The
Automotive Industry's
Last Pot Of Gold
Delivering Sales Excellence in
Challenging Markets
Pan-European Automotive
Sales Excellence Study 2007
June 2007
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
1
Contents
Page
A. Car distribution today – The industry's last pot of gold
3
B. Joint Roland Berger & IBM Study – Pan-European survey of the sales &
distribution landscape
11
C. Selected Results – Current situation, opportunities and hurdles
16
D. Implications for stakeholders – How to lift the pot of gold
31
E. Outlook – The road ahead
59
F. Survey team – Roland Berger Strategy Consultants &
IBM GBS Consultants
64
This document was created for the exclusive use of our clients. It is not complete unless supported by the underlying detailed analyses and oral presentation. It must not
be passed on to third parties except with the explicit prior consent of Roland Berger Strategy Consultants or IBM GBS Consultants.
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
2
A.
Car distribution today –
The industry's last pot of gold
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
3
2.5 m people in Western Europe market, sell and service new and
used cars
Car Distribution in Western Europe, 2006
• 2.5 m people in marketing, sales, distribution, service etc.
• 16 major OEMs with 33 brands and 329 manufacturerowned NSCs/importers
• > 74,300 sales and 97,900 service outlets
• > EUR 92 bn sales & distribution cost (new cars only)
• 16.7 m new and 32.0 m used cars sold in 2006
• 5.2 m leasing/financing contracts closed by Captive
Finance companies
• 205.1 m cars on the road
Source: Datamonitor; J.D. Power; Company Reports; Roland Berger analysis; IBM GBS Consultants Analysis
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
4
Up to 30% of a car's retail price are spent for sales, marketing and
distribution
Breakdown of sales & distribution cost [%]
100
2
18
80
Sticker/
List Price
(MSRP1))
Reductions
Dealer
Margin
2
Turnover Personnel
Vehicle
Manufacturer
3
Marketing
30%
1
Guarantee
and Warranty
1
3
Cost of
Stock
Distribution
70
Cost of
Goods
1) MSRP = Manufacturer’s suggested retail price
Source: Institute for Automotive Industry (Prof. Dr. Seeba, UAS Braunschweig)
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
5
Sales and distribution cost amount to EUR 92 bn p.a.
Sales related cost estimate for new cars, Western Europe
EUR 18,400
weighted avg. net MSRP1) new car
30%
EUR 5,520
for sales, marketing &
distribution
X
16.7 m cars
sold in
Western Europe 2006
West-European
top-selling models 2006
['000 units]
Renault Clio
70%
455
Peugeot 207
425
Opel Astra
415
VW Golf
409
Ford Focus
404
=
EUR 92 bn p.a.
New cars only
• Dealer margin
• Discounts/incentives/
reductions
• Labor
• Marketing
• Distribution
• Stock
• etc.
1) MSRP = Manufacturer’s suggested retail price
Source: J.D. Power; Roland Berger Analysis
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
6
Stakeholders are still not satisfied with the current state of
automotive sales & distribution and finance
CUSTOMERS
DEALERS
OEMs
CAPTIVE
FINANCE
• Customer satisfaction gradually increasing
• Customer loyalty decreasing
• Dealer satisfaction stable/slowly decreasing
• Collaboration with OEMs unsatisfactory
• Profitability unattractive
• Not satisfied with their sales operations
• Adversative rather than cooperative relation to dealers
• Program results behind expectations
• Lack of integration with OEM at the Point of Sale
• Profitability endangered with new competitors
entering the market, especially universal banks
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
7
Customer satisfaction gradually increasing – However, European
brands need to catch up with Japanese competitors
Customer satisfaction with the buying experience, Western Europe, 2002-2006
[CSI Index Western Europe]
844
POSITIVE
EXCEPTIONS
842
831
831
817
822
825
825
820
816
797
807
787
835
786
800
791
784
788
Industry
average
Europe
767
2002
2003
2004
2005
2006
Source: NCBS; J.D. Power
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
8
Dealer satisfaction on average stable/slowly decreasing
Dealer satisfaction with OEM, Germany, 2003-2007 [DSI Index Germany]
POSITIVE
EXCEPTIONS
2,24
2,32
2,35
2,36
2,37
2,43
2,38
2,62
2,74
2,47
2,42
2,74
2,76
2,82
2,81
2,87
2,85
2003
2,92
2,90
2,85
2004
2005
2006
Industry
average
Germany
2007
Source: Schwacke Markenmonitor
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
9
Despite indisputable progress, all market players see significant
areas for improvement in their sales operations
How do you rate the performance of your sales operation?
