Issue 02.2013
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Ro ap Mag
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Automotive
Insights
Insights
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For detai
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page
Automotive Competence Center Client Magazine
A Look around the world
Regional insights
Aftersales in the US,
Brazil and CEE
STrategy
Tires Aftermarket
Chinese manufacturers
set to bounce back
Cover story
How well Do
you know your
customers?
Smart customization in aftersales
Interview
Dr. Markus Schramm
© Roland Berger Strategy Consultants
06/2013, all rights reserved
www.rolandberger.com
www.rolandberger.com/rb-kiosk
NEW–!eMag
The Head of Aftersales talks
about BMW's goals
Issue 02.2013
Automotive Competence Centers Worldwide
Editorial
Ralf Kalmbach
Partner and Member of the Executive Committee
Roland Berger Strategy Consultants
Dear Reader,
Belgium
• Didier Tshidimba
Phone +32 (2) 6610 317
didier.tshidimba@rolandberger.com
The automotive year 2013 is proceeding apace, and highlights like the
International Motor Show in Frankfurt (IAA) are just around the corner.
To make the time before the trade fair pass a bit more quickly for you
(or to provide you with some reading for your summer break), we have
published this new issue of our Automotive Insights magazine.
CEE
• Rupert Petry
Phone +43 (1) 53602 101
rupert.petry@rolandberger.com
Its focus is the aftersales and aftermarket business, which is gaining
importance in various markets. In contrast to the sale of new vehicles,
aftersales has been neglected for quite some time and needs to be
developed and professionalized.
The biggest challenge – and hence the biggest opportunity – is the
current lack of customized offerings, as our experts examine in
the cover story. Using the German market as an example, they analyze
the various customer groups and their special needs, emphasizing
the imperative of customized services in the battle for customers.
Individualization is also a major theme in our interview with
Dr. Markus Schramm, Head of Global Aftersales at BMW Group.
As an international consultancy, we aim to provide you with global
insights. That's why this issue looks at the aftersales business in three
different regions: the US, Central and Eastern Europe and Brazil.
Published by:
Roland Berger Strategy Consultants GmbH,
Mies-van-der-Rohe-Straße 6, 80807 Munich
Editors-in-chief:
Ralf Kalmbach and Ralf Landmann
Editors:
Jan-Philipp Hasenberg, Christian Weber, Swen Beyer,
Sven Wittmaack, RB Language Service
Layout:
RB Media Design
Printed by:
Girodruck, Hamburg
By the way, don't forget to download the eMag version for tablets from
the Roland Berger Kiosk. There you'll find plenty of extra content,
viewable on both iOS and Android devices.
If you want to share your views on any of the topics we have covered
or if you have any questions, please call my colleagues or myself, or just
drop us a line. I look forward to your feedback. But until then,
I wish you insightful reading!
Kind regards,
Photo credits:
Cover: RB Media Design . Page 2: Roland Berger Strategy
Consultants GmbH . P. 4: Plainpicture/Mira . P. 5: picturealliance/Estadao Conteudo . P. 10: istock . P. 13: istock .
P. 14: Mopar . P. 18: istock . P. 23: istock . P. 24-25: RB
Media Design . P. 36: RB Media Design . P. 38: Norbert
Wilhelmi . P. 40: Norbert Wilhelmi . P. 41: Li Zhong/laif .
P. 42: Corbis . P. 50: Porsche AG
Ralf Kalmbach
Many thanks to car mechanic Erwin Zott for letting us take
photos in his repair shop in Munich. Thanks also to all Roland
Berger staff who lent us their car keys for the cover photo.
Circulation:
3,900, published three times a year.
No reprints without prior permission
of the publisher.
Automotive Insights | 02.2013
NORTH AMERICA
• Marc Winterhoff
Phone +1 (248) 729 5116
marc.winterhoff@rolandberger.com
• Thomas Wendt
Phone +1 (248) 729 5116
thomas.wendt@rolandberger.com
CHINA
• Jun Shen
Phone +86 (21) 5298 6677 890
jun.shen@rolandberger.com
• Junyi Zhang
Phone +86 (21) 5298 6677 890
junyi.zhang@rolandberger.com
Norbert Dressler
Phone +49 (89) 9230 8511
norbert.dressler@rolandberger.com
• Philipp Grosse Kleimann
Phone +49 (89) 9230 8511
philipp.grossekleimann@rolandberger.com
• Dr. Thomas Schlick
Phone +49 (89) 9230 8737
thomas.schlick@rolandberger.com
• Dr. Marcus Hoffmann
Phone +49 (89) 9230 8037
marcus.hoffmann@rolandberger.com
POLAND
• Krzysztof Badowski
Phone +48 (22) 32374 62
krzysztof.badowski@rolandberger.com
INDIA
• Dr. Wilfried Aulbur
Phone +49 (89) 9230 8108
wilfried.aulbur@rolandberger.com
RUSSIA
• Dr. Uwe Kumm
Phone +7 (495) 287 92 46
uwe.kumm@rolandberger.com
CZECH REPUBLIC
• Constantin Kinsky
Phone +420 (2) 10219 552
constantin.kinsky@rolandberger.com
• Roland Zsilinszky
Phone +420 (2) 10219 551
roland.zsilinsky@rolandberger.com
ITALY
• Roberto Crapelli
Phone +39 (02) 29501 257
roberto.crapelli@rolandberger.com
• Alberto de Monte
Phone +39 (02) 205011 0
alberto.demonte@rolandberger.com
SCANDINAVIA
• Per I. Nilsson
Phone +46 (31) 75755 14
per-i.nilsson@rolandberger.com
• Per M. Nilsson
Phone +46 (31) 75755 10
per-m.nilsson@rolandberger.com
FRANCE
• Max Blanchet
Phone +33 (1) 53670 946
max.blanchet@rolandberger.com
• Sebastien Amichi
Phone +33 (1) 53670 946
sebastien.amichi@rolandberger.com
JAPAN
• Dr. Satoshi Nagashima
Phone +81 (3) 35876 385
satoshi.nagashima@rolandberger.com
• Keisuke Yamabe
Phone +81 (3) 35876 695
keisuke.yamabe@rolandberger.com
• Dr. Martin Tonko
Phone +81 (3) 35876 697
martin.tonko@rolandberger.com
Singapore
• Joost Geginat
Phone +65 6597 4566
joost.geginat@rolandberger.com
• Thomas Klotz
Phone +65 6597 4566
thomas.klotz@rolandberger.com
GERMANY
• Ralf Kalmbach
Phone +49 (89) 9230 8314
ralf.kalmbach@rolandberger.com
• Marcus Berret
Phone +49 (89) 9230 8737
marcus.berret@rolandberger.com
• Ralf Landmann
Phone +49 (69) 29924 6301
ralf.landmann@rolandberger.com
• Dr. Wolfgang Bernhart
Phone +49 (69) 29924 6301
wolfgang.bernhart@rolandberger.com
• Jürgen Reers
Phone +49 (89) 9230 8511
juergen.reers@rolandberger.com
Automotive Insights | 02.2013
•
Malaysia
Anthonie Versluis
Phone +60 (3) 2203 8611
anthonie.versluis@rolandberger.com
SOUTH AMERICA
• Thomas Kunze
Phone +55 (11) 3046 7124
thomas.kunze@rolandberger.com
• Stephan Keese
Phone +55 (11) 3046 7124
stephan.keese@rolandberger.com
MIDDLE EAST
• Michael Wette
Phone +973 (17) 56795 0
michael.wette@rolandberger.com
TURKEY
• Doruk Acar
Phone +90 (212) 358 6401
doruk.acar@rolandberger.com
•
Netherlands
• René Seyger
Phone +31 (20) 7960 608
rene.seyger@rolandberger.com
51
Table of contents
4
10
18
24
41
INterview
A look around the world
4
Brazil
38
A challenging aftermarket – with bright prospects
10
18
Strategy
41
Cover story
Customizing aftersales
How OESs as well as independent players can
better understand their different customer
segments to offer appropriate individual services
Automotive Insights | 02.2013
German tires aftermarket
Why tire manufacturers from China are bouncing back
Central and Eastern
Europe
Size matters – survey on the maturity of the
aftermarket in CEE countries and major trends
shaping the industry
24
Dr. Markus Schramm, Head of Global Aftersales at
BMW, talks about the need for service differentiation
USA
After years of neglect, OEMs now recognize the
importance of aftersales
Aftersales at BMW
Strategy
46
Alliances
Preview of our new global study on global alliances
in the auto industry
49 Books & Studies
The latest Roland Berger publications at a glance
50 Famous cars
Porsche 993 S Coupé "Vesuvio Metallic"
3
A Look around the world
Brazil
Dream destination
Copacabana: Brazil is
an attractive aftersales
destination, but not
necessarily an easy one
Ample growth
opportunities in
a challenging
environment
4
Automotive Insights | 02.2013
A Look around the world | Brazil
The Brazilian vehicle
aftermarket is undergoing
a shift of directions: After
years in which the business
with parts and services
was more or less dormant,
now the prospects
turn out to be promising
O
ver the last years, Brazil has received
increasing attention as the country grew into
the fourth largest market for new vehicle
sales in the world, leaving other major global
markets including Germany, Russia or the UK behind. In
2012, the market accounted for 3.6 million passenger
cars and light commercial vehicles and 170,000
commercial vehicles. For 2013, the outlook is stable on
the passenger car market and a 10% rebound is expected
for the commercial vehicles market.
On the aftermarket, however, things are still quite
different. Despite a running fleet of just below 30
million vehicles, Brazil's aftermarket is still significantly
smaller than for other countries. Official figures are
hard to come by, but Roland Berger estimates the
passenger car aftermarket at roughly USD 10 billion
– related to the revenues of original equipment (OES)
and independent aftermarket (IAM) suppliers. Thus,
the average Brazilian spends only USD 300 per year on
parts, less than half of their European or US American
counterparts. Why is that?
For one, the Brazilian fleet is still quite old. For many
years until 2005, new vehicle sales have been dormant
and consequently the average fleet age for passenger cars
is now at roughly nine years, well above the European
averages. In addition, most of the vehicles sold in the
past were technologically outdated. Until a few years
ago, Brazil was at least one model generation behind the
global standards, selling cars with little equipment and
thus lower repair potential. With the recent sales boom,
the fleet is being modernized. OEMs are now launching
their latest global models or even developing specific
variations for the Brazilian market.
SkEPTiCISM TOWARDS DEALERSHIPS IS A
CHARACTERISTIC FOR THE BRAZILIAN AFtERMARKET
Preferred service provider
Others1)
17%
Gas
stations
16%
Workshops/
autocenters
25%
Dealerships
22%
14%
18%
17%
13%
11%
18%
15%
50%
57%
64%
68%
71%
5%
2%
1%
1%
5-6
years
7-9
years
10-14
years
15 years
and more
42%
10%
Car age
20%
23%
Up to
2 years
3-4
years
1) Includes oil change stations
Reasons not to repair in dealerships2)
High prices
43%
Low reliability
36%
Bad service
33%
Long repair times
17%
Insufficient advice
14%
Poor aftersales service
14%
Long waiting times
12%
Large distance from home
12%
Low flexibility in timing
10%
Vehicle warranty has expired
9%
2) Multiple answers possible; does not add to 100%
Source: Sindipeças; GMA; Roland Berger
Automotive Insights | 02.2013
5
ANYTHING BUT A MATURE AFTERMARKET: BRAZILIANS SPEND LESS THAN HALF OF THE MONEY ON PARTS
AND SERVICES IN COMPARISION TO OTHER COUNTRIES
Fleet size in million
42.1
31.3
30.7
250.0
746
745
36.6
46.5
25.9
57.3
874
Annual aftermarket revenues per vehicle [USD]
782
566
407
288
193
Germany
France
UK
US
Italy
China
Brazil
Eastern
Europe
Source: Sindipeças; J.D.Power; Projetos; Roland Berger
Why Brazilian customers prefer
independent workshops
A further important explanation for the lack of scale of
the Brazilian aftermarket lies in the customer behavior
for maintaining cars. Even though Brazilians are very
attentive of their vehicles and quickly repair any (visible)
damages, they are also extremely cost conscious. More
than 50% of maintenance during the first two years of
car ownership is done outside the dealerships. As soon
as the warranty is over (most OEM warranty programs
are limited to only one year), maintenance and repairs at
dealerships drop to only 10%. Instead, customers prefer
to frequent one of the 75,000 smaller, independent
workshops to whose owners they often have a trustful
and personal relationship and where they are sure to get
the "best" prices and an attentive and reliable service.
6
The reason for this behavior lies in a mix of deeply routed
perceptions that dealerships overcharge their customers,
do not attend them well and provide poor service.
In fact, OEMs have only recently started to develop
better organized sales and service programs for their
dealerships, to train dealer principals and mechanics,
and to control parts and service prices. Most dealers
still achieve less than 30% of their overall revenue from
aftersales and the sale of parts. Nevertheless they are
inexperienced in attracting and retaining customers.
Nevertheless, this behavior is starting to change. As
new vehicle margins for dealers come under increasing
pressure, OEMs and large dealer groups start to
understand the need to focus more on aftersales. As a
consequence, the share of the OES channel is expected
to rise from only 17% in 2010 to 24% in 2016. And
there is even more room to grow for dealerships:
Recently, Roland Berger developed an aftersales strategy
Automotive Insights | 02.2013
A Look around the world | Brazil
for a leading Brazilian dealership group resulting in a
duplication of aftermarket revenues at the individual
service sales and service points within three years.
The market growth accelerates
for various reasons
This shift is happening in the light of strong overall
aftermarket growth. For the years to come, the market
should grow by approximately 10% per year, driven by
the growth of the new vehicle fleet, better equipped
and more complex vehicle models, more disposable
income of the car owners, an increasing focus on
(preventive) maintenance and stricter emission and
vehicle safety regulations.
In response to this growth, large global autocenter
groups are arriving and workshop networks are
starting to form. Several global players have entered
the Brazilian market over the last years, aiming to
participate in the fast growth and taking market
shares from the independent small and medium-sized
workshops. After a successful initial entrance, many
struggle to expand further.
