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ive “moments of truth” are essential to deliver the seamless experience customers demand
Across Europe, auto manufacturers, start-ups, established rental agencies and dealers are rolling out car subscription offers to keep pace with rapidly growing customer demand. Berylls estimates that total annual new subscription contracts will soar from between 210,000 and 230,000 in 2022 to as many as 4 million by 2030. Many of these potential new subscribers currently do not own a car. In January 2022, Berylls’ Vehicle-as-a-Service (VaaS) survey of 2,040 German consumers found that 13 percent of today’s non-car users would be interested in VaaS, adding 1.3 million people to the market.
On average, current subscription customers are between seven and eight years younger than car buyers, and their wish to own a car is being replaced by a desire for convenience and flexibility. Increasingly, these consumers are demanding a highly digital product offering and the kind of customer experience they have come to expect from the likes of Amazon, Zalando and Netflix.
Car subscription ticks all the critical boxes from their point of view. Vehicles are often available straightaway from an existing fleet, within minutes of ordering online. This is a welcome contrast to purchased cars, which can take as long as a year to be delivered because of chip shortages and other supply-chain issues. Typically, it’s a short-term commitment, where instead of being locked into a multi-year credit or leasing contract, customers can opt for a minimum period of as little as one month.
Not surprisingly, Europe’s subscription market is becoming increasingly crowded, with carmakers such as Volvo and VW competing with rental agencies and a growing range of innovative start-ups.
What these different players and subscription models have in common is a shared challenge. To win in this market, you have to differentiate by delivering a stellar, fully-digitalized customer experience as well as having the right vehicle offering and monthly rate.
We have identified five customer “moments of truth” which together deliver the kind of experience that people expect when they take out a subscription. The common theme connecting these moments is digitalization, in a market where customers assume they can select and pay for a vehicle entirely online with no need to phone a dealer or see the car.
Simply providing a standard online service won’t be enough to differentiate your offer from the competition. The winners in this race will be those companies which build the right digitalized features into their subscription platform – and build them well – to deliver a truly bespoke customer experience.
A clear strategic focus is essential for future champions in a subscription market that is becoming increasingly crowded. At present, too many entrants are in a gold-rush mood, pursuing an undifferentiated me-too approach for fear of missing out. Yet simply copying a relatively successful competitor’s subscription model won’t be enough to emerge as one of the winners. Our five moments of truth are critical for delivering the level of service that will give your subscription offer the edge, in a market where tomorrow’s champions will be fully digitalized and focused on delivering a superb customer experience.
Featured Insights
ecided to implement the agent model? What now?
In our recent publication „Dealer vs. Agent” we have concluded a draw (3:3) between the classic “Dealer Model” and the direct sales “Agency Model”.
Nevertheless, it appears the Agent’s following is growing, not least due to the need to keep track with the cost efficiency of new, direct selling entrants. A desire to reap the benefits of digitalization and to cater to the customers’ expectations when it comes to a premium sales and service experience are other factors.
Together with the evaluation of direct sales via agents as a new go-to-market model you must immediately ask “How can we make this transformation work?” To help we want to draw a potential path for a successful sales model transformation in this article.
Structure helps, so here is our three-step approach:
Direct sales can beat a dealer-based wholesale model on four dimensions – but you will have to pick your battles, not all of them can be at the same time:
Like for every successful journey, finding the best route comes right after setting the destination. Nobody can realistically switch over a decade-old global go-to-market structure in one go – identifying the right steps and the best way to scale up is a key success factor. And there are a number of building blocks for this roadmap:
Implementing any direct sales model inevitably leads to a shift of tasks from the former dealer to the OEM across the whole customer journey, as shown in Figure 1. OEMs have to take on new and complex tasks, such as pricing or inventory planning – with on the retail level have much higher frequency and granularity that what NSC and regional staff are used to from their matching wholesale tasks. Process performance and integration with the agents must be excellent from the switch-over date to achieve a seamless customer journey.
Financing and Digital Services remain largely unchanged, since they are widely in OEM hands already today. The Used Car Business will largely remain under control of the agents.
Of course, in addition to the tasks along the customer journey, there are also new or changed tasks for the OEM around agent steering, interaction management, data management, etc. which require careful setup before the switch-over – from the organisation design along the steering, process, and structural dimension to the design and creation of the supporting IT systems and not ending at recruiting and onboarding the additional staff.
It all starts with the objectives – it is crucial to make the transition for the right reasons. Ensure alignment across your whole organisation, once on the way it will be really difficult to shift priorities. Strictly guard your target hierarchy also in interim stages – an improved customer experience cannot be expected if different sales models have to co-exist under the same retail rooftop. Be more than aware of the additional tasks for the wholesale level – it will in essence also become your retail level. And expecting immediate cost reduction effects in a transition phase with increasing structural costs can only lead to disappointment.
Most importantly, keep putting yourself in your customers’ shoes: you need to deliver a customer experience where OEM and agent work hand in hand, where online and offline touch-points are well-connected. In an agent model it will always be the OEM that is in the driver seat, using the agents as extended arms into the local markets. This orchestration across the omnichannel system requires clear governance and effective steering since – unfortunately – objectives between agents and OEMs are not always aligned.
Keep all this in mind when you are designing the details of your future agent system – it is not just a new dealer contract you are about to implement.
Arthur Kipferler (1963) started his career in 1989 at the Boston Consulting Group, where he consulted for 13 years in the automotive industry. After consulting, Arthur Kipferler held senior management positions at Toyota in Europe and the U.S. From 2013 to 2014, he was global head of the BMW Group’s Future Retail program. Subsequently, he had leading roles in strategy, corporate planning and transformation management at Jaguar Land Rover in Coventry, UK. Arthur Kipferler complements the expertise of the Berylls partner team in the fields of market & customer, technologies, sales, and digitalization, as well as in the development and implementation of corporate, product, and regional strategies.
Mechanical engineering, production engineering, at the Technical University of Munich (TUM); MBA in Strategy, Marketing and Organizational Behavior at INSEAD Business School, France.
Featured Insights
ew things shape modern life as much as individual mobility. Be it as an expression of freedom and individuality, or as an economic driver.
To reflect this, we have developed the Solactive Berylls LeanVal Automobility Leaders 100 Index – the AUTO100. It tracks the performance of the 100 most relevant publicly listed automobility players worldwide. By design, the AUTO100 covers the industry’s entire value chain – from vehicle manufacturers and
suppliers, to dealer groups, and providers of mobility services or infrastructure.
Currently there are several major effects impacting the global capital markets. With Russia’s invasion of Ukraine, the global markets are seeing major ripple effects across industries. Recent gas cut-offs in Eastern Europe could