A
B
Excellent
Good
C
D
Satisfactory Sufficient
E
Insufficient
New car sales (B2C)
New car sales (B2B/fleet)
Used car sales
Financial service sales
After sales, parts &
accessories sales
OEMs
Retailers
Captive Finance
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
10
B.
Joint Roland Berger & IBM Study –
Pan-European survey of the sales &
distribution landscape
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
11
Our pan-European study addresses the key performance levers in
automotive sales and after sales
Study's focus
COST DOWN
How to improve operating efficiency?
• OPPORTUNITIES
SATISFACTION UP
How to exceed customer and dealer
expectations?
• HURDLES
SALES UP
How to turn excellence into market
share gains?
• KEY SUCCESS FACTORS
• KEY LEVERS
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
12
Western Europe's key automotive players provided their insights
Study participants include
Vehicle Manufacturers1)
Audi
BMW/Mini
Alfa Romeo
DaimlerChrysler
FIAT
Honda
Ford
Jaguar
Kia
Land Rover
Mitsubishi
Nissan
Opel
PSA
Renault
SEAT
Suzuki
Volkswagen
Wholesale/Retail1)
Captive finance
AVAG Holding
DaimlerChrysler Bank
DaimlerChrysler
DaimlerChrysler
Financial Services
Denzel
BMW Bank
D'Ieteren
BMW Financial Services
Gottfried Schulz
VW Leasing GmbH
Grill Gruppe
GMAC
ifas
Niedermair&Reich
Analysts/Institutions
Pon
International Car
Distribution Programme
Porsche Holding
J.D. Power
United Auto
Weller Gruppe
QUADIS Group
JPMorgan
Deutsche Bank (London)
Zentralverband
Deutsches
Kraftfahrzeuggewerbe
Sal. Oppenheim
1) Some participants expressed the wish not to be listed. Their input, however, is included in the study's results
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
13
Our study's findings are highly representative
Study's market coverage
Participating brands …
Audi
BMW/Mini
Alfa Romeo
DaimlerChrysler
FIAT
Ford
Honda
Jaguar
Kia
Land Rover
Mitsubishi
Nissan
Opel
PSA
Renault
SEAT
Suzuki
Volkswagen
… represent more than
80%
71%
64%
43%
of major passenger car
brands offered in
Western Europe
of Western Europe's
new car sales (2006)
of Western Europe's
branded sales and
service outlets
of Captive Finance new
contract volume in
Western Europe
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
14
Our findings are based on senior management input
Top executive participants
Participating brands …
… represented by
VEHICLE
MANUFACTURERS
•
•
•
•
•
•
WHOLESALERS/
RETAILERS
• Member of the Board
• Owner/Managing Director
• President/ General Director
CAPTIVE FINANCE
• Managing Director Leasing Worldwide
• Vice President Sales & Marketing Europe
• Chief Executive Officer
ANALYSTS/
INSTITUTIONS
•
•
•
•
Managing Director and COO
Vice President Sales
Director Corporate Strategy
Director Network Development & Direct Sales
Director Marketing/Brand Director
Director Aftersales
(London)
President
Chairman
Executive Vice President
Senior Vice President World Operations
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
15
C.
Selected Results –
Current situation, opportunities and hurdles
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
16
Our study investigated automotive sales excellence along three
dimensions
1
The Situation
PANEUROPEAN
AUTOMOTIVE
SALES
EXCELLENCE
STUDY 2007
2
The Opportunities
3
The Hurdles
• Sales performance
• Benchmarks
• Top issues/priorities
• Cost reduction
• Sales increase
• Key levers for performance
improvement
• Communication/Change
Management
• Cost management
• Transparency/data availability
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"We plan the perfect sales process
to the very last detail – but then we
do not apply it. Incredible."
VP Sales Strategy, Volume Car Manufacturer
"One cannot imagine how much
energy is wasted."
MD of a multi-brand dealer group
"We need to come to our senses –
this volume pressure is madness.
