Automotive: Operational Excellence & Strategy

Dilemma whether to surrender or continue existing business?

A passenger auto-component manufacturer was confronted by OEM with additional 15% discount; while existing business was already registering losses at existing pricing structure.

Business Challenge: 

Potentially of closing down the operations if unable to match OEM pricing expectations.

Our Approach: 

We studied the current business model to understand why existing business was making losses and whether the proposed price revision would make economic sense.

  • Evaluate ideal business model Vs. current 
  • Used Proprietary Business Modelling Tool to arrive at minimum volumes for break even and profitability at proposed discounted price by OEM

Our Recommendation 

Cost-Optimisation and strategic recommendation to stop child-part outsourcing which enabled high value contributions there by making existing business viable

Proposed discounting was accepted with MOQ. 


External perspective of re-evaluating business model and viability helped client to make money in existing business while accepting new opportunity confidently.