Capturing the growth of the Brazilian aftermarket
is not an easy task for suppliers. On the plus side,
Chinese brands are only starting to arrive as the vast
and developed aftermarkets in Europe or the US are
much more attractive. Only the most advanced and
professional Chinese IAM players have got lasting import
and distribution partners. Most companies still work
with changing partners willing to assume the entire risk
of importing and then selling whole containers of goods
Jammed roads are ordinary in Brazil: South America's biggest country has grown into the world's fourth largest automotive market
Automotive Insights | 02.2013
7
A Look around the world | Brazil
Aftermarket distribution chain in Brazil. Two characteristics are conspicuous: OEMs achieve only
20% market share, and the IAM strongly relies on distributors
Original equipment market
Independent aftermarket
Suppliers
Supply
15%
Wholesale
60%
OEMs
15%
Retail
Distributors
5%
30%
3%
16%
Retailers
OEM dealerships
6%
Repair
9%
24%
8%
Workshops
4%
Fleets
Auto centers
39%
17%
10%
22%
12%
Final consumers
xx%
Share of aftermarket volume
Source: Sindipeças; GMA; clippings; interviews; Roland Berger
from China. In addition, margins are quite strong due to
elevated aftermarket prices for the suppliers, distributors
and retailers.
On the down side, the Brazilian aftermarket is
still highly fragmented and the geographic expansion
poses significant challenges for both new entrants and
established players. In comparison to more mature
markets that are typically using a 2-Tier structure
between suppliers and final customers (typically
distributors and workshops), Brazil is still using a 3-Tier
structure with national/regional distributors, resellers
and workshops, each adding their own margin and
service to the parts delivery.
Heads up: The Brazilian
market has some important
characteristics
A key reason for this complex structure is the vast
expansion and poor infrastructure of Brazil. Bringing
parts within even 24 hours at reasonable cost still poses
an enormous challenge in many regions of the country,
8
not even considering the really remote areas such as
the Amazon. Thus national distributors often work
hand in hand with regional players to ensure a national
coverage of warehouses on-site. Local resellers often
operate a network of motorcycle delivery boys bringing
the parts to the workshops that usually do not keep any
stock at all.
A consolidation of this market is expected on a
short-term basis but has not yet started. The leading
distributor thus currently holds below 4% market share
and even the top-20 combined do not surpass 25%
market share.
With infrastructure and professionalism of the
market developing, this structure becomes increasingly
outdated and unnecessary. The market needs to
consolidate, but no one seems to know how. Will
suppliers deliver directly to the bigger autocenters and
workshop chains as they are already starting to do,
thus bypassing the distributors entirely? Or will the
distributors consolidate, encompassing the resellers and
thus position themselves as an irreplaceable partner in
the distribution chain? So far, no trend is clearly visible,
and market participants maintain a high degree of
flexibility, preparing for either scenario.
Automotive Insights | 02.2013
Competition is growing:
Brazil attracts players along
the entire value chain
For new market entrants, this creates a scenario of
uncertainty, where capturing the growth in a profitable
manner is not an easy task. Ensuring the right partners
and products, implementing a cost efficient, lean
and highly effective and reliable logistical structure,
establishing the brand and building trust to the
customers are among the key challenges for any
market participant.
For the years to come, the Brazilian aftermarket will
grow significantly. This will attract many more players
along the entire value and distribution chain. However,
it is a complex automotive market that needs to be
understood in detail and requires substantial preparation
and consideration to succeed. Companies investing
in Brazil have become very successful and earn good
money – or have lost their investments many times over.
5 reasons
to browse the
Automotive Insights
eMag on your tablet:
Best practices
Find out about the aftersales strategies
of big OEMs.
Examples from other industries
Read more about customer service at
online and telco giants.
The RB Profiler in detail
Take a closer look at our analytics tool.
Audio content
Listen to Ralf Kalmbach, Head of
Automotive at Roland Berger.
Reading tips
Check out our collection of eMags, studies
and papers for automotive insiders.
Authors
Stephan Keese
Partner
Roland Berger Strategy Consultants, São Paulo
stephan.keese@rolandberger.com
Martin Bodewig
Principal
Roland Berger Strategy Consultants, São Paulo
martin.bodewig@rolandberger.com
Rodrigo Custodio
Project Manager
Roland Berger Strategy Consultants, São Paulo
rodrigo.custodio@rolandberger.com
Automotive Insights | 02.2013
9
A Look around the world
USA
Downtown New York – symbol for
"the land of opportunity": Is there an
opportunity to grow in the aftermarket
business for OEMs, too?
The battle
for customer
ownership
10
Automotive Insights | 02.2013
A Look around the world | USA
After years of neglect,
OEMs in the US recognize
the importance of the
aftermarket business and
try to regain market share
from their independent
competitors
T
he US light vehicle automotive aftermarket
reached a total size of USD 230 billion in
2012. Currently, 73% of the overall revenues
are generated through the independent
aftermarket channel, which is an increase of 5% within
the last ten years. Because OEMs are losing market
share to the independents, they and their dealers need
to find new and expand existing measures to benefit
from the highly lucrative parts and service business. On
average a dealers service, parts and body shop operations
generate 12% of sales but as much as 43% of profits, an
Automotive News study revealed.
The big problem for OEM networks in the US is
customer retention. After purchasing a new car a
typical US owner rarely returns to his dealer for nonwarranty service, preferring to use an independent shop
instead. The main reason for that is that customers
believe that independent service providers are generally
less costly and do not offer unneeded repair service.
This poses a problem for OEMs and their dealers, as
this generalization does not always hold true. The
immense geography of the US is exacerbating this
problem, as it is difficult for manufacturers to have a
dealership close to all customers. Independents, also
attracted by the high profitability of the aftermarket,
have filled in these geographical gaps. Another
challenge for OEMs as well as independents is the
ever increasing vehicle quality. This will further reduce
the overall need for service and maintenance, and
consequently increase competition in the aftermarket.
In particular younger generations, which are
accustomed to utilizing various electronic channels,
will further increase the need for better and more
convenient services solutions. For example, they are
used to signing an iPad and then receiving an email
Automotive Insights | 02.2013
invoice. They will not tolerate waiting 15 minutes and
then being asked to fill out lengthy paper forms.
Because of these challenges and dynamics many
OEMs have placed a newfound importance on
making their service more convenient. However, the
majority of the automotive industry is still far behind
companies like Apple, Starwood or Starbucks in terms
of convenience and consistency of services.
Current initiatives by OEMs
Based on our perception, manufacturers in the
US have understood that they need to adapt their
existing aftermarket solutions to match the changing
customer demand. Furthermore, they realized that
they can retain their customer base by offering
them an excellent customer experience. Because US
customers value convenience above all else, especially
when compared to other major markets like Europe
or Japan, OEMs need to improve the convenience
of their existing processes and aftersales formats as
well as their online presence and make prudent use
of telematics systems. The current initiatives can be
differentiated in three fields:
• Process and format innovations
• Online presence
• Telematics systems and connected vehicle technologies
How OEMs try to improve the
overall customer experience
These measures include all kinds of improvements to
existing service related processes initiated by OEMs
in cooperation with their dealer networks. Moreover,
they cover innovative solutions, which were either
adopted from leading service industries or are entirely
new solutions designed specifically for the automotive
segment. The following presents an overview of current
examples by various OEMs and their dealer networks'
efforts to improve the overall customer experience:
• Ford launched Quicklane, a network of over 600
quick service centers that perform oil and filter
changes, tire changes and minor repair services.
Quicklane locations service competitive brands as
well – over half of customers bring in a competitive
vehicle. Dealers have reported an increase in new
and used car sales since the introduction.
• Nissan recently launched express lanes at 400 of
its 1,100 dealerships.
11
US light vehicle aftermarket sales breakdown
by channel, 2002 vs. 2012
• OEMs like BMW, Volkswagen, Toyota, Nissan, Chrysler
Total market size:
USD
230 bn
OEM – new
car dealers
Others
28%
27%
2012
Sales by
channel [%]
Tire
dealers
7%
16%
11%
Automotive
parts &
accessories
stores
General
automotive
repair shops
11%
Automotive body,
paint and interior repair
and maintenance
Total market size:
USD
180 bn
25%
Others
Tire
dealers
Automotive
parts &
accessories
stores
2002
7%
32%
Sales by
channel [%]
10%
11%
15%
Automotive body,
paint and interior repair
and maintenance
OEM – new
car dealers
General
automotive
repair shops
or Mercedes Benz offer online service scheduling
through Xtime for their dealerships. Advantages
are to choose from open time slots, reminders and
status updates as well as online payment. The 200
Volkswagen dealerships currently using Xtime
generate an average of 20 new customers a month.
• Hyundai has gone one step further with its "At
Your Service Campaign" for owners of its new
Equus luxury model. The company decided that a
luxury ownership experience should not require
the customer to ever set foot inside a dealership
or repair shop. A representative will come to pick
up your vehicle and leave you a loaner car when
service is required. Once the service is complete,
your car will be returned to you. Additionally,
Hyundai provides America's best warranty coverage
of 10 years or 100,000 miles (about 161,000 km).
• Hyundai assurance offers a "Hyundai Trade-In
Value Guarantee" which guarantees (at the time of
purchase) exactly how much a car (Genesis, Genesis
Coupe and Equus) will be worth two, three and four
years from the purchase date.
• The ever increasing electronic complexity of today's
cars has prompted Lexus to introduce Apple-style
"Geniuses" that provide customers with free support
in navigating all the vehicle technology such as the
entertainment and navigation systems.
• Lincoln is set to roll out its new 24/7 concierge
program (integrated into its website) which among
other things will give its customers a personalized
portfolio, logging all customer vehicle preferences,
which can be shared with the customer's preferred
dealer.
• Chrysler has recently (in conjunction with its dealer
network) introduced 800 express lanes designed to
offer quick services like 15-minute oil changes at
prices in line with independent outlets. Additionally,
the company has introduced the wiAdvisor system,
which helps dealers and their service employees to
have selected vehicle data and customer preferences
instantly available.
• A lot of OEMs like Chrysler, Ford and Toyota have
started to offer care programs and service contracts.
According to a recent DMEautomotive survey only
about one in four US vehicle owners currently has
a prepaid or free service plan. According to the
study, 56% of these consumers are likely to continue
servicing at the dealership even after the expiration
of these plans.
Source: AAIA; Roland Berger
Automotive Insights | 02.2013
A Look around the world | USA
These examples clearly demonstrate that OEMs in
the US have realized the need to turn their focus to
the aftersales market segment and not only to new
car sales. However, not all customers have the same
expectations or requirements regarding pricing and
procedures. In order to address each client individually,
manufacturers also need to have a comprehensive
customer segmentation approach. This will help
each OEM to further differentiate its service product
portfolio. Most importantly, the knowledge about
customer service patterns, their attitude towards cars,
as well socio-demographical information need to be
distributed to all involved aftersales employees. In
this regard, Chrysler's wiAdvisor approach is a good
example of how OEMs started to leverage relevant
customer information.
Why manufacturers have to
invest into online presence
In 2012 online automotive parts sales hit approximately
USD 3.5 billion. While this is still a small portion of the
overall aftermarket, it is also one of the fastest growing
segments. Additionally, over 70% of US consumers
who need automotive parts use the internet for price
comparison and location searches, even if they do not
make their actual purchase online. Because of this,
the web is one of the most important contact points
between OEMs and their clients. A great customer
experience needs to be consistent across all channels
and processes where people interact with the brand.
Therefore OEMs must ensure that their online presence
is as user friendly and convenient as all of their other
initiatives.
For example, when customers want to schedule
service or buy a part online, they are often redirected
from an elegant OEM website to a less sophisticated
and less convenient local dealer website. Currently,
a number of OEMs, including Chrysler (Mopar),
Ford, Honda and Nissan offer parts retail from their
website. Once a part is selected the order is processed
by the website of the closest dealer. Even though the
customer is aware that this is no longer the company's
website, it is still a representation of the brand.
Therefore, OEMs must work very closely with their
dealers to better leverage the power of their brand.
One player that has done well in this regard is BMW.
Most of their dealers' websites match the corporate
web design very closely and provide a pleasant user
experience.
Green traffic lights ahead: Several OEMs are opening the throttle to regain market share in the aftersales business
Automotive Insights | 02.2013
13
A Look around the world | USA
Other manufacturers such as
Mercedes, Toyota and GM do not
offer parts retail service on their
website, probably because they
do not want to undermine the
sales efforts of their dealers. The
relationship between an OEM
and its dealers is unique relative
to other countries. Owing to US
franchise laws, manufacturers must
sell their vehicles through their
franchised dealers and cannot retail
directly. Such a situation gives
dealers the ultimate control over
face-to-face customer interactions.
Therefore, OEMs must redesign
their processes and platforms in a
way that more easily incorporates
external systems, such as their
various dealers' websites. Ideally,
it should be possible to schedule a
service at a specific dealer directly
from the manufacturer's website.
Moreover, the visitors should never
be redirected to an external site
that may not represent the brand in
the best manner. Convenience and
consistency are the keys to success
and customer retention. Therefore,
the customer must be presented
with a single and consistent image
and experience of the brand that
does not change when moving
from one channel to another.
Telematics systems
and connected
vehicle technology
A key lever for manufacturers and
their dealer networks to increase
customer retention can be seen
in the increasing integration of
telematics systems in new vehicles.
The North American telematics
market for OEM embedded systems
increased from roughly 800,000
units in 2000 to approximately
14
"Convenience
is the most
critical
factor"
Pietro Gorlier,
President & CEO
of the Chrysler
parts and service
brand Mopar,
talks about future
aftersales challenges
and characteristics
of the US market
INSIGHTS Mr. Gorlier, what makes the US
aftermarket special compared to other
major markets like Germany or Japan?
Pietro Gorlier We have one of the most
competitive environments and a larger
market share held by independent players
compared to other key markets around
the world. Two main drivers have led to
this environment:
The first dimension is the geographic one:
Due to the sheer size of the US, it's very
hard to have a sustainable OEM service
point close to every single customer.
Independent competitors, serving multiple
brands, have filled this space.
The second driver are service demands
that differ from other regional markets:
compared to Europe, US car owners
travel more miles, more than 50%
more in fact, and the service
intervals are shorter, requiring more
service visits.
Automotive Insights | 02.2013
This larger potential has created favorable
conditions for the development of a fierce
competition to conquer these customers.
Magneti Marelli, creating a portfolio of 30
product lines and more than 3,000 part
numbers for all makes.
What are, in your opinion, the key
challenges from an OEM perspective
within the US aftermarket?
The greatest challenge is customer
retention. With OEMs, you have a clear,
sharp decline in customer retention after
the first two or three years of the life of
a car. You quickly move from a retention
rate of approximately 60-70% in the
beginning to below 50%. When the car
reaches five years or older, the retention
rate falls to 20-30%.