Chairman of the Board, Car Retailing Group
SITUATION
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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1
SITUATION
Particularly emerging brands see significant improvement
potential in their own sales performance
Looking at the current state of your sales operation, how do you rate its performance?
Premium, Volume and Emerging Brands
A
B
C
D
E
Excellent
Good
Satisfactory
Sufficient
Insufficient
New car sales
(B2C)
New car sales
(B2B/fleet)
Used car sales
Financial service
sales
After sales, parts &
accessories sales
Premium Brands
Volume Brands
Emerging Brands
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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1
SITUATION
Sales excellence is mainly determined by dealer competence in
sales and service
How would you define "sales excellence" for automotive sales?
DEFINITION (all respondents)
Dealer competence (sales/service)
53%
Customer satisfaction
40%
Profitable business management
38%
Professional CRM
32%
Stable end-to-end sales processes
26%
End-to-end brand perception
23%
Dealer satisfaction
Optimized marketing mix
OEM leadership
17%
6%
2%
Note: Multiple answers possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
20
1
SITUATION
Retail network optimization viewed as key lever to significantly
improve sales performance
What would you improve/change within the sales network if you had no limitations/
political restrictions?
DESIRED CHANGES (all respondents)
Optimize retail network
49%
Increase OEM leadership/influence
27%
Increase freedom for dealers
27%
Price policy and cost management
Improve end-to-end brand perception
24%
16%
Strengthen customer orientation
13%
Improve dealer qualification
13%
New IT infrastructure
7%
Motivation of staff
7%
Rate of innovation
4%
Note: Multiple answers possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
21
1
SITUATION
Toyota and BMW perceived as benchmarks in terms of quality of
sales operations today
Which car manufacturer today would you rate as benchmark/best practice in Europe
(not considering your own brand)?
DEFINITION (all respondents)
Comments
1
Toyota
2
BMW
3
Audi
4
Porsche
11%
Mercedes-Benz
11%
5
6
51%
32%
19%
Lexus
5%
Mazda
5%
Volvo
5%
Fiat
3%
Ford
3%
Jaguar
3%
Opel
3%
Renault
3%
Subaru
3%
• Premium brands
widely perceived as
best practice
• Toyota’s overall
success influences
rating of its sales
organization
Note: Multiple answers possible; alphabetical listing of same rank
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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SITUATION
1
Toyota and Audi perceived as the brands with the greatest
potential to become benchmarks in Automotive sales
Which car manufacturer/brand has the greatest potential to "revolutionize" automotive
sales by 2015?
DEFINITION (all respondents)
1
Toyota
2
Audi
3
Mercedes-Benz
12%
Volkswagen
12%
4
47%
21%
Alfa Romeo
6%
BMW
6%
Kia
6%
Lexus
6%
Porsche
6%
Note: Multiple answers possible; alphabetical listing of same rank
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"Of course we can reduce sales cost
by 25% – the manufacturers have
allowed to really bloat their sales
administrations."
MD/Owner of European Dealer Group
"Which manufacturers are the least
profitable? Those with the strongest
intra-brand competition."
VP Network Strategy Premium Brand
OPPORTUNITIES
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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2
OPPORTUNITIES
Our study delivered the key levers to improve sales performance
and reduce cost
KEY LEVERS
SALES UP
+11%
• Qualification of dealers/salespeople
• Cooperation of sales, after sales
and captive finance
+38-383 m EUR EBIT
Substantial EBIT/EBT increase for
both OEMs and Retailers achievable
+24-123 k EUR EBT
COST DOWN
-12%
• Professional incentive/discount
management
• Incentive reduction through
limited intra-brand competition
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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2
OPPORTUNITIES
SALES UP
Staff qualification, aligned processes and local market knowledge
are key to improve sales
What are the top-3 reasons for unexplored sales potential?
REASONS (all respondents)
Qualification of dealers/passive sales people
59%
Unaligned/unprofessional sales and CRM processes
31%
Lack of market and target group knowledge
25%
Lack of organizational alignment
19%
Eroding brand image and loyalty
19%
Wrong product and pricing
16%
Frequent changes in strategy and organization
16%
Cross selling potentials unexplored
16%
Lack of controlling
13%
Other
6%
Note: Multiple answers possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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2
OPPORTUNITIES
SALES UP
Salespeople's qualification perceived as key to successful sales
management by OEMs …
What are the most important levers for sales management?
