support for a tracking tool