Another challenge is the perception
customers have of dealers: they see
them as inconvenient and expensive
compared to independent outlets. This
is more perception than reality, but this
is an issue. Last but not least, as vehicle
quality improves and service intervals
become longer, cars need less service.
This contraction of business potential in
a market overcrowded of players is
leading to even more competition for
aftersales business.
How to you react to the ever-growing
demand for online services?
We know that 70% of all parts, tire, service
and accessory searches are online, so
we enhanced our Mopar website. Now
customers may conveniently browse our
online catalogs of proven, quality-tested
parts and accessories and order them on
the web. We offer dealers a search program
that allows us to present them as a top
option to consumers who are using a
search engine or social network, with
the opportunity to download coupons,
get driving directions and call the dealer.
Dealers may also send coupons to mobile
phones and instantly collect customer
feedback.
Apart from that, we introduced numerous
industry-first features including vehicleinformation apps, electronic owner
manuals, WiFi, wireless charging for
smartphones, and an electronic vehicle
tracking system that sends owners a text
when their vehicle is being driven too fast
or too far based on set parameters.
What is Chrysler/Mopar doing to capture
even more aftermarket value?
The crisis of 2008 and 2009 was a strong
wake-up call for all the dealers when they
suddenly found out that they needed to
cover the lack of volume in new-car sales
with parts and service profits. To maximize
our business, we are working closely with
our dealer network on a daily basis to
create an excellent customer experience
in order to improve customer retention
and attract new customers.
Could you specify that, please?
We introduced a number of initiatives to
improve the overall customer experience:
For quick, convenient maintenance,
we launched 800 Mopar Express Lane
facilities at our dealers, which is 35%
of our network.
We also launched Saturday service
hours in more than 80% of our dealers,
expanded our daily customer call-center
hours and introduced industry-first
Sunday call-center hours. To generate
return business, we significantly improved
our service-contract penetration. Last
year, we sold a record 1.4 million service
contracts. This is significant because each
contract generates an average of three
future visits.
You already support several brands –
any efforts to expand this range?
To attract owners of competitive makes
into our service lanes, we partnered with
Automotive Insights | 02.2013
Do you use mobile or web-based
technologies for customer care in
your workshops, too?
We do: For a quick, all-encompassing
check-in procedure in our service lanes,
we introduced the industry-first wiAdvisor
technology, a system on a tablet computer
that provides service representatives with
an instant 360-degree view of a customer
and his or her car the minute they pull
into our service lane. All data, including
customer preferences and relevant
vehicle information, is immediately at the
fingertips of our service personnel. The
experience is similar to that of checking
into a luxury hotel.
How does Fiat's/Chrysler's single
aftersales brand approach compare
to other OEMs? What are advantages
and disadvantages?
When you start sharing platforms,
components, processes, systems, and
diagnostic tools across all of your brands,
you realize numerous benefits. Having only
one organization that provides service
and support to every dealer and every
customer for all brands is a competitive
advantage in standardization of process
and parts and time to market. The Mopar
umbrella gives dealers a single point of
contact for all of our brands. And don't
forget that the Mopar brand has a proud
76-year heritage, a legacy that also gives
us a competitive advantage.
Final topic, Mr. Gorlier: What are your
prospects for the aftersales business?
I think it's important to keep in mind how
customer demographics are changing and
how we will effectively change to meet the
expectations of and delight tomorrow's
customers. New generations will be even
more demanding because they have
been exposed to better service and retail
dynamics. I think this is one area where
the automotive market still lags behind
other retail industries. Think about the
typical teenager who is used to shopping
online. He or she has never dealt with
paper transactions and does everything
electronically. Why should they have to
deal with a cashier when they are used to
signing their names on a tablet and getting
an invoice e-mailed to them? Similarly,
customers expect to conveniently book
service online or receive online updates on
the progress of a repair.
It's all about convenience?
Absolutely: In today's day and age,
convenience is the most critical factor. Only
those OEMs, dealers, and independents
who can offer the highest level of
convenience seamlessly integrated into
their overall customer experience will
be successful in winning a share of the
automotive aftermarket. And, as an added
benefit, if you provide a customer with a
great experience, they will be much more
likely to consider you when purchasing their
next new vehicle.
Mopar is the service, parts and customer
care brand within Chrysler Group LLC and
Fiat SpA. It was founded in 1937. The
name is a portmanteau word of "motor"
and "parts". Headquartered in Auburn Hills,
Michigan, the brand employs more than
6,000 people in 130 countries. Mopar
ships more than 350,000 order lines per
day and operates 50 parts distribution
centers. It supports different car brands
like Chrysler, Dodge, Fiat or Alfa Romeo.
Mr. Pietro Gorlier is the President & CEO
of Mopar since 2009. He joined the Chrysler
Group from Fiat Group Automobiles and
CNH Global. At Fiat he served as head of
customer service. Gorlier entered into the
Fiat Group in 1989 as a market analyst and
held various positions in logistics, aftersales,
and customer care. The Italian-born
manager holds a Master of Economics from
the University of Turin.
15
Historical development of the US light vehicle
aftermarket [USD Billion]
CAGR +2.6%
210
29%
230
'02-'12 CAGR [%]
27%
+0.6%
215
27%
180
32%
+3.5%
71%
73%
73%
How is the independent
aftermarket responding?
68%
2002
2007
2010
2012
OEM – new car dealers
Independent aftermarket players
Source: AAIA; Roland Berger
4 million units in 2012. It is the largest market in the
world, according to an IHS study.
With a growing penetration of telematics systems in
the car fleet, OEMs can establish a direct communication
channel to vehicle owners and introduce new proactive
services, which create a competitive advantage against
the independent aftermarket. For instance, telematics
can automatically notify the manufacturer to send a
message directly to a car or smartphone, reminding the
owners that their vehicle is due for an oil change and
recommend the preferred dealer and special products
or service packages at the same time. OEMs can
provide wireless software updates that continuously
create an added value for the customer during the
complete car ownership cycle strengthening the bond
with the brand. In the future, telematics will also be
the basis for predictive maintenance, where the driver
is automatically warned ahead of a severe failure. This
service can include recommendations how to mitigate
the problem with the preferred dealership or in urgent
16
cases the dealer close by, which provides a unique
opportunity to avoid a negative product and brand
experience.
A good example for the increased usage of telematics
systems in the US is the Hyundai system "Blue Link".
An integrated multimedia navigation system plus a
connected smartphone are its base. Service related
functions include vehicle diagnostic trouble code
notification, maintenance alerts, service scheduling, and
live owner support. Over 300,000 customers subscribed
to the service in the US. Ford's SYNC package also offers
service related information to vehicle owners.
The vehicle health report as an example provides data
and suggests actions for displayed warning indicators and
scheduled or subserviced maintenance. The system was
already introduced in late 2007.
The independent competition will not easily give up
its current market share of the US aftermarket. They
are responding to OEM initiatives with constant
improvements of their existing processes and solutions.
The major independent service and retail chain,
Pep Boys, recently launched a pilot program in
Tampa Florida. The store has a completely new
design where traditional aisles are replaced with
"Product Neighborhoods" to make finding products
more convenient. The store also features a general
aesthetic makeover and customer conveniences such
as an upgraded waiting lounge with free WiFi and
other amenities. The entire design is focused around
convenience and a more customer centric approach.
AutoZone, another major independent aftermarket
retail chain recently partnered with Osram Sylvania
to provide store personnel and customers an easy to
use touch screen kiosk at the shelf to assist with part
selection. Customers in selected AutoZone stores will
find it much easier to select the right headlights for
their cars and can even watch videos detailing how
to perform the installation, using iPads with special
software (Sylvania's custom headlight app).
These two examples of major players demonstrate
that independents have also realized that a convenient
and pleasant experience is what drives customers to
frequent their stores. Moreover, the big independent
aftermarket service chains are highly professional
businesses, which already have well defined best
Automotive Insights | 02.2013
A Look around the world | USA
The US aftermarket
in numbers
250
Light vehicle car fleet
(2012)
11
Average light vehicle age
(2012)
m
years
146,000
4.0
m
Number of
independent service
points (excluding
gasoline stations;
2010)
Number of employees
(2011)
31,400
Number of light vehicle
dealers (including
franchises; 2012)
focus back to this highly profitable business over the last
few years. They realized its importance in boosting their
customer retention and have initiated programs to improve
the aftersales experience. Improved online presence and
the forethought to leverage all benefits offered by telematics
systems are further measures for OEMs.
However, OEMs still have a long way to go,
particularly given the strong competition of independent
service companies. They also need to find the right
balance when working together with their dealers by
providing them innovative solutions and ideas, without
influencing their operations too much. We believe that
in the end only those OEMs that work closely with their
dealers to offer a pleasant and convenient experience
that is consistently and seamlessly integrated into all
different channels will be successful.
Authors
Antonio Benecchi
Partner
Roland Berger Strategy Consultants, Chicago
antonio.benecchi@rolandberger.com
Source: AAIA; Automotive News; Experian Automotive; J.D. Power; Roland Berger
practices regarding customer experience. Pep Boys,
as an example, opens its stores from Monday to Sunday,
appointments can be made online, and the company
uses apps as a communication platform. Furthermore,
it has already established a reward membership program
similar to other major hotel chains. Program members
are eligible for special treatments like free tire repairs or
battery checks and earn points with every purchase
or service, which can be used for future purchases.
Manufacturers still have
a long way to go
Marc Winterhoff
Partner
Roland Berger Strategy Consultants, Detroit
marc.winterhoff@rolandberger.com
Danny Mueller
Senior Consultant
Roland Berger Strategy Consultants, Chicago
danny.mueller@rolandberger.com
Alexander Baumgartner
Junior Consultant
Roland Berger Strategy Consultants, Chicago
alexander.baumgartner@rolandberger.com
The US aftermarket has lagged behind other industries in
terms of customer convenience and experience. However
OEMs, who neglected the aftersales side, have shifted their
Automotive Insights | 02.2013
17
One region, many different ways.
The aftersales business in CEE
is as divers as the countries
A Look around the world
CEE
Size
matters
Survey on the maturity of the aftermarket in CEE
countries and major trends shaping the industry
T
he CEE aftermarkets have experienced
dynamic growth over the past few years
and are also likely to grow faster than the
established European countries in the
future. The maturity of spare part markets is generally
improving as the countries approach Western European
levels, albeit with different dynamics. As the region is
very diverse, and significant differences exist between
the countries, the key question is where the particular
18
CEE countries stand in terms of market maturity, and
which ones will benefit from the future growth? We
can already say that the maturity of major CEE markets
is still far behind that of developed Western European
countries, and that the "size matters" principle has
proven to be a valid profitability driver along with
the business model and relative market share, for
instance. Some CEE markets have already entered the
consolidation phase for this reason.
Automotive Insights | 02.2013
A Look around the world | CEE
Lean and growing markets
The CEE aftermarket has been virtually rebuilt
from scratch over the last 20 years and is therefore
characterized by a lean and efficient structure. There is
a small number of leading independent distributors in
each of the countries, typically supplying garages directly
via a dense network of branches. Wholesalers and
regional distributors play a lesser role than in Western
Europe, as they focus mainly on fringe regions and
small cities where it is not necessarily economical for
distributors to operate their own branches.
Two major business models have crystallized in the
market – own branches and franchise branch operations.
Most Western European players, such as Rhiag,
Stahlgruber or Trost, approach the market via their own
branches nowadays; they focus on maximizing value
by controlling the network and proximity to clients.
However, the major Polish players, such as Inter Cars,
use mainly the franchise model to achieve fast market
expansion at limited costs.
The combined market size of the CEE aftermarkets
reached EUR 8 billion in 2011, driven mainly by regional
leaders such as Poland (55%), the Czech Republic (17%)
and Romania (12%). As car parc age is higher on average
than in Western Europe (ranging from 12 years in
Slovakia to 14 years in the Czech Republic and Poland),
the independent aftermarket's share of the total is very
significant, reaching as much as 73%. The markets have
achieved strong average growth of 4.7% per annum in
the past (2005 to 2012), driven by increases in disposable
income and a growing car parc. They are also expected to
maintain above-average annual growth of 4.2% between
2012 and 2016.
CEE: A diverse region far from
Western levels
Market maturity in CEE varies widely by country, so we
have created an aftermarket maturity index to assess their
respective stages of development. The index combines a
number of criteria across three major stakeholder groups:
distributors (presence of international players, partner
program quality, for instance), garages (with criteria like
garage size), and end customers (average car age, spend
per car, for example). Thus it provides a comprehensive
assessment of each country.
In a nutshell, CEE still significantly lags behind the
most advanced markets such as Germany or Switzerland
Automotive Insights | 02.2013
(see first figure next page). The differences can be found
across all stakeholder groups.
On average, a customer in Germany spends up to
EUR 500 per vehicle per annum. This figure is just EUR
270 (54% of the German amount) in the Czech Republic
and as low as EUR 230 (46%) in Poland. The average
age of a German car is roughly 8 years, and the car
parc renovation rate is 7.4% per annum. In the Czech
Republic or Poland in contrast, the average age is about
14 years, and the renovation rate stands at 3.6% (Czech
Republic) or 1.5% (Poland, 2011). These differences
are crucial, as past surveys have shown that car owners
significantly reduce their investment in vehicles that
are ten years old or older (for further insights into the
customer behavior check out our cover story on page
24).
Not surprisingly, brand preferences differ from country
to country: the Poles like to drive Fiats, Czechs and
Slovaks favor Škoda, Hungarians prefer Suzukis, and
Romanians like Dacias – based on local footprint
of the brands.
Distributor backgrounds differ greatly among the
countries. In some markets there is a strong presence
of established players from Western Europe. For example,
the Czech Republic and Slovakia have five brands
among the top ten players owned by major international
distributors, including Rhiag, Stahlgruber and Trost. On
the other hand, Romania and Hungary are dominated
by local players with only a minor presence on other
markets and with limited access to foreign capital and
know-how.
The Polish market is exceptional, as it is dominated
by the national champion Inter Cars, a company that
has also managed to expand significantly into other CEE
countries. At the same time, Poland is characterized by
very low margins compared to the rest of CEE. This is
due to customers' high level of cost consciousness and
the proliferation of the franchise model, which focuses
on growth rather than profitability.