OEMs
Salespeople qualification
72%
Cooperation of sales, captive finance and after sales
56%
Closure of open points
56%
44%
Integrated CRM and Lead Management systems
33%
Used car re-marketing
28%
Service staff qualification
17%
Salespeople’s Financial Service know how
Promotion program communication
11%
Collaboration between OEM, wholesaler and retailer
11%
Up- and cross-selling
6%
Note: Multiple answers possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
27
"The difference between a successful
program and a failure is simple:
communication, communication,
communication!"
Managing Director of an OEM Leasing company
"We do not have KPIs for cost controlling on the sales side – we are solely
steered by volume figures. We do not
even have transparency about our
bottom line results."
Manager Network Planning at a German OEM
HURDLES
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
28
3
HURDLES
Poor change management and lack of transparency identified as
main hurdles
POOR
CHANGE
MANAGEMENT
MAIN
HURDLES
• Change Management principles not
(always) applied
• Importance of timely, exhaustive and
frequent communication often neglected
IMPEDING
ACHIEVEMENT
OF REAL
• Reliable controlling data
SALES
EXCELLENCE
LACK OF
TRANSPARENCY
• External benchmarks
• KPI tracking and communication
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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3
HURDLES
All stakeholders emphasize the importance of dedication, culture
and trust …
What are the key human/cultural factors that affect sales performance?
ASSESSMENT of TOP 6 LEVERS (all respondents)
Dedication to customer satisfaction of every single
person in the sales network (OEM-Wholesale-Retail)
76%
Motivate employees for continuous improvement
45%
Live a culture of trust for cross-organizational
teamwork and networking within your organization
Ability to gain and maintain commitment within your
organization
Ability to react fast on shifting market requirements
Live a culture of trust for cross-organizational
teamwork and networking with your retailers/OEMs
30%
27%
24%
21%
Note: Multiple answers possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
30
D.
Implications for stakeholders –
How to lift the pot of gold
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
31
The case for change is obvious
All stakeholders demand improvement
The benefits are evident
OEMs
• Better performing sales organizations
• Better brand experience on POSlevel
• Lower distribution cost
• Higher sales volumes
• Increased customer loyalty
Dealers
• Higher margins and higher volumes
• More entrepreneurial freedom
• Higher profitability
• Higher investment return
• Increased customer loyalty
Captive
Finance
• Closer collaboration with sales
• Better partnering onPOS-level
• Higher market shares
• Increased profitability
Customers • More reliability and convenience
• Good cars and services at
reasonable prices
• Better brand experience
• Better dealer experience
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
32
Volume pressure and intra-brand competition destroy the
profitability equation
Strategic shortcomings of retail networks
Intra-brand
Competition
Dealer
Profitability
Dense Dealer
Networks
Customer
Retention/
Acquisition
Production
Push
Investment/
Improvement
Ability to
hire & retain
Top Talent
Dealer
Satisfaction
POSPerformance
Marketing
cost
Volume pressure
Qualification cost
No. of programs
Distribution cost
Collaboration
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
33
Our study's participants call for action
Two options for car distribution – which one's yours?
OPTION 1 – CONTINUE
OPTION 2 – SHAPE
• We're working on it, it just takes time
• We will really reduce intra-brand competition
• Bold moves only cost too much, the network
issue will solve itself over time
• We will jointly improve network profitability
• We will prevent the worst and our great cars
will make the difference
• We will develop a long-term strategy and will
stick to it
• We will bring our sales network to a higher
level
• ...
• ...
Continuation of the decline
Opportunity knocks
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
34
"We've got to change drastically. We
have such exciting products but so
outdated sales organizations."
Managing Director, Dealer Group
"You want automotive sales
excellence? Go get a good dealer
body, a loyal group of sales
managers and an excellent training
process."
EVP Market Research Provider
ELEVEN PRINCIPLES TO ACHIEVE
SALES EXCELLENCE
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
35
To improve network performance and maximize joint value
creation stakeholders should follow 11 key recommendations
Key levers to improve performance
SALES
STRUCTURE
1
Optimize your retail network !
2
Clean up your wholesale structure !
PEOPLE
3
Collaborate within the network !
