Increased profitability by developing the service offering and introducing automation in price management process
Upplands motor is a privately owned company with a strong focus on delivering great customer service, Upplands Motor is one of Sweden’s most successful car dealerships with brands such as Volvo, Mercedes-Benz, Renault, Dacia and Smart. With ten sites in the greater Stockholm area, Upplands Motor sell and service cars for private individuals as well as businesses, run a complete tire management service and act as a wholesaler of Volvo spare parts.
The automotive industry is undergoing a dramatic transformation driven primarily by digitalization and electrification, and car dealers are facing new challenges to their business model. Among the trends influencing the industry are
Upplands Motor knew that it would be challenging to develop pricing in this arena, but that there was also significant potential for the company that did it right. Deciding that they needed the expertise and support of an external actor they turned to Capacent.
“The Capacent project management was great – a professional and pleasant collaboration. Without much previous industry experience, they quickly understood our business and learned how our business works.”
Kent Jonsson, CEO
A pre-requisite for long-term success
In the early discussions with Capacent, Upplands Motor realized that there was no suitable internal owner of new pricing, and that a pricing manager was needed to ensure sustainable results and continued development. Capasearch, an executive search agency, was commissioned to find a suitable candidate for the position. To ensure that the new pricing manager would get a flying start and be able to fully take long-term ownership of the new pricing, the project was postponed until he was in place.
Determine the current state
To identify areas with potential, a broad investigation was carried out throughout the organization. Through interviews with key individuals from different business areas and levels, as well as a supportive quantitative analysis, a current state map with estimated potentials was established. After iterative discussions, management selected the most promising areas for further development and implementation.
To facilitate implementation, the project was run in three streams matching the organization of Upplands Motor: spare parts, service offering, and accessories. Each stream and area had its own main stakeholders, potentials and challenges.
The spare part offering was a wholesale business reliant on the OEMs ERP systems for pricing. A factor-based discount structure was designed to help create a structured pricing logic, enabling better pricing of the more than 40 000 SKUs. As implementation was hindered due to limitations in the ERP system, Robotic Process Automation (RPA) technology was used to enable efficient management of the large product range in a way that had previously been impossible.
The service offering was redesigned with new bundling and pricing based on industry know-how as well as customer insight. Customer perceived value and organizational capabilities guided the development of the new offering creating three balanced packages with pricing that scaled with the value delivered.
Pricing of accessories was dependent on manual effort and RPA was successfully developed and implemented in this area as well. A new pricing structure that allowed greater differentiation between e.g. similar accessories in different car models was designed and implemented for sales of accessories to new cars.
The different areas of the project naturally variated in implementation time, with some generating results right away and others requiring more time for the effect to be measurably evaluated. Specifically, the price management of accessories was one of the first successes of the project, and inspired Upplands Motor to further increase efficiency through automation of selected processes.
“The part focusing on accessories was very good, it alone payed for the whole project” – Kent Jonsson, CEO
Additionally, due to the capacity and available resources of the newly established pricing manager several additional development streams identified in the current state analysis were able to proceed in parallel. Creating the foundation for a new internal development group continuously working to make the entire business more profitable.
Capacent stands out from other consulting firms that often work from a pre-defined theoretical model and rarely adapt and focus enough on our industry. Capacent are responsive, knowledgeable and professional to work with.
Do you want to know more about how we can support your journey towards improving your working capital?
Lotte Kylberg is our senior Pricing Manager at Capacent_x. Book a meeting with her using the meeting function, or contact Lotte via firstname.lastname@example.org, to learn more about how we can help your company achieve its maximum pricing potential.
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