Partner programs are already popular in some CEE
markets, such as the Czech Republic, Slovakia or
Poland, and a number of sophisticated programs have
developed (Partner Elit by the leading Czech distributor,
for instance). However, the penetration of affiliated
workshops is still low in Hungary and Romania, and the
share of affiliated garages has room to grow across all
CEE markets, compared to more developed countries
(below 30% contrary to over 60% in Italy and 50% in
Germany).
Furthermore, the average size of garages (measured
as car parc per garage) is smaller in CEE, where small
19
Our "Aftermarket maturity index" visualizes the stages of development of different markets
Switzerland
Germany
Maturity index
Romania
Laggard
Poland
Hungary
Czech
Republic
Slovakia
Fast follower
Follower
Italy
Advanced
Most advanced
Source: Roland Berger
Overview about key aftermarket metrics in CEE and selected Western European countries
C
Customers
h
zec
lic
ub
d
kia
va
lan
o
Po
Sl
p
Re
n
Hu
ry
ga
R
om
ia
an
ly
Ita
lan
i
Sw
r
tze
d
y
an
m
er
G
Spend per car
Age of fleet
Fleet renovation
Car penetration
Distributors Market consolidation
Direct access to garages
Presence of internat. players
Partner program quality
Involvement in buying groups
Garages
Average garage size
Presence of specialized chains
Total
Positive/high
20
Source: Roland Berger
Negative/low
Automotive Insights | 02.2013
A Look around the world | CEE
workshops with limited equipment and skills are still
very common. The average figure is below 1,500 vehicles
in most CEE markets, while the developed countries
reach about 2,000.
However, the lower maturity level of many CEE
countries means that the markets still present a
significant investment opportunity. They are likely to
experience above-average growth driven by an expanding
car parc, spend per car approaching European levels, and
the declining average age of vehicles driven.
end customer to purchase the necessary spare parts and
at the same time to book a slot at an Inter Cars partner
garage to have them fitted. Nevertheless, the risk to
established players from the online segment is not
considered to be very high at the moment.
Exclusivity, which was very common in CEE in
the past, has gradually been abandoned, as distributors
have become increasingly reluctant to commit
themselves to sales targets and instead are choosing to
offer their clients a wider range of products. At the same
time, suppliers have opted for maximum possible access
to the market in order to maintain their sales levels.
Several global trends affect
the CEE markets, too
Consolidation underway
A number of global trends are shaping the CEE
aftermarkets. The crisis hit carmakers with a local
footprint, and their regional sales and aftermarket
business for new vehicles declined. Since then,
OEMs have been trying to penetrate the independent
aftermarket segment of older vehicles (more than
three years) to generate more business and improve
profitability. The main levers used focus on increasing
customer loyalty and satisfaction and improving
cost competitiveness by means of focused marketing
campaigns.
At the same time, major independent distributors
are striving to set up stronger links to leasing, fleet
management and insurance companies. Thus, they gain
a greater share of the young cars segment (up to three
years). Relations with insurance companies (which could
save up to 20% of the costs by using IAM garages) are
not yet well established – mainly due to substandard
service levels provided by the IAM workshops. However,
leasing companies and fleet managers have increasingly
been testing the IAM segment over the last three years
in order to optimize their cost base.
Overall, despite the fact that OEMs have significant
financial clout and their workshops have a strong quality
and technology base, the IAM segment is expected to
hold, or even slightly improve its position. Its remaining
cost competitiveness and the improving service level
contribute to this advancement.
The development of online business, especially B2C,
was accelerated by the crisis in CEE, as end customers
became increasingly cost-conscious. Many buy parts
online nowadays and then ask a garage to fit them.
Distributor-supported web platforms are also beginning
to appear. One example is motointegrator.pl, run by
the leading Polish distributor Inter Cars. It enables the
The markets in a number of CEE countries are in
turmoil, characterized by ongoing consolidation, with
some players strengthening their positions and others
leaving the battleground.
Especially the most developed markets, such as
the Czech Republic and Slovakia, are on the move,
with major European players consolidating the market
(though some are still finding it hard to get into in the
black). Trost initiated the consolidation wave with its
Meteor takeover in 2008. Rhiag added Auto Kelly to
its portfolio, next to Elit, in 2010 – establishing a clear
number-one player in the Czech Republic and Slovakia.
Stahlgruber acquired Autobenex in 2012 as a second
brand next to Autocora to strengthen its position in the
Czech Republic. At the same time, a number of players,
especially from those ranked fifth to fifteenth, were
forced to leave the market, as their position and growth
prospects were no longer sustainable.
There are also some local growth stories. Inter Cars
has managed to almost double in size to become nearly
three times larger than its most important competitor in
Poland. It has also expanded into neighboring countries,
where it is now present in ten neighboring markets.
Since 2008, Inter Cars has opened 83 new branches and
entered four markets, though Poland still accounts for
more than 75% of its business.
The strength of the top ten leading players has been
growing continually over the last few years at the
expense of both other national players and local
wholesalers. For example, the top ten distributors in
the Czech Republic have increased their market share
by 15% since 2007. In Slovakia, the top ten even have
grabbed 17%.
As the CEE markets are rather small compared to
Germany, for example, they are already characterized
Automotive Insights | 02.2013
21
A Look around the world | CEE
by a lower degree of fragmentation, with the top five
players holding over 40% of all the assessed markets.
This share is likely to grow further as the countries
mature and the major players shore up their positions.
Size matters!
Spare parts distribution is one of the most competitive
businesses, and only the largest players are able to
achieve positive profitability (see the infographics
below). One reason is that access to capital and knowhow becomes critical (especially on small markets)
as complexity increases – driven by the growing
importance of electronics and a higher variety of models.
Thus, a growing number of stock-keeping units have
to be available, and greater demands are made on the
services and intelligence of a garage.
Secondly, the largest players are typically those
with the highest relative market share (Inter Cars is
almost three times larger than Fota in Poland, and
Rhiag is four times the size of Stahlgruber in the Czech
Republic). This gives them significant advantages on
a number of criteria: only the largest players are strong
enough to negotiate the best deals with suppliers,
achieve economies of scale in logistics, have sufficient
capacity and strength to develop an affiliation program
and private label brand, and provide their clients with
the required service level and tools.
Exceptions include specialized players such as ACI
in the Czech Republic (crash specialists), which can
achieve high profitability with a specific USP (unique
selling proposition). Of course, other key drivers
like the business model can also significantly drive
profitability.
As a consequence, buying groups, both global and
local, have significantly gained in importance. Global
players, such as ATR or Temot, increased their joint
revenue from EUR 7 billion to EUR 12 billion between
2007 and 2011. This rise is due to their attraction
for distributors, which find them an efficient tool for
increasing their negotiating power vis-à-vis suppliers.
Similarly, a number of consortia were set up by local
wholesalers (such as Nas Service Group in the Czech
Republic, founded in 2011) to leverage their combined
buying power and improve their quality of service.
How to generate synergies?
Recent cases have indicated that synergies are hard to
realize in the aftermarket distribution business, and are
only to be found if two players merge in adjacent or the
same markets.
Size matters: The bigger a player, the higher its chance to achieve profitability, as shown
by the matrix of major CEE independent distributors
Sales [EUR m]
450
150
100
50
20
0
-25
-20
-15
Major CEE independent distributors
-10
-5
0
5
10
15
20
EBIT margin [%]
Source: Roland Berger
22
Automotive Insights | 02.2013
A Look around the world . CEE
Buzzy future: The CEE markets are on the move and likely to experience above-average growth in the next few years
Consolidators can count on synergies from sharing
investment in the diagnostic tools provided to garages,
sharing overhead functions, streamlining product
portfolios, or optimizing transportation and warehousing
costs. A number of recent cases tapped synergies by
accessing a private label or affiliation program developed
by a particular distributor.
Finally, let's not forget synergies from improved
negotiating power vis-à-vis suppliers. However, once
the buying groups are already established as a strong
negotiating platform in this respect, benefits of scale
achieved via consolidation are diminished.
Significant care must be taken to implement synergy
levers, even if they relate to the background functions
– there must be no negative impact on customer
satisfaction. The risk of losing market share is high, as
competitors are ready to take advantage of every small
mistake.
To conclude, size matters, since only the large
players have sufficient resources to succeed in the highly
competitive but (in terms of growth prospects) still
appealing markets with a number of regional specifics.
Both consolidation and organic growth seem to be valid
ways to tap the region's potential. However, the optimal
size should be reached with a wise and well-thought-out
approach. Otherwise there is a considerable risk that a
step forward will turn out to be a jump back.
Automotive Insights | 02.2013
Authors
Roland Zsilinszky
Principal
Roland Berger Strategy Consultants, Prague
roland.zsilinszky@rolandberger.com
Jan Sklenar
Senior Consultant
Roland Berger Strategy Consultants, Prague
jan.sklenar@rolandberger.com
Jaroslav Hrabovsky
Consultant
Roland Berger Strategy Consultants, Prague
jaroslav.hrabovsky@rolandberger.com
23
Cover story
Strategy
Customization –
the key to success
in aftersales
T
he car industry has entered a fierce but
hitherto largely unnoticed race to win the
maintenance, repair and parts business.
Bosch, the world's biggest automotive
supplier, took over US shop equipment provider SPX
Service Solutions for more than USD 1 billion, while
competitor Continental laid its hands on British
diagnostics specialist Omitec, and PV Automotive
bought pitstop, the German repair shop chain.
The aftersales market is a safe haven with strong
margins for suppliers and independent repair shop
24
chains, and also the OEMs. Manufacturers already generate
75 to 80% of their profits from aftersales products and
services although they account for no more than 20% of
sales – and the profit share is rising. Big corporations like
VW and BMW long ago included "aftersales" in the official
title of their board members in charge of the area.
Why is aftersales becoming so important? It's because
the rules of the automotive game are undergoing a
fundamental change. Current trends will shake up the
industry between now and 2025: Supply and demand
are increasingly shifting to Asia, competition along with
Automotive Insights | 02.2013
Who finds the key to success?
The fight for the customer is heating up
in the automotive aftermarkets
Many OEMs are still neglecting the aftermarket.
But the repair and service business can be a major
profit driver, especially in times of thin margins.
Our new study says how to get it right
consolidation pressure are intensifying, and the increasing
demand for well-affordable vehicles is giving rise to an
entirely new segment.
While alternative new powertrains will even speed
up the pace of change, young urban consumers are
challenging the very concept of car ownership, a trend we
call demotorization. They call for new mobility services
such as carsharing and carpooling, which are already
experiencing rapid growth.
To survive in the market, aftersales players must
carefully listen to their customers and provide the
Automotive Insights | 02.2013
goods and services they really want. This must be clear
from their approach to communication and product
portfolio design. Micro-marketing – with a service
offering tailored to each individual customer – would
be the ideal solution.
The extreme complexity in today's repair shops,
however, rules that out. The task at hand is to identify
the individual target groups and put together suitable
– and profitable – service offers. The first step for every
aftersales player therefore is a detailed product, service
and customer segmentation.
25
Cover Story | Strategy
Aftersales is the most
important profit driver
in new car registrations. After a dip, the figures have
been on the rise again since 2010, and this trend should
continue – although the 2009 record of 3.8 million
newly registered cars will not be achieved again in the
foreseeable future.
Along with the number of new registrations, the
number of cars on the road is also continuing to rise in
Germany. The figure today is 42 million, set to rise to
44 million by 2015.
Overall, Germans register more new cars than they
scrap, export or no longer use. This drives up average
car age. In 2003, the average German car was 7.4 years
old, in 2012 the figure was up to 8.5 years according
to Germany's Motor Vehicle Authority. In particular,
the share of cars aged between seven and ten years is
on the rise.
Older cars need more servicing, which is speeding
up aftersales growth. With 1.2% anticipated annual sales
growth for all players by 2016, it will continue to be
a source of stable income. Spare parts and accessories
account for the lion's share of that business, with over
30% and 20% respectively.
The aftersales market is huge but difficult to grasp.
In 2011, sales in Germany alone were a whopping
EUR 38 billion. The players range from OEMs and
OES-players to independent parts suppliers, wholesalers,
retailers, repair shop chains and independent repair
shops. What's more, current trends allow players from
other industries to enter the market with innovative
business ideas. Just think of the information &
communication technology (ICT) companies that will
provide all the Internet and cloud services that are
becoming standard in cars. The interactions among
the individual players are very complex, however. This
lack of transparency allows the providers to charge nice
markups without anybody noticing, but it also leads to
uncertainty among customers.
New car registrations in Germany are leading to
moderate aftersales growth even in times of crisis. In
2009, Germany's cash-for-clunkers scheme led to a peak
The slight but steady growth in the number of cars on the road and of new registrations underlines
the importance of aftersales
New registrations in Germany
Cars on the road in Germany
[vehicles m]
[vehicles m]
65 60 -
CAGR of cars on the road
+1.0%
3.8
55 -
3.1
50 -
2.9
45 -
41.7
41.8
42.1
22%
23%
23%
20%
20%
20%
40 35 30 25 20 -
3.2
- 4.0
3.3
3.4
3.5
- 3.0
- 2.5
- 3.5
42.8
43.4
44.0
44.4
22%
24%
22%
22%
22%
22%
22%
20%
5 -
0-3
4-6
7-10
>10
Age
groups
(in years)
- 2.0
- 1.5
24%
24%
25%
26%
26%
25%
28%
33%
33%
32%
32%
31%
31%
30%
2009
2010
2011
2012
2013e
2014e
2015e
15 10 -
New registrations
0 -
- 1.0
- 0.5
- 0.0
Source: Datamonitor; Roland Berger
26
Automotive Insights | 02.2013
The four most important
aftermarket trends
Some developments, however, give cause for concern. Not
all players stand to profit to the same extent. Some may
even have to tolerate painful cuts in their sales and profits.
Four market changes stand out as they have a direct
impact on the customer interface:
1. Stronger consolidation
The aftersales business is characterized by repair
shop insolvencies, mergers and acquisitions – the
consolidation trend has been tangible for quite some
years now. In retail, independent repair shops have
recently been gaining market share.
Of course, we also need to consider the fact that new
cars need fewer repairs during their lifecycle. Less mileage
and longer-lasting parts have continuously pushed down
the amount of service required (from 0.98 annual
service appointments in 2005 to 0.9 today).