4
Remove functional silos !
5
Qualify your retail network to the next level !
6
Know your customers (current and potential) !
7
Get to grips with incentives !
8
Live the brand !
9
Market used cars !
10
Don't forget the other half (fleet) !
MARKET &
CUSTOMER
ORIENTATION
SEGMENTS
Dare to
follow your
11
long-term
strategy !
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
36
" The best way to reduce cost? Sell
OEM owned branches to professional
dealers. Instead OEMs are trying to
keep dead bodies alive…"
CEO, Multi-brand dealer
"We simply have too many dealers.
That drives incentives and destroys
the profitability equation."
VP, Automotive Service Provider
"We need the soft pressure of the OEM
to bring competing retailers together
and to force them to their luck…"
Chairman, Car Retailing Group
PRINCIPLE 1:
OPTIMIZE YOUR RETAIL NETWORK!
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
37
PRINCIPLE 1: OPTIMIZE YOUR RETAIL NETWORK!
Network optimization will ensure higher returns
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers &
Captive
Finance
• Jointly develop local market strategies to
ensure dealer – profitability and higher
standards of brand representation
OEMs
• Establish moderation teams to resolve local
intra-brand issues
• (Emerging brands) resist the volume pressure
and take the opportunity to establish perfect
networks
Dealers
• Reduced intra-brand
competition
• Reduced incentive
spending
• Ensure a strong local, systematic market
development and use your entrepreneurial
opportunities
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
38
"We have so many structural
redundancies and waste so
much money"
VP Sales Strategy, Volume Maker
PRINCIPLE 2:
CLEAN UP WHOLESALE STRUCTURE
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
39
PRINCIPLE 2: CLEAN UP WHOLESALE STRUCTURE!
Re-organize your resources to improve business performance
WHAT STAKEHOLDERS SHOULD DO
OEMs &
PanEuropean
Dealer
Groups
• Streamline your wholesale
organization and
infrastructure
• Improve coordination of
activities across countries
and between regions
• Enable systematic market
development
• Strengthen customer and
local focus to provide a
better level of service to
customers
Re-organize
wholesale
structure to
increase
market impact
and efficiency
of your sales
operations
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
40
"There's a giant wave of insecurity
concerning the OEMs' dealer
policies – and that's why
investments are held back."
MD, Multi-Franchise Dealer
"It's 'us' and 'them' – not 'we' or
'together'. We're great at blaming
each other. But this way, we all
loose."
VP Sales, Volume Manufacturer
PRINCIPLE 3:
COLLABORATE!
Find common ground for an honest, trustful cooperation
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
41
PRINCIPLE 3: COLLABORATE!
Successful collaboration is based on mutual trust
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers &
Captive
Finance
• Go from "what should they do?" to "what can we do
together?" to be more successful
• Produce a joint plan for growth for the next five years
• Exchange personnel part-time to improve mutual
business understanding
OEMs
• Treat dealers as preferred partners
• Communicate with dealers as you should/would with
end customers
• Increase continuity and reliability for dealers
Dealers
• Do not mistake every OEM initiative as interference
• Take planning seriously (have a plan!) – gut feeling is
not enough for challenging markets
Joint basis for an
honest, trustful
and productive
collaboration
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
42
„Cooperation between new car
sales, used car sales and aftersales
is very important"
CEO, Retail Group
"We simply do not understand each
other – that's the reason for 90% of the
problems between the OEM and
Financial Services"
VP, Leasing Provider
PRINCIPLE 4:
REMOVE FUNCTIONAL SILOS!
Change to better collaboration between Sales, After Sales and Finance
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
43
PRINCIPLE 4: REMOVE FUNCTIONAL SILOS!
Teaming across units and processes is the only way to be
competitive in the future
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers &
Captive
Finance
• Go from "optimizing silos" to "overall optimizing"
• Develop a customer oriented integrated approach
for selling, financing and service across all units
• Systematically exploit customer lifetime value
OEMs
• Manage business across silos
• Change the incentive system accordingly
Dealers
• Ensure adequate customer care across sales,
service and along the car's lifecycle
• Establish integrated Workplaces
Captive
Finance
• Support the customer across life-time (new car,
used car, leasing …)
• Develop offerings together with sales and services
10-20% sales
increase
through
exploitation
of crossselling
potential
possible
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
44
"We need to teach, train and coach
our dealers. That's the key lever to
improve sales and that's our priority
# 1 for the next years"
VP sales, volume OEM
"It's a leadership issue. Look at the
managerial quality of the owner or
the MD of the dealer. Improve It. The
rest is easier."
