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  • Writer's pictureChuck Russell

Automotive OEM changes product strategy and pricing, makes significant improvement

Automotive OEM changes product strategy and pricing, makes significant improvement in transaction price and overall revenue



Issue:

Automotive OEM with little success in “aaaa” car segment adjusts product strategy and improves revenue by $1 Billion/year.

Implementation:

During the development of the OEM’s “aaaa” car for North America, the team became very concerned about the viability of offering a “aaaa” car of comparable or less value to the segment leaders; Honda Yyyy and Toyota Zzzz. Historically, the company offered “aaaa” vehicles that were known for poor quality, poor performance, non-competitive fuel economy and cheap materials. “aaaa” car sales for the company were heavily incentivized and volumes were driven largely with heavy rebates and sales to unprofitable rental fleets.

Modifications were made to the product execution, performance and pricing. Content increases, significant increases in fuel economy, interior execution enhancements and increases in pricing enabled a successful re-positioning of the vehicle. Average transaction prices were significantly increased.


Results:

The result of this change was a $4000 increase in average vehicle transaction price

Revenue improved by over $1B per year for the vehicle vs. the prior offering

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