Consolidation on all sales levels – In retail,
independent PLAYERS are gaining market share
52%
51%
51%
52%
52%
52%
54%
54%
55%
Repair shops in Germany
['000]
CAGR -2.2%
45 - 41.7
40.2 39.8 39.1
38.3 38.1 38.0 37.7
40 35 30 -
20.1 19.8
19.7 18.9 18.3 18.1 17.6 17.4
25 -
33.5
15.0
20 -
By 2025, the amount of workshop labor hours is
expected to drop by 20 to 25%. Consolidation will
continue in the entire sector – from OEM and OES to
parts wholesalers and repair shops. This will shift more
power to specific players, while others will have to
struggle for survival.
The positive effect of consolidation is that the
surviving repair shops will ultimately enjoy better
capacity utilization.
2. New players & business models
Players from other industries and intermediaries are
using innovative business models to gain a foothold
in the aftersales market and occupy the interface with
customers by offering new services. Unlike in other
industries, this makes the situation less clear for the
customer.
Insurance companies were the first to make a
move. For quite a few years now, they have been using
alliances to channel customers into selected (authorized
and independent) repair shops. This channeling process
already works very smoothly for accident and glass
repair claims. The next logical step would be to transfer
this approach to the service realm.
Selling spare parts over the counter, with no repairs,
is becoming an increasingly important business model.
For authorized dealers, trade with other repair shops
and end customers has become a pillar of their business,
potentially accounting for more than 30% of their total
sales if well organized and managed.
White label products are also gaining importance
in the aftersales market. They appeal to price-sensitive
customers with older cars both in the traditional spare
parts and service business. More and more new players
are entering this segment, joining the ranks of the wellknown guaranty and insurance providers that discovered
this niche a long time ago. For the customer, it is
becoming harder to stay on top of this diverse range
of offerings. But white labels definitely offer clear cost
benefits.
15 10 - 21.6 20.4 20.1 20.2 20.1 20.0 20.4 20.3
18.5
5 0 2005 2006 2007 2008 2009 2010 2011 2012 2015e
Share of independent repair shops
Authorized repair shops
Independent repair shops
3. Disruptive technologies and mobility concepts
Established and new players can also use new
technologies to tap into innovative revenue sources.
Linking up cars with the Internet ("infomobility") for
car-to-infrastructure communication and ICT certainly
offer enormous potential. For classic automotive services
and products, the web has long since become a sales
channel. At the moment, for instance, specialized online
repair shops are achieving breakthroughs with their own
online portals.
Source: ZDK; press research; Roland Berger
Automotive Insights | 02.2013
27
Cover Story | Strategy
Among the new mobility concepts, fleet management
and carsharing have emerged as the most important
topics. In 2012, about 700,000 Europeans were sharing
some 21,000 cars, and the figure is expected to hit 15
million people and 240,000 cars by 2020.
Several OEMs have already entered the
carsharing business with own brands. further
players are examining market entry options
Top players by company type (selection)
such as carsharing providers, on the other hand, will
multiply. Aftersales players will therefore have to tailor
their offerings even more precisely to the needs of the
remaining private car users.
Carsharing is a response to the new demand
for mobility and is seeing continuous growth
Carsharing users in million,
2006-2020
15.0
OEMs
4.0
Germany
Europe
Rental
companies
0.1
Independent
providers
Source: Bundesverband Carsharing e.V.; University of California;
Frost & Sullivan; Roland Berger
Fleet management is already having a major impact
on the aftersales business. With just over a million newly
registered fleet and rental cars, business customers
already account for about a third of annual demand in
Germany.
This structural change means that the proportion
of private customers that have their cars serviced will
fall. Framework agreements with large customers
28
0.2
2006
0.3
0.7
2012
2020
Source: Bundesverband Carsharing e.V.; University of California;
Frost & Sullivan; Roland Berger
The data required for customized offers is continuously
improving. In addition to vehicle data, aftersales
players have access to an increasing wealth of personal
information. More and more customers are willing to
reveal information about themselves if this ensures them
individual service.
In other areas, this phenomenon is nothing new.
Amazon, for instance, has shopping suggestions for
registered users based on their order history. This could
help repair shops put together individual offers. Basic
services such as reminders of the next scheduled service
appointment or mileage-based maintenance suggestions
should become standard.
4. Service must be an individual experience
So far, none of the big OEMs has customized its
aftersales approach. This is surprising as selling new
cars is becoming ever more sophisticated so as to reach
more specific target groups. Customers tend to project
this positive experience onto aftersales. Providers that
want to establish long-term relationships, and want
Automotive Insights | 02.2013
customers to buy the same brand the next time, must
work for this loyalty and meet customer requirements
throughout the entire car lifecycle.
And here is where OEMs have the most catching
up to do. At the moment, hardly any OEMs manage to
retain their customers beyond the first four years
of buying a new car. This means that they are missing
out on a large chunk of the high-margin repair business.
These lucrative customers are deserting OEMs in favor
of independent repair shops and shop chains. More than
60% of the people who own cars that are older than
eight years do not use OEM-authorized repair shops
any more. The figure is 2 to 3% for cars that haven't
celebrated their second birthdays yet.
Where repair/maintenance work is done
categorized by vehicle age
Share
[%]
The battle for customers has
kicked into high gear
At the same time, more and more providers are competing
in aftersales – and directly at the customer interface.
These providers are giving authorized repair shops and
other formats in particular a constant struggle on the
maintenance and repair market. Repair shop chains in
particular have continuously developed over the past few
years. They have raised their profiles primarily through
aggressive expansion of their branch networks and largescale ad campaigns, which have helped position them as
broad-coverage players offering better value for the money.
The development over the past five years can be split
into two phases. In the first, multiple new repair shops
and repair shop chains entered the market and have taken
market share from OEMs on a grand scale. In response,
the OEMs created initiatives designed to claim back their
piece of the profitable aftersales market (flat rate contracts,
additional parts lines, counter service concepts). They were
able to halt the erosion of their market share – for a while.
100 -
Showdown on the maintenance and repair
market: OEM and independent repair shop
formats battle it out
80 60 40 -
Phase I Phase II Phase III
20 0<2 years
2-4 years
4-6 years
6-8 years
>8 years
Do-it-yourself
Independent repair shops/chains
Authorized repair shops
Source: DAT-Report 2013
Repair shop
chains take
over a major
Market share of the
aftersales
share
market
[%]
OEMs launch
initiatives
and win back
some market
share
- 4.4%
+2.8%
60 50 40 -
The development in Phase
III is still unclear: Those
that best address customer
needs will establish
themselves on the market
0.0%
.4%
+13
30 -
If you buy a premium car for more than EUR 100,000,
you are probably going to get the same service as
the owner of a EUR 15,000 low-end car. This is
unbelievable, given that customers can switch providers
at little or no cost and that services offered are more
or less the same everywhere. Customer touchpoints
in the aftersales business offer particularly valuable
opportunities to spot individual needs, meet them and
thus boost both customer satisfaction and profits.
Automotive Insights | 02.2013
20 10 0 2007
2009
Authorized repair shop
2011
Other repair shop
2013
2015
Do-it-yourself
Source: DAT-Report 2013; Roland Berger
29
Cover Story | Strategy
Stand out to survive
Consumer profile example John smith,
25 years old, male, single, low-level income,
average education, employed full-time
Who will win the next round? The jury is still out. But
the winner will definitely be the player that best meets
the needs of individual customer segments with a
differentiated range of products and services. In the
future, standing out from the competition won't just be
advisable, but crucial to survival.
Clearly dividing customers into various segments
offers similar advantages as micro-marketing. Players
can assemble service packages tailored to the values
and needs of each segment so that the customer
experiences the maximum of individual attention.
To do this, aftersales players first need a much better
understanding of who their customers are and what
they need. We at Roland Berger Strategy Consultants
tested this segmenting process on the German market
with the "RB Profiler" tool. Using 18 values, the RB
Profiler methodology is designed to measure, visualize
and analyze the values and needs of individuals and
groups. Thus, we shed light on customer and market
values plus further sociodemographic criteria and
usage behaviors. We also identified the target groups
that promise companies the greatest strategic and
commercial success.
Together with market researcher GfK, we surveyed
over 1,500 aftersales customers in Germany. Based on
their responses, we were able to segment them into
six meaningful brand- and values-specific groups. Key
differences emerged, not just in service preferences,
but also in demographics, values and service behavior
in general:
1. Low-involved Traditionalists
2. Service-focused Rationalists
3. High-demanding Enthusiasts
4. Status-oriented Youngsters
5. Price-focused Emotionalists
6. Cost-oriented Minimalists
Naturally, segmenting by brand or repair shop chain
would result in even more precise groupings. But
even this analysis reveals differences: for example,
three of the six segments show a strong preference
for authorized repair shops and an above-average
tendency to request original parts for maintenance
and repairs.
E
-
+
R
Value of comparatively
less importance
E Emotional values
Value of comparatively
more importance
-
R Rational values
Minimalist values
+ Maximalist values
Interpretation
• Mr. Smith is a progressive and hedonistic person
• He finds new, innovative technologies very exciting,
is status-oriented and – referring to the criteria in our
consumer profile – into "thrill & fun"
• Money is definitely an issue – He is relatively costconscious
• Ethical and traditional values have no major meaning
for him – He is comparatively less concerned about
quality or service, or about society, the environment
or his own health
Source: Roland Berger
Demographics
xx
30
Avg. age [years]
Female
Male
Recidence big city
Recidence rural area
There are six aftersales service segments in Germany
1
34%
5
47
E
•
•
•
-
+
•
R
3
2
Low-involved Traditionalists
E
biggest segment (23%)
very high income
relatively low cost
focus
drive new premium
vehicles
•
•
-
+
R
33%
4
E
•
•
•
•
-
+
•
•
4
High-demanding Enthusiasts
•
•
•
-
+
5
17%
R
6
Price-focused Emotionalists
8
35
E
•
•
•
-
+
R
Vehicle
x
56%
•
-
Share of used cars
•
+
•
•
R
xx%
Avg. age [years]
11
•
13%
xx
youngest segment
(avg. 28 years)
cost-oriented
very low income
drive old and used
vehicles
75% drive used cars
Cost-oriented Minimalists
E
emotional values and
"status"
cost-oriented
very low interest in the
vehicle and therefore
no clear preferences
regarding aftersales
services
31
17%
44
33
75%
11
•
R
oldest segment (avg.
50 years)
dominated by women
rational, traditional
values
want explanations for
service/price
Status-oriented Youngsters
E
very high income
progressive values
typcial OE customer
want top services for
their premium vehicles
and VIP treatment
46
17%
28
54
51%
9
50
49
23%
38
Service-focused Rationalists
68%
16
lowest income
rejection of progressive
tendencies and
performance
drive old and used cars
vehicle is not a priority;
limited interest in
aftersales services
13%
Usage of OEM original parts [%]
xx
Size of segment
31
What makes
each segment
unique?
To learn more about customers' specific desires and requirements,
we examined the six segments in terms of the following categories:
• General preferences regarding cars
• Criteria for selecting a repair shop
• Satisfaction with the repair shop
• Readiness to switch repair shops and reasons why
• Preferred service packages and contracts
SIX segments based on customers'
specific desires and requirements
1 General preferences regarding cars
Here the spectrum ranges from High-demanding
Enthusiasts, for whom the car is sacred and who put
great value on first-class service, to the Cost-oriented
Minimalists, who basically don't care what the car
brand and service are like – as long as it's cheap.
Emotional connection to the car
Low-involved
Traditionalists
Deviation (%)1)
I never miss a service
appointment for my car
Service-focused
Rationalists
Deviation (%)1)
7
1
High-demanding
Enthusiasts
Deviation (%)1)
31
My car's appearance is
important to me
(cleanliness, scratches, etc.)
-4
-2
36
I know the precise technical
details about my car
-6
-8
33
Status-oriented
Youngsters
Deviation (%)1)
-16
2
-3
Price-focused
Emotionalists
Deviation (%)1)
Cost-oriented
Minimalists
Deviation (%)1)
-18
-34
3.0
-19
-35
3.1
-7
-24
3.1
2 Criteria for selecting a repair shop
As the names of the segments reveal, Price-focused
Emotionalists and Cost-oriented Minimalists place
special emphasis on low price. At the opposite end are
Traditionalists and Enthusiasts, for whom the price of
products and service is less important.
Regarding traditional needs, it's primarily the Servicefocused Rationalists who set great store by top service,
namely as regards quality of the service performed,
personal support and warranty and guarantee content.
By contrast, Price-focused Emotionalists have few
discernible preferences in this area. They view their cars
as a basic commodity, and repairs and maintenance are
simply a necessary evil.
For high-demanding enthusiasts and Servicefocused Rationalists, fast service is just as important
as being able to easily get in touch with the repair
shop, such as by phone or Internet. Particularly
important to Status-oriented Youngsters is innovative
and mobile communication – for scheduling the first
appointment and for tracking order status. Price-focused
Emotionalists recognize that being unwilling to pay
higher prices means forgoing certain conveniences,
1) Deviation from the average agreement in %; a positive value indicates above-average agreement
2) Scale: 1 ("absolutely agree") to 6 ("absolutely do not agree")
32
Average2)
Automotive Insights | 02.2013
Cover Story | Strategy
such as collection and delivery service, or being able to
choose a particular time slot.
The picture is not much different for actual
customer support. It's the Service-focused Rationalists
and the High-demanding Enthusiasts who prize
intensive and individual support – whether in the form
of preferential treatment, express service or even house
calls. The Price-focused Emotionalists and the Costoriented Minimalists put much less value on this kind
of treatment.
Service priorities
price
Low-involved
Traditionalists
Deviation (%)1)
I am willing to forgo quality
and service to pay a lower
price
-12
I always pick the cheapest
product
-15
Needs
They explain the maintenance
or repairs in detail
CONVENIENCE
-3
3
0
They immediately give me
personal attention when I
come in
-4
They use only original parts
Support
Service-focused
Rationalists
Deviation (%)1)
2
Maintenance/repairs are
performed quickly
-3
Repair shop is easy to contact
by cell phone or online
0
I get preferential treatment when
making an appointment
-8
They make house calls
(e.g. for tire changes)
-12
High-demanding
Enthusiasts
Deviation (%)1)
Status-oriented
Youngsters
Deviation (%)1)
Cost-oriented
Minimalists
Deviation (%)1)
Average2)
-10
3
20
24
3.5
-11
6
15
15
3.8
6
1.9
33
10
-2
-61
32
14
-5
-49
20
26
-7
32
13
37
10
28
18
3
18
7
14
Price-focused
Emotionalists
Deviation (%)1)
-7
4
-4
2.1
-1
2.8
-38
-58
-3
1.9
12
-68
-39
-12
1.9
-15
2.4
-18
2.4
3 Satisfaction with the repair shop
Service-focused Rationalists and Price-focused
Emotionalists display the largest differences here. The
former are typically customers of OEM/authorized
repair shops and are basically satisfied with their
experience. This is an indication that the first initiatives
toward improved customer focus are being launched
there. Repair shop chains and independent repair shops
especially have catching up to do here, as their typical
target groups, such as the Price-focused Emotionalists,
are clearly dissatisfied.