Senior manager network development, Premium OEM
PRINCIPLE 5:
QUALIFY YOUR RETAIL NETWORK
TO THE NEXT HIGHER LEVEL
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
45
PRINCIPLE 5: QUALIFY YOUR RETAIL NETWORK
Qualification programs should be designed around dealer
processes – and with dealer participation
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers
OEMs
Dealers
• Jointly (!) design pragmatic programs with
measurable (!) results and long-term impact (!)
• Reduce the number of programs and focus on sales/
service managers
• Do not "push" one program after another, let dealers
"pull" what they need
• Be dealer specific – because "one size fits all" actually
does not
• Test your programs before roll-out
• Focus on key processes
• Insist on measurable results and track KPI's
• Focus on on-the-job coaching instead of classroom
settings
• Systematic local
market
penetration
ensured
• Order intake up
10%
• Customer
satisfaction up
• Dealer
satisfaction up
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"A good salesperson? 12 good
customer contacts a day produce 12
sold cars a month"
Owner, multibrand dealer group
"Only very few Dealers actually track
the basic KPI's for sales. Volume,
yes – but the quality of the customer
database? Forget it."
Network development Manager, volume brand
PRINCIPLE 6:
KNOW YOUR CUSTOMERS
(current & potential)
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 6: KNOW YOUR CUSTOMERS
An integrated, high quality customer database is the key lever to
lift unexplored sales potential
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers
• Collaborate to ensure top customer database quality
• Establish mandatory sales controlling activities on
retail level
• Incentivize data quality
OEMs
• Publish dealer performance internally to establish an
objective and independent benchmark
• Focus on sales managers' leadership capabilities
Dealers
Systematically
increase sales
performance
• Measure the key sales processes and the quality of
your customer database(s)
• Make it known that you are tracking the key indicators
and focus on contact-data and conversion rates in the
sales funnel
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"We have way too many sales
programs – we can't count them, we
can't manage them and they don't
reach our customers"
CEO, Captive Finance Provider
PRINCIPLE 7:
GET TO GRIP WITH INCENTIVES!
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 7: GET TO GRIP WITH INCENTIVES!
Create the base for a trustful cooperation to define efficient,
customer oriented incentive programs
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Wholesalers &
Dealers &
Captive Finance
• Collaborate actively in the development and
implementation of incentive programs
• Exchange mandatory data and information on
incentive programs, performance and customer needs
OEMs
• Define and follow a clear incentive strategy across
lifecycle and functions
• Reduce high number of incentive programs and
simplify the administrative implementation
• "Don't just give away money"
Dealers
• Measure the incentive performance on customers and
vehicles
• Align new and used cars, services and aftersales
incentive programs
• Ensure early communication of incentive programs
and their objectives to sales
Effective
and
efficient
incentive
programs
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"Management's example and sales
staff's behavior make the difference
and separate us from the
competition."
MD, Multibrand Group
"Even if you're doing everything
right and customers love you – they
will turn around and buy a car from
another brand – simply because they
like to have something new – and the
choices are there ..."
EVP, Automotive Service Provider
PRINCIPLE 8:
LIVE THE BRAND!
Ensure brand adequate behavior, every day, in every customer interaction
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 8: LIVE THE BRAND!
Connect your people with your brand
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers
• Build customer loyalty on the base of your
customers' physical experience with you, your
brand and your sales organization
• Identify and remove those hotspots that inflict
severe brand damage
OEMs
• Practice what you preach
• Define how the brand translates into
on-the-job-behavior
Translate brand
claims into onthe-job-behavior
Feel the difference
Driven by passion
The Power of Dreams
Dealers
• Define the key processes that "make" the brand
along "moments of truth" in customer interaction
• Have a clear value proposition while promoting
the OEM brands and your own business brand
The Future of the
Automobile
The relentless pursuit
of perfection
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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"Used cars. We don't know enough
and haven't done anything for years"
Director Sales Strategy, Volume OEM
"Used car business is more or less
not existent with us"
MD Network development OEM
PRINCIPLE 9:
MARKET USED CARS!