Satisfaction with the repair shop
Low-involved
Traditionalists
Deviation (%)1)
Service-focused
Rationalists
Deviation (%)1)
High-demanding
Enthusiasts
Deviation (%)1)
Status-oriented
Youngsters
Deviation (%)1)
Price-focused
Emotionalists
Deviation (%)1)
Cost-oriented
Minimalists
Deviation (%)1)
Average2)
Quality of the work performed
-1
17
8
-4
-33
3
1.7
Personal support
-1
19
8
-9
-31
6
1.7
Customer's assessment
-2
16
8
-9
-26
5
1.8
Automotive Insights | 02.2013
33
4 Readiness to switch repair shops and reasons why
Poor quality plus non-approved repairs are two key
reasons customers switch repair shops. Service-focused
Rationalists and High-demanding Enthusiasts also switch
frequently because the range of services offered is too
small. Contrary to what you might expect, Price-focused
Emotionalists and Cost-oriented Minimalists don't do this.
Reasons for switching to a new repair shop
Low-involved
Traditionalists
Deviation (%)1)
Service-focused
Rationalists
Deviation (%)1)
High-demanding
Enthusiasts
Deviation (%)1)
Status-oriented
Youngsters
Deviation (%)1)
Price-focused
Emotionalists
Deviation (%)1)
Cost-oriented
Minimalists
Deviation (%)1)
Average2)
Poor quality of repairs/services
10
12
7
-8
-47
11
1.7
The agreed-upon repairs/
services were not performed
5
10
5
-5
-39
13
1.9
Too few services offered
1
15
10
-2
-27
2.6
-13
5 Preferred service packages and contracts
In this section we identified the biggest differences
between the six segments. There is, for instance, a
dividing line between three typical customer segments
of authorized repair shops and the three other ones.
While the first prefer original spare parts, customers in
the other three segments also accept identical or noname parts due to cost considerations.
For service contracts the dividing lines are different:
High-demanding Enthusiasts prefer comprehensive
service and maintenance contracts for their often
newer vehicles. So do Status-oriented Youngsters –
although they tend to drive considerably older cars.
In the other four segments, these contracts do not
play a major role.
In particular the two customer segments mentioned
above frequently use repair shop and service portals on
the Internet: AutoScout24, for instance, brokers service
orders, clearly lists repair shop services and thus addresses
new customer groups via regional marketing through
new media. Another example is DriveLog by Bosch
where customers with a "digital service log" can control
costs and save money.
Each aftersales service provider's customer base
contains all six customer segments to some degree.
Although the first two groups can be found to a greater
degree at OEM-authorized repair shops, independent
repair shops cannot ignore them. And authorized repair
shops also count Status-oriented Youngsters, Price-
Preferred service packages
Low-involved
Traditionalists
Deviation (%)1)
Repairs/maintenance with
original parts from the
manufacturer
Repairs/maintenance with
generic spare parts (no
original parts)
Service-focused
Rationalists
Deviation (%)1)
17
-60
High-demanding
Enthusiasts
Deviation (%)1)
9
-6
29
Status-oriented
Youngsters
Deviation (%)1)
37
Cost-oriented
Minimalists
Deviation (%)1)
-62
-21
-27
-65
Price-focused
Emotionalists
Deviation (%)1)
62
42%
187
1) Deviation from the average agreement in %; a positive value indicates above-average agreement
2) Scale: 1 ("absolutely agree") to 6 ("absolutely do not agree")
3) Percentage of respondents ticked the option or answered "yes"; multiple answers possible
34
Share3)
Automotive Insights | 02.2013
11%
Cover Story | Strategy
focused Emotionalists and Cost-oriented Minimalists
among their customers.
It seems clear why differentiated service portfolios
are needed, but why have most aftersales service
providers not yet defined distinctive customer profiles
for themselves? One of the main reasons is probably
the expected effort and complexity. But even making
a correct distinction between business customers and
private customers can be a first step toward improving
customer satisfaction. Many private customers still
choose their repair shop based primarily on value for
money, whereas corporate fleet operators often go
for those that offer the best technical skills and the
greatest convenience.
Preferred service agreements
Low-involved
Traditionalists
Deviation (%)1)
Agreements that cover all
maintenance but no repairs
2
Service-focused
Rationalists
Deviation (%)1)
High-demanding
Enthusiasts
Deviation (%)1)
-6
19
Status-oriented
Youngsters
Deviation (%)1)
Price-focused
Emotionalists
Deviation (%)1)
Cost-oriented
Minimalists
Deviation (%)1)
-2
-4
-29
3.4
Average2)
Agreements that cover all repairs
but no maintenance
-6
-5
14
12
-2
-19
3.7
Service packages that cover all
maintenance and repairs
-5
-1
20
11
-15
-26
2.9
-5
24
12
-13
-22
3.3
Service packages that cover all
maintenance and repairs, plus
extra services such as collection
and delivery service
-81
Sustainable strategies for
aftersales players
To ensure their aftersales business is set up in a
sustainable way, all players must stay on top of formatand company-specific issues.
If we look at the OEM-authorized repair shops,
it is clear that their special structure is one of their
most important strengths: they have standardized
processes developed by OEMs, where they can
implement their brands throughout the entire repair
shop network. However, in doing so, they must ensure
that their repair shops don't perceive this as a further
administrative burden, but rather as a competitive
advantage. Authorized repair shops, which generally
lack staff necessary for developing a differentiated
service concept, should receive support from a strong
OEM. This includes appropriate systems, relevant
training and other competent support. The OEMs, for
instance, can provide standardized marketing material,
develop appropriate data-supported pricing policies
or host customer events in the shops. And they can
also conduct analyses and brand-specific customer
segmentation so that the shops can focus on their core
competencies. The resulting USP offered by the dealer
Automotive Insights | 02.2013
must be reflected not only in the bonus, but also in
the dealer's local market penetration.
Independent shops and chains have two major
advantages: transparent fixed-price offers and the
option of working for key accounts with multi-brand
fleets. For independent shops, the trick is to offer
standard services consistently across all brands.
Our customer segmentation approach is ideal for
such providers because it is not restricted to a specific
vehicle brand, but is instead based on customers and
their values. Integrated shops and chains can easily
use this approach for all branches.
Professional players such as Bosch Car Service or
A.T.U. offer customer cards, warranties and flat rates
so that profiles can be set up for the customers, or
customers create their own profiles. The proven recipe
of offering the best value for the money can be further
refined. Independent shops and chains can develop into
a type of service discounter.
Furthermore, they should approach commercial key
accounts and market their multi-brand competence as
a USP: Commercial customers would have to manage
large numbers of providers, if they wanted to use
OEM shops for their various brands. In contrast, a
single brand-independent chain can service all kinds of
vehicles. Independent shops can entice key accounts
35
There's no single tool that does it all: Aftersales customers are as diverse as the tools in the garage
by offering attractive quantity discounts that would
not even be possible if the fleet had to draw upon the
services of multiple OEM-authorized shops.
Segmenting and contacting customers requires the
ability to use a specially designed process to address
customers, often mapped in systems. Such systems
include the Dealer Management System (DMS) and
CRM or marketing systems at the interface between
the retailer and the wholesale organization.
Developing a corporate USP
Even more important than format details is a
customized approach that takes the specific company
into account. Our analysis and the six segments
we identified form the basic principles of aftersales.
However, our approach unleashes its full potential only
after each market player has analyzed its own specific
customer base. Only those that know which segments
they operate in, and to what degree, can effectively
stand out from the competition.
36
The war to win the customer
is heating up
There are many different types of repair shop offers
at the customer interface: Premium or budget offers,
key droppers or active receipt, fast-lane or airport
service, pick-up and collection or receiving stations
in city centers, all-inclusive service contracts or
remanufactured parts. Going forward, market players
must cover all of these options in a better way.
In the future, aftersales providers must have a clear
service USP and customized service. The war to win
the customer is heating up as it has become clear that
aftersales is a lucrative business. However, competition
is fierce and unprofitable shops are disappearing, while
the remaining players are increasing their market
power through M&A. Consolidation pressure, new
market players and mobility concepts combined with
rising customer expectations are making life tough for
providers. Nevertheless, there are strategies for success
in this environment. An essential part of this is an
Automotive Insights | 02.2013
Cover Story | Strategy
Authors
Service differentiation
in other industries
Telecommunications
Access to the World Wide Web is a commodity
such as electricity. This makes differentiating
one's services all the more important. To
stand out from the competition, providers are
focusing on speed, reliability, hotline support,
on-site service or add-on services such as
anti-virus programs. This enables them to offer
customers different packages with different
prices. What's more, customers can switch
plans (at least in the case of upgrades) if their
needs should change.
Airlines
Airlines promise a similar USP. The customers
can usually decide whether to fly economy,
business or first class. They can select seats,
rebook at short notice or, for a surcharge,
take excess baggage along according to their
personal preferences. However, even within
a class it is possible to select different service
levels and accommodate individual wishes –
and this doesn't only apply in the air, but also
on the ground (Economy Flex vs. Economy
Basic, for instance). Furthermore, frequent
flyer customers receive special services such as
upgrades, use of the lounge or a shuttle service.
Online retailers
Many online shops use their customers'
previous purchasing behavior to recommend
other potentially interesting offers (by e-mail
or on the screen during a product search).
This means customers receive customized,
individual offers (cross-selling).
individual customer analysis to develop a differentiated
range of products in line with ideal micromarketing.
At the moment, very few providers have such
a refined USP. This means first movers can gain a
valuable competitive edge in the war at the customer
Automotive Insights | 02.2013
Philipp Grosse Kleimann
Partner
Roland Berger Strategy Consultants, Munich
philipp.grossekleimann@rolandberger.com
Dorit Posdorf
Principal
Roland Berger Strategy Consultants, Manama
dorit.posdorf@rolandberger.com
Alexander Brenner
Project Manager
Roland Berger Strategy Consultants, Hamburg
alexander.brenner@rolandberger.com
Swen Beyer
Senior Consultant
Roland Berger Strategy Consultants, Berlin
swen.beyer@rolandberger.com
Dr. Ralf Kiene
Senior Consultant
Roland Berger Strategy Consultants, Hamburg
ralf.kiene@rolandberger.com
Torsten Hunstock
Consultant
Roland Berger Strategy Consultants, Munich
torsten.hunstock@rolandberger.com
interface, as some OEMs have already shown in
initial pilot projects. And there's no doubt about it:
If you want to be successful in the automotive
industry, you must focus on the profitable aftersales
business.
37
Interview
Dr. Markus Schramm
Aftersales is very
important for BMW's
business model
38
Automotive Insights | 02.2013
The Head of Global
Aftersales at BMW
Group talks about
the main trends in
his business, the
need of service
differentiation and
the competition
with the IAM
INSIGHTS Mr. Schramm, aftersales
generates about 20% of revenues, but
80% of profits, at least according to a
rule of thumb in the automotive industry.
How important is the aftermarket for the
BMW Group?
Dr. MARKUS SCHRAMM No question
about it, aftersales is very important
for BMW Group and our dealers'
profitability. The crisis years 2009 and
2010 showed that even during uncertain
times, aftersales can provide a secure
contribution to earnings. Our top dealers
cover a large portion of their fixed costs
through earnings generated by their auto
repair shops. This ensures that they can
survive no matter what – especially when
margins for vehicles sales come under
pressure.
So the 80/20% rule is true?
For dealerships this may be true in
some markets, but for BMW Group, the
proportion of total earnings is much less
than the stated 80%. This is especially due
to our positioning in the premium segment
and the sound cost position we have with
new vehicles.
Let's look into the future: Will new
technologies, sales channels or service
models change the importance of
aftersales?
Our management already knows that
aftersales is very important for BMW's
business model. Our "Number One"
strategy focuses on this area. And new
technologies will allow us to fulfill this
role even better in the future, because they
will enable us, for example, to gain new
access to customers.
Automotive Insights | 02.2013
In your view, what important trends
should the industry stay focused on?
I think there are three major topics that
we need to deal with: changing customer
demands, a new playing field due to
changing business models and the
influence of new technologies on repair
processes.
Can you go into more detail?
Of course! First, the topic of customers:
The demands of our premium customers
are already very high, and we'll do
everything in our power to keep meeting
them. But what will change is their level
of information. The Internet means they
are much better informed now than they
used to be – regardless of whether it's
about a technical topic, prices or how
we or a dealer provides a specific service.
More than ever, our customers today are
undergoing different service experiences.
If you are treated really well at a five-star
hotel, then you rightfully expect the same
from us too.
You mentioned two other trends ...
One was the change in business models.
This can be a threat or an opportunity,
depending on how you approach it. I'd
like to give you an example: Insurance
companies have been optimizing their car
insurance business for a while and are
trying to direct damage claims to their
own network of repair shops. This
is certainly a threat to us, if we're unable
to convince the insurance companies
that we can help them significantly cut
process costs.
How might this be possible?
Possible approaches could be lower
administrative expenses through
integrated, largely automated claims
settlement – a kind of "claims network"
– or joint concepts for providing courtesy
cars or other forms of transportation.
Thus, we view collaborations with
insurance companies as more of an
opportunity than a threat. But as a
sort of small "insurance policy", we are
still looking into developing the parts
business with independent shops on
our end.
And then there's the third factor that
affects the aftersales business: changing
processes due to new technologies.
Let me give you an example here:
Assume that a customer comes to the
shop because he needs something fixed.
The advisor can discuss the costs with
him directly at his vehicle. But to set up
an order, he's got to go back to his desk
with the customer. We are currently
piloting a solution in France that uses
an iPad to record customer and order
data directly at the vehicle. In doing so,
the advisor has the entire order clearly
laid out in front of him, plus all price
information, shop receipts and parts
availability. This means he can calculate
the repairs on the spot for the customer.
Based on these trends, what major
topics are on your to-do list?
We have set up our aftersales strategy
according to three focus areas:
rigorous customer orientation, business
development and improved efficiency
through process orientation and
adherence to standards.
In terms of customer orientation,
we want to be number one in our
competitive environment. We are already
number one in many of our markets
today, but it's important for us to be
number one in all the key markets.
In developing our business, we
systematically record all business
potential around the world and derive
best practices that we can then roll
out in the markets. Furthermore, we
are examining how to bundle individual
customer offers by interconnecting
business models.
What does this look like specifically?
In the area of mobility services, for
instance, we successfully launched the
"Park Now" service in San Francisco in
late 2012. This enables customers to
easily book spaces in parking garages
and enter and leave these without any
contact and then pay online. Now if you
link the booked parking duration with
the telematics in the vehicle, mobile
aftersales takes on a whole new level
of importance.
BMW has announced various innovations,
for both products and sales. The BMW
i-series or the "Future Retail" sales
program immediately comes to mind.
How will this be shored up by aftersales?
We don't "shore up" rather, aftersales
is a comprehensive component of
the innovations you just mentioned.
This is because it's aftersales' task to
ensure the service capability of our new
products, such as the i3 and i8, around
the world and from day one.
39
Aftersales goes online. Mr. Schramm,
online providers have already won relevant
market shares for certain product types
such as tires or spare parts – in both
the independent aftermarket as well
as from authorized dealers. There are
currently a number of online auto repair
shop portals cropping up that promise
price transparency by comparing similar
services. Do you view this as a threat or
an opportunity?
Since our entire business and processes
are geared toward the customer, we see
significant opportunities in aftersales.
We regularly check all of our prices,
services and processes in terms of their
competitiveness. Furthermore, we know
from market research that customers
clearly prefer the quality of BMW and MINI
original parts and services, even when
ordering online. This means this change
isn't a threat to us, but an opportunity that
we will actively exploit.
As I already touched upon, a partial
shift of business toward independent
aftermarkets is evident. How are you
responding to this?
Our market share among independent
shops is steadily rising, and we view
their BMW or MINI customers as our
customers as well. After all, they are
driving our products, and many choose
independent shops simply because
they are nearby. However, at the same
time we want mechanics to use original
parts. Therefore, a professional business
relationship between our authorized
dealers and independent repair shops
provides a clear win-win situation with
major potential.
From talks in the industry, we have the
impression that aftersales service is not
yet as strongly differentiated by customer
group as new vehicle sales, for example.
How do you differentiate?
We align our services and processes
rigorously according to the customer. That
includes knowing them and their needs.
That's why we regularly conduct market
research. This is where we differentiate
our customers by the age segments of
their vehicles and define corresponding
segment-specific offers.
Interesting! At Roland Berger we've
also just conducted a global study on
customer segmentation in the aftersales
business and identified six segments in
Germany, for example. We called them
Low-involved traditionalists, Servicefocused Rationalists, High-demanding
Enthusiasts, Status-oriented Youngsters,
Price-focused Emotionalists, Costoriented Minimalists. What are the key
customer segments for your brands?
Since we are a premium manufacturer
and our customers expect the same
service quality, segments one to three
are surely the most important. But as
already mentioned: all BMW and MINI
drivers are our customers and expect
appropriate offers.
Service differentiation means bundling
more services so that you can fulfill
the needs of each customer group.
Do you think your customers would
like to define their profiles themselves
– such as by using an online portal
– or will face-to-face advice remain
indispensable?
I think that both processes complement
each other. What's important for our
customers is that all the information
that they give us, regardless of the
channel used, can also be used for
providing service support. This can be a
preference as to how we should contact
them, or basic information as to why
they were here the last time.
Final question, Mr. Schramm: What are
the key to-do's in terms of your dealers
in order for BMW Group to achieve
optimal service differentiation?
We have to provide them (this is clearly
shown by our market research) with
different product offers for different
customer groups: I'm thinking for
instance about fixed price campaigns
for owners of older cars. Of course
all our offers must be in line with our
position as a premium OEM, because
our customers in all segments demand
top quality.
Therefore, it's imperative that we get
dealers on board in realizing our goal
of continuous improvement – after all,
customer contact is established mainly
through our dealers.
Dr. Markus Schramm is Head of Global
Aftersales Business Management and
Mobility Services at BMW Group. He holds
a degree in business administration and
runs marathons in his spare time. He has
worked for the BMW Group in various roles
since 1991 and moved to his current
position in May 2011.
BMW Group encompasses the BMW,
MINI and Rolls-Royce brands as well as
the BMW M and BMW i sub-brands. The
Munich-based company, listed on the DAX
stock exchange, celebrated the best year in
its history in 2012 with record sales (EUR
76.8 billion) and pretax profits (EUR 7.8
billion). Sales volumes at the BMW Group
rose to an all-time high of 1.8 million
vehicles in 2012. BMW was founded in
1916 and has 106,000 employees.
40
Automotive Insights | 02.2013
Strategy
German tires aftermarket
Chinese
comeback
ahead
As demand for economy-priced aftermarket
tires goes up, Chinese competitors have the
potential to threaten established players
Automotive Insights | 02.2013
Tire manufacturers from
China have been successful in
the German market for many
years now. They are set to
rebound after a weak phase
41
Strategy | German tires aftermarket
T
he German aftermarket is regarded as a safe
haven for tire manufacturers. It is quite stable
and grew at approximately 1% per annum from
2006 to 2011. The competing brands can be
categorized into four segments from premium to ultra
cheap. Premium tires are the most well known ones,
such as Conti, Pirelli, and Michelin. Quality and budget
tires are cheaper; examples are Uniroyal and Barum
(both operated as brands by Conti). On the lower end,
cheap/ultra cheap tires are mostly private labels such as
Wanli or Chengshan. Both are of Chinese origin.
Several years of rising market
penetration
The Chinese imports to Germany (mostly aftermarket
tires) increased sharply in the last years: the annual
growth was about 19% from 2006 to 2011 (see our
timeline on the right). From 2009 to 2011, when
established manufacturers like Conti, Michelin or
Bridgestone decreased their stocks, a supply shortage of
tires was created. This led to an even stronger increase
of imports during that specific period.
So why have Chinese tires been so popular (besides
the mentioned supply shortage)? The main reason is
that they are offered significantly cheaper. Compared
to premium tires, they are sold for half the price.
Manufacturers from China have two kinds of cost
advantages: On the one hand they benefit from lower
labor costs. On the other hand they have easier and
cheaper access to rubber, which makes up to 55% of the
entire raw materials. Raw materials in total add up to
55% of the costs of goods sold (COGS). It's obvious that
wholesalers and retailers use these tires to attract cost
sensitive end customers.
Chinese players capitalize on the mentioned
advantages and have massively increased their
production capabilities. The three manufacturers with
Disastrous test results have discredited Chinese tires: Can manufacturers overcome this image damage?
42
Automotive Insights | 02.2013
GROWING tire IMPORTS TO GERMANY: THE CHINESE
MARKET SHARE MORE THAN DOUBLED SINCE 2006
CAGR +19%
14.1
11.8
8.8
8.3
7.3
7,009
5,878
6.4
4,176
4,131
3,619
2,994
2006
2007
2008
2009
2010
2011
Market share [%]
Chinese tire imports ['000 units]
Sinking customer confidence
led to decreases in imports
Despite investments in capacity increase and the
"obsession" with exports, Chinese players absolutely lack
the R&D focus compared to established manufacturers.
(Our chart on page 44 depicts the figures).
This is directly reflected in tire tests in media, most
notably ADAC, auto motor und sport and Autobild –
the three most influential entities in car related media
in Germany. Chinese tires show poor or intolerable
performance, especially on wet surfaces, leading to clear
recommendations by testers not to risk one's life for the
sake of saving some money.
Indeed, sinking overall end customers' confidence
in Chinese tires' quality has led to decline or at least
stagnation of imports as shown in the latest statistics:
since February 2012, Chinese imports have been
decreasing. Compared to the figures from January to
October 2011, they dropped by approximately 20%,
to a level below that of 2010.
Furthermore, Chinese manufacturers largely remain
unknown, as they neither have European regional
production and distribution nor branding, leaving
them to use wholesalers' and retailers' distribution
channels without a possibility to build up proper brand
recognition.
Considering these unfavorable circumstances and
the current development, it is appropriate to ask if the
decline of Chinese tires will continue and if they might
even mostly disappear from the German aftermarket
eventually?
Source: Federal Statistical Office; Roland Berger
Rebound of Chinese players is
foreseeable
the strongest capacity growth from 2006 to 2011
are the Triangle Group with plus 925%, Shangdong
Linglong Rubber with plus 110% and Hangzhou
Zhongce Rubber with plus 88%. Due to this
development, these players can already be found
among the top 20 of the largest tires manufacturers
worldwide in 2011. They are ranked 16th, 19th and
12th respectively. At the same time, Chinese players
strongly focus on international markets: the rate of
their export growth outweighs their rate of capacity
increase by far.
We do not believe in that: We expect that the imports are
only temporary flattening. Chinese players are here to stay
and could even increase their presence. To understand
our hypotheses, two prevailing trends of the German
automotive market need to be considered: an increasing
share of smaller vehicles and an aging car parc.
Related to new vehicle sales, the share of smaller
cars in the basic, subcompact and compact segments
has increased in the last few years. This trend will
remain. At the same time, the German car parc is aging,
from averagely 7.4 years in 2003 to 8.5 years in 2012.
Automotive Insights | 02.2013
43
Strategy | German tires aftermarket
Owners of smaller cars tend to use cheaper tires as their
aftermarket choice, just like holders of older cars who are
rather cost sensitive.
Based on these two major trends, it's foreseeable that
the demand for economy-priced aftermarket tires will
increase. This will lead to a favorable situation for Chinese
manufacturers, threatening established manufacturers of
quality and budget tires.
Yet, in order to fully exploit these trends and to
increase their sales again, Chinese manufacturers need to
learn from their current limitations, namely poor quality,
lack of regional footprint, missing branding and no OE
business. After a "learning period" they will rebound (as
forecasted in our timeline on the right).
A blueprint Chinese manufacturers can follow is the
South Korean tire company Hankook. Once a completely
unknown brand, now a global premium manufacturer,
Hankook has R&D facilities in Germany and the US as
well as a production and distribution footprint in
Hungary and the Netherlands. Another key success factor
was Hankook's cooperation with Michelin, which, besides
financial linkage, provided the Koreans with access to
Michelin's technological know-how and its distribution
network. Hankook also increased its marketing activities,
by sponsoring the UEFA Europa League in soccer,
for instance. Another example for a successful Asian
competitor is Kumho, likewise a South Korean company.
Two appropriate strategies for
Chinese manufacturers
Chinese players can use two strategies to overcome
their current limitations and fully exploit the overall
favorable situation:
BIG IN SALES, SMALLER IN R&D: THE STRONGEST CHINESE PLAYERS ARE AMONG the WORLD'S
LEADERS IN SALES, BUT NOT IN RESEARCH SPENDINGS
Company
1. Bridgestone
2. Michelin
3. Goodyear
4. Continental
5. Pirelli
6. Sumitomo
7. Hankook
8. Yokohama
9. Giti
10. Maxxis
11. Cooper Tires
12. Hangzhou Zhongce
13. Kumho
14. Toyo
15. Apollo
16. Triangle
...
19. Linglong
...
Chinese manufacturers
Sales 2011 [EUR, m]1)
22,940.7
20,304.6
16,364.0
8,811.5
5,601.6
5,336.1
4,201.8
3,439.3
2,956.4 2)
2,921.0
2,822.6
2,722.0 2)
2,499.3
2,225.7
1,821.0 2)
1,806.8 2)
...
1,234.8 2)
...
Company
1. Bridgestone
2. Michelin
3. Goodyear
4. Continental3)
5. Pirelli3)
6. Sumitomo3)
7. Yokohama
8. Kumho
9. Hankook
10. Cooper Tires
11. Nokian Tyres
12. Nexen tire
13. Titan
14. Apollo
15. JK Tyres
16. MRF
R&D spendings 2009 [USD, m]
916.1
703.7
337.0
213.9
185.0
160.1
142.9
95.4
73.4
22.3
16.7
14.6
8.9
6.9
3.4
3.1
1) Revenues consider sales from tires only, exceptions where noted
2) Sales on group level
3) Tire division
Source: European Rubber Journal; Neue Reifenzeitung; Roland Berger
44
Automotive Insights | 02.2013
PROMISING SECOND HALF OF THIS DECADE: CHINESE TIRE MANUFACTURERS WILL RETURN TO CONTINuOUS GROWTH SOON
CAGR +19%
17.7
16.9
Market share in %
China tires by
absolute figures
16.0
15.2
14.5
14.1
13.8
13.1
12.4
12.5
11.8
11.8
11.2
10.8 10.9 11.0
8.8
8.3
7.3
6.4
2006
2008
2010
Learning Period
Rebound Period
Decrease & flatening
of sales of Chinese tires
Sales will increase again, yet
at a slower pace than previously
2012
2014
2016
2018
2020
2022
2024
2026
Source: Federal Statistical Office; Roland Berger estimations
The first one is "aftermarket dominance": This shortterm strategy focuses on collaborative product
optimization, private label branding and optimized
utilization of wholesalers' and retailers' available
distribution channels.
The second one is a long-term strategy – let's call
it "OE business penetration": It banks on the massive
strengthening of R&D activities and presence, on
comprehensive branding, marketing and sponsoring
activities as well as the set up of a regional and local
production and distribution footprint to achieve justin-time capability.
If the companies execute these two approaches
sustainably a return to the growth trajectory is
predictable.
Automotive Insights | 02.2013
Authors
Philipp Grosse Kleimann
Partner
Roland Berger Strategy Consultants, Munich
philipp.grossekleimann@rolandberger.com
Willy Lu Wang
Senior Consultant
Roland Berger Strategy Consultants, Stuttgart
willylu.wang@rolandberger.com
45
Strategy
Cooperation
Alliances:
when to
form them
and when to
avoid them
Who is linked to whom?
Interdependences in the
global automotive industry
(schematic illustration only;
source: Handelsblatt)
Direct investments
Cooperations and joint ventures
46
Automotive Insights | 02.2013
strategy | cooperation
Cooperation in the global
vehicle industry becomes
more and more important:
Roland Berger explores
the topic in an exhaustive,
ongoing global study
S
tagnation in Europe, globalization of sourcing
and production, the regulatory demand for
new environmentally-friendly propulsion
engines or connecting vehicles to multi-modal
mobility systems – that's just a few of the challenges
fundamentally disrupting the automotive industry
today. Mastering them alone is less and less an option
– the enormous need for scale, capital and know-how
surpasses the capabilities of even the largest market
players.