Look upon each used car as an attractive business opportunity
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 9: MARKET USED CARS!
Look upon each used car as an attractive business opportunity
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers &
Captive
Finance
OEMs
• Establish a customer care program for used car sales
• Develop an integrated approach for used car selling,
financing and service within your sales system
• Use a common used car sales platform
• Align new car sales and re-marketing activities to
support residual values
• Support with active brand management, covering the
whole product life-cycle
Dealers
• Provide more management attention to used cars
• Focus on inventory turn
• Care for used car customers after car sales
Captive
Finance
• Develop specific used car products
• Implement risk adjusted pricing
• Expand
customer
base
• Realize
opportunities
to increase
margins
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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" No strategy for B2B new car sales;
Focus so far only on ‚traditional‘
areas"
Director Sales, volume OEM
"Fleet customer care is far more
complex than private customer care.
Overall the professionalism is low and
a clear profile is missing"
Director NSC, Premium OEM
PRINCIPLE 10:
DON’T FORGET THE OTHER HALF! (FLEET)
Expand and professionalize your fleet business
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 10: DON’T FORGET THE OTHER HALF (FLEET)!
The impact of fleet management on profitability and image is high
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Wholesale
& Captive
Finance
• Bundle your fleet activities in one organizational unit
with full P/L-responsibility across brands and entities
• Ensure direct user/chooser care
Dealers
• Discover small commercials as your customers
Captive
Finance
• Define appropriate products for different fleet
categories
Increase sales,
profitability and
brand loyalty
through
professional fleet
management
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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" Why are automotive sales, marketing
and distribution so expensive?
Because only one dictates what
customers are supposed to buy. And
that’s the production line …"
VP, European Car Group
" Their job description, their bonusscheme and the press keep top
managers in sales from doing what is
necessary in the long-term"
MD, Car Retailing Group
PRINCIPLE 11:
DARE TO FOLLOW YOUR LONG-TERM STRATEGY!
Overcome the pressure of quarterly reports
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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PRINCIPLE 11: DARE TO FOLLOW YOUR LONG-TERM STRATEGY!
A (joint) long-term strategy must be built around value
maximization for all stakeholders
WHAT STAKEHOLDERS SHOULD DO
OEMs &
Dealers &
Captive
Finance
• Collaborate to achieve a common target
• Have a long-term strategy and stick to it
OEMs
• Implement wholesale and retail structures with "built-in“
profitability
• Implement the necessary changes – even if they cost
some (small, short-term) volume
• Be reliable for dealers
Dealers
• Ensure systematic local market development and build
strong relationships with actual/potential customers
• Have a strategic plan for growth and ensure
management quality at the POS
Captive
Finance
• Develop a brand supporting business and operations
model
• Act as cross-functional one-stop shop
Long-term
success
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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E.
Outlook – The road ahead
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
59
Our study's participants see a trend towards less dense retail
networks with more professional dealers
What is your vision of Automotive Sales in 2015? (Top-5 trends)
Retail networks will be further
consolidated
46%
More multi-brand dealers
17%
Franchise of aftersales
Increasing importance of the
internet
New approaches/concepts for
metro-areas
9%
• Reduced number of dealers
• Qualification key to survival
• Large multi-brand dealer groups will
cover "parallel markets" (e.g. Bavaria &
Northern Italy; Netherlands/Belgium
and Rhineland etc.)
14%
• OEMs and existing providers battling
for aftermarket share
14%
• After years as information medium the
internet will finally develop into a
selling platform
• Mega cities will see automotive megastores (mostly multi-branded and partly
OEM-financed)
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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Limited influence of BER-changes expected
Will changes in the European Block Exemption/BER lead to a complete restructuring of
car distribution?