The hype around full-blown mergers in the
1990s cooled down rapidly, as the difficulties in
managing such transactions have become painfully
apparent. The need for cooperation, however, has
not diminished. Thus, OEMs are more and more
discovering alliances as a more flexible alternative.
The core dilemma, however, remains – when do
alliances make sense and when should they be
avoided? To answer this question, Roland Berger has
decided to carry out an exhaustive global study in
2013. Beyond primary research in cooperation with
the academic world, we have started to interview
top decision makers at all major OEM and OES
to establish a pragmatic, weather-tested guide to
selecting, establishing and managing the right kind of
alliances for you. Our study will explore the topic from a multiple
of dimensions. Some of the key questions we will
tackle are:
Automotive Insights | 02.2013
47
Key questions
Do you engage in the right types of
alliances that fit your firm's strategy?
For instance, this could refer to:
More efficient R&D through sharing technology
competence/risk
Sharing platforms in production
Purchasing cooperations
Outsourcing of production
Increased market access through sharing distribution
networks
Additional growth through acquiring access to new
customer segments
Do you engage with the right kind
of partners?
Analysis and choice of partner
Strategic fit to your firm in the long run
Cultural fit
Long term consequences of sharing or gaining key
competences
Do you have the right legal
framework that fits with your
alliance types?
Contracts, legal structures (joint ventures, for instance)
Risk management and flexibility parameters
Do you have established the
prerequisites for effective
partnerships?
Clear definition of future core competences (focus)
Cultural basis (openness)
How to gain the maximum
benefit from such partnerships
Alliances are an unavoidable answer to the current
challenges in the automotive sector. Our study results
will help you avoid the often unexpected pitfalls and
gain the maximum benefit from such partnerships.
Authors
Philipp Grosse Kleimann
Partner
Roland Berger Strategy Consultants, Munich
philipp.grossekleimann@rolandberger.com
Jan-Philipp Hasenberg
Project Manager
Roland Berger Strategy Consultants, Hamburg
jan-philipp.hasenberg@rolandberger.com
Szabolcs Markovszky
Project Manager
Roland Berger Strategy Consultants, Berlin
szabolcs.markovszky@rolandberger.com
Luisa Wahlig
Junior Consultant
Roland Berger Strategy Consultants, Berlin
luisa.wahlig@rolandberger.com
Do you have the right skills in
managing your alliances?
Human capital skills
Processes and systems
Organizational setup
48
Automotive Insights | 02.2013
Books & studies
"Rightsizing Europe" [March 2013]
Some 10% of jobs
could be lost at
Western European
automotive
suppliers as a
result of the
crisis in the car
industry, our new
study found. So suppliers' top priority is to "rightsize"
their European structures. Our paper analyzes nine key
levers for boosting margins and sustainably improving
profitability.
rolandberger.com/rightsizing_europe
What the customer really wants
[March 2013]
A think: act study on the needs and wishes of German
customers. Though the study focuses on retailing, it also
applies to automotive aftersales. It defines seven typical
buyer segments and considers suitable online strategies
for each of them.
rolandberger.com/customer_wishes
Automotive Insights 01/2013
[March 2013]
The March issue of Automotive Insights has two
articles on the aftersales business. One examines the
future of transportation and "infomobility" and the
resulting challenges for vehicle repair shops. The other
analyzes the German market for automotive services and
the growth of specialized online platforms.
rolandberger.com/automotive_insights_01_2013
If you are interested in older publications or future
updates, please visit our Automotive Insights page at:
rolandberger.com/automotive_insights
21ST Century Car Distribution in
Europe [February 2013]
How will new social and technological trends change
the car industry value chain? These trends include
social media, new mobility solutions and the transition
to renewable energy. Find the answers in this study by
Roland Berger, IESE and Automanager.
rolandberger.com/IESE_car_distribution_2013
Client centricity [December 2012]
This issue of think: act CONTENT shows how client
centricity can boost revenues. The best way to become
client-centric is to launch specific projects based on
target clients' needs. Our study looks at the finance
industry, but the approaches used (expanding business
with existing clients, attracting new clients) apply to
the car industry as well.
rolandberger.com/client_centricity_2012
Automotive Insights 03/2011
[December 2011]
Even the strongest OEMs and suppliers have to rethink
their approach to the increasing uncertainty in the global
car industry. Strategic alliances are one possible solution,
and our experts analyzed the opportunities and success
factors. Their conclusion: "Strategic alliances are a
promising path."
rolandberger.com/automotive_insights_03_2011
Telematics could revolutionize
auto insurance premiums
[August 2011]
The groundwork has already been laid for telematicsbased auto insurance, and there is considerable
consumer interest. think: act CONTENT considers the
impact on current business models and the long-term
potential. The conclusion: Telematics solutions have the
power to revolutionize auto insurers' business models.
rolandberger.com/telematics_revolutionize
Automotive Insights | 02.2013
49
Famous CARS
Porsche 993 S Coupé
The 993 was the last real 911, traditionalists say
A Porsche for aficionados:
especially the color "Vesuvio
Metallic" is almost as rare as
the Penny Blue
R
eal Porsche aficionados get very excited about
this three-digit number: 993. The 993 was
the last Porsche of the 911 series with an aircooled boxer engine and its distinctive throaty
roar. The first 993s rolled off the line in 1993, so they
are just now reaching the status of modern-day classic
cars. The Carrera and Targa models started with 272
hp, while the fastest turbo version GT2 cranked out up
to 450 hp (and the souped-up edition even surpassed
this figure by far).
For many Porsche traditionalists, the 993, the fourth
production series of the 911, represents the last
50
"real" 911, because its successor, the 996, came with
a completely new water-cooled engine.
Due to this aspect and its much-praised technological
perfection, the 993 reaches above-average collector's
prices on the secondhand car market today. And
according to experts, prices are expected to climb
even higher in the future. One of the most sought-after
models of the 993 is the S Coupé in Vesuvio Metallic
livery.
Only 3,714 S Coupés were manufactured from
1996 to 1997, with an original price tag of 137,500
deutschmarks (about 70,300 euros). Just a small share
received the special "Vesuvio Metallic" blue paint,
combined with steel-grey lacquered features such as
door handles, side mirrors and louvers. The model is
so rare that some even compare it with the legendary
"Penny Blue" stamp from the island of Mauritius.
Possibly the only thing rarer than the 993 is seeing
it in a mechanic's garage: in its age category, the 911
series heads the no-claims ranking of the German
Association for Technical Inspection (TÜV).
Automotive Insights | 02.2013
Automotive Competence Centers Worldwide
Editorial
Ralf Kalmbach
Partner and Member of the Executive Committee
Roland Berger Strategy Consultants
Dear Reader,
Belgium
• Didier Tshidimba
Phone +32 (2) 6610 317
didier.tshidimba@rolandberger.com
The automotive year 2013 is proceeding apace, and highlights like the
International Motor Show in Frankfurt (IAA) are just around the corner.
To make the time before the trade fair pass a bit more quickly for you
(or to provide you with some reading for your summer break), we have
published this new issue of our Automotive Insights magazine.
CEE
• Rupert Petry
Phone +43 (1) 53602 101
rupert.petry@rolandberger.com
Its focus is the aftersales and aftermarket business, which is gaining
importance in various markets. In contrast to the sale of new vehicles,
aftersales has been neglected for quite some time and needs to be
developed and professionalized.
The biggest challenge – and hence the biggest opportunity – is the
current lack of customized offerings, as our experts examine in
the cover story. Using the German market as an example, they analyze
the various customer groups and their special needs, emphasizing
the imperative of customized services in the battle for customers.
Individualization is also a major theme in our interview with
Dr. Markus Schramm, Head of Global Aftersales at BMW Group.
As an international consultancy, we aim to provide you with global
insights. That's why this issue looks at the aftersales business in three
different regions: the US, Central and Eastern Europe and Brazil.
Published by:
Roland Berger Strategy Consultants GmbH,
Mies-van-der-Rohe-Straße 6, 80807 Munich
Editors-in-chief:
Ralf Kalmbach and Ralf Landmann
Editors:
Jan-Philipp Hasenberg, Christian Weber, Swen Beyer,
Sven Wittmaack, RB Language Service
Layout:
RB Media Design
Printed by:
Girodruck, Hamburg
By the way, don't forget to download the eMag version for tablets from
the Roland Berger Kiosk. There you'll find plenty of extra content,
viewable on both iOS and Android devices.
If you want to share your views on any of the topics we have covered
or if you have any questions, please call my colleagues or myself, or just
drop us a line. I look forward to your feedback. But until then,
I wish you insightful reading!
Kind regards,
Photo credits:
Cover: RB Media Design . Page 2: Roland Berger Strategy
Consultants GmbH . P. 4: Plainpicture/Mira . P. 5: picturealliance/Estadao Conteudo . P. 10: istock . P. 13: istock .
P. 14: Mopar . P. 18: istock . P. 23: istock . P. 24-25: RB
Media Design . P. 36: RB Media Design . P. 38: Norbert
Wilhelmi . P. 40: Norbert Wilhelmi . P. 41: Li Zhong/laif .
P. 42: Corbis . P. 50: Porsche AG
Ralf Kalmbach
Many thanks to car mechanic Erwin Zott for letting us take
photos in his repair shop in Munich. Thanks also to all Roland
Berger staff who lent us their car keys for the cover photo.
Circulation:
3,900, published three times a year.
No reprints without prior permission
of the publisher.
Automotive Insights | 02.2013
NORTH AMERICA
• Marc Winterhoff
Phone +1 (248) 729 5116
marc.winterhoff@rolandberger.com
• Thomas Wendt
Phone +1 (248) 729 5116
thomas.wendt@rolandberger.com
CHINA
• Jun Shen
Phone +86 (21) 5298 6677 890
jun.shen@rolandberger.com
• Junyi Zhang
Phone +86 (21) 5298 6677 890
junyi.zhang@rolandberger.com
Norbert Dressler
Phone +49 (89) 9230 8511
norbert.dressler@rolandberger.com
• Philipp Grosse Kleimann
Phone +49 (89) 9230 8511
philipp.grossekleimann@rolandberger.com
• Dr. Thomas Schlick
Phone +49 (89) 9230 8737
thomas.schlick@rolandberger.com
• Dr. Marcus Hoffmann
Phone +49 (89) 9230 8037
marcus.hoffmann@rolandberger.com
POLAND
• Krzysztof Badowski
Phone +48 (22) 32374 62
krzysztof.badowski@rolandberger.com
INDIA
• Dr. Wilfried Aulbur
Phone +49 (89) 9230 8108
wilfried.aulbur@rolandberger.com
RUSSIA
• Dr. Uwe Kumm
Phone +7 (495) 287 92 46
uwe.kumm@rolandberger.com
CZECH REPUBLIC
• Constantin Kinsky
Phone +420 (2) 10219 552
constantin.kinsky@rolandberger.com
• Roland Zsilinszky
Phone +420 (2) 10219 551
roland.zsilinsky@rolandberger.com
ITALY
• Roberto Crapelli
Phone +39 (02) 29501 257
roberto.crapelli@rolandberger.com
• Alberto de Monte
Phone +39 (02) 205011 0
alberto.demonte@rolandberger.com
SCANDINAVIA
• Per I. Nilsson
Phone +46 (31) 75755 14
per-i.nilsson@rolandberger.com
• Per M. Nilsson
Phone +46 (31) 75755 10
per-m.nilsson@rolandberger.com
FRANCE
• Max Blanchet
Phone +33 (1) 53670 946
max.blanchet@rolandberger.com
• Sebastien Amichi
Phone +33 (1) 53670 946
sebastien.amichi@rolandberger.com
JAPAN
• Dr. Satoshi Nagashima
Phone +81 (3) 35876 385
satoshi.nagashima@rolandberger.com
• Keisuke Yamabe
Phone +81 (3) 35876 695
keisuke.yamabe@rolandberger.com
• Dr. Martin Tonko
Phone +81 (3) 35876 697
martin.tonko@rolandberger.com
Singapore
• Joost Geginat
Phone +65 6597 4566
joost.geginat@rolandberger.com
• Thomas Klotz
Phone +65 6597 4566
thomas.klotz@rolandberger.com
GERMANY
• Ralf Kalmbach
Phone +49 (89) 9230 8314
ralf.kalmbach@rolandberger.com
• Marcus Berret
Phone +49 (89) 9230 8737
marcus.berret@rolandberger.com
• Ralf Landmann
Phone +49 (69) 29924 6301
ralf.landmann@rolandberger.com
• Dr. Wolfgang Bernhart
Phone +49 (69) 29924 6301
wolfgang.bernhart@rolandberger.com
• Jürgen Reers
Phone +49 (89) 9230 8511
juergen.reers@rolandberger.com
Automotive Insights | 02.2013
•
Malaysia
Anthonie Versluis
Phone +60 (3) 2203 8611
anthonie.versluis@rolandberger.com
SOUTH AMERICA
• Thomas Kunze
Phone +55 (11) 3046 7124
thomas.kunze@rolandberger.com
• Stephan Keese
Phone +55 (11) 3046 7124
stephan.keese@rolandberger.com
MIDDLE EAST
• Michael Wette
Phone +973 (17) 56795 0
michael.wette@rolandberger.com
TURKEY
• Doruk Acar
Phone +90 (212) 358 6401
doruk.acar@rolandberger.com
•
Netherlands
• René Seyger
Phone +31 (20) 7960 608
rene.seyger@rolandberger.com
51
Issue 02.2013
e
t th
ou iosk
eck r K all
Ch erge read ree
d B nd or f
lan p a s f
Ro ap Mag
re
ou
Automotive
Insights
Insights
ls
For detai
see
please 9
page
Automotive Competence Center Client Magazine
A Look around the world
Regional insights
Aftersales in the US,
Brazil and CEE
STrategy
Tires Aftermarket
Chinese manufacturers
set to bounce back
Cover story
How well Do
you know your
customers?
Smart customization in aftersales
Interview
Dr. Markus Schramm
© Roland Berger Strategy Consultants
06/2013, all rights reserved
www.rolandberger.com
www.rolandberger.com/rb-kiosk
NEW–!eMag
The Head of Aftersales talks
about BMW's goals
Issue 02.2013