EXPECTED SCENARIOS
Nearly same BER as today – with minor
evolutionary changes
76%
Revolution ("Wild West")
Evolution: concentration in all networks;
strong increase of large multi-brand
dealers and internet based sales
10%
7%
Minor changes in network structure –
Major changes in after sales
3%
Open/unclear
3%
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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Long-term success is based on built-in profitability and
determination to implement the necessary changes
Strategic guideline to maximize value
Ensure outstanding customer
experience at the POS and maximize
your brand’s value
T
O
D
A
Y
Restructure retail networks to ensure a
"built-in" minimum dealer profitability
Align your organization to maximize
your profits along the lifecycle of your
customers and their cars
Brand value up
Implementation
Customer
satisfaction up
Profits up
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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Implementation of the necessary changes will restore the
profitability equation for all stakeholders
Focus on dealer revenues and profitability
Intra-brand
Competition
Dealer
Profitability
Restructured
Dealer
Networks
Production
Customer
Retention/
Acquisition
Investment/
Improvement
Ability to hire
& retain Top
Talent
Dealer
Satisfaction
POSPerformance
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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F.
Survey team –
Roland Berger Strategy Consultants &
IBM GBS Consultants
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
64
OVERVIEW PROJECT MEMBERS
Roland Berger Strategy Consultants & IBM GBS Consultants teams
Ralf Landmann, Partner, Frankfurt
Dr. Alexander Scheidt, Partner
Automotive Competence Center
Phone: +49 (69) 29924-6300
[email protected]
Automotive Leader North East Europe, Frankfurt
Phone: +49 (171) 566-2281
[email protected]
Susanne Tebartz, Senior Project Manager, Munich
Claudia Schmitt-Lühmann, Associate Partner
Automotive Competence Center
Phone: +49 (89) 9230-8457
[email protected]
Strategy & Change Leader Automotive, Stuttgart
Phone: +49 (170) 785-9617
[email protected]
Nicole Steffen, Consultant, Frankfurt
Jens Diehlmann, Partner
Automotive Competence Center
Phone: +49 (69) 29924-6304
[email protected]
Automotive Captive Finance, Frankfurt
Phone: +49 (170) 786-1115
[email protected]
Ralf Kalmbach, Partner, Munich
Carsten Eickhoff, Associate Partner
Automotive Competence Center
Phone: +49 (89) 9230-8669
[email protected]
Marketing & Sales Automotive, Munich
Phone: +49 (170) 785-5813
[email protected]
Max Blanchet, Partner, Paris
Marco Zurru, Partner, Milan
Tom Wendt, Project Manager, Munich
Jörg Richartz, Senior Consultant, Düsseldorf
Erich Nickel, Director Automotive MSS, Stuttgart
Anja Kremer, Managing Consultant, Frankfurt
Philippe Guillaume, Partner, Luxembourg
James Daulton, Managing Consultant, London
Sergio Strata, Partner, Torino
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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Roland Berger Strategy Consultants
Roland Berger Strategy Consultants
The Automotive Competence Center (ACC)
• We are a worldwide leading consulting
firm, serving our clients with more than
1,700 employees located in 33 offices
across Europe, Asia and the Americas.
• Since the firm's establishment in 1967, we
have enjoyed dynamic and sustainable
growth and excellent business results.
• An average growth rate of over 17% p.a.
since 1970 clearly shows our outstanding
development
• We support the world‘s leading companies of the
automotive industry.
• In close cooperation with our clients, we solve a wide
range of strategic issues and operational problems at
every stage of the automotive industry value chain.
• The ACC is one of the largest Industry Competence
Centers of Roland Berger. Our teams’ industry and
consulting experience guarantees that we can generate
tangible value for our clients.
• Over 700 successful projects in the past decade have
made us a leading player in the automotive consulting
arena
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
66
IBM Global Business Services Consultants
IBM Global Business Services
IBM GBS
SERVICE AREAS
Customer Relationship Mgt
Supply Chain Management
Financial Management
Human Capital Management
End-to-end consulting
Strategy and Change
Public
Industrial
- Automotive-
Financial
Services
Distribution
Communications
SECTORS
• Is with more than 60,000 consultants in
160 countries the world's largest consulting
services organization.
• Serves clients with business transformation
and industry expertise, and the ability to
translate that expertise into integrated,
responsive, innovative business solutions
and services that deliver bottom-line end-toend business value.
• Offers end-to-end consulting services from
strategy to implementation with:
– 43 partners and 400 consultants in the
European automotive community
– 30 dedicated Automotive Captive
Finance experts in Europe
Application Innovation
Pan-European Automotive Sales Excellence Study 2007 © Roland Berger Strategy Consultants & IBM GBS Consultants. All rights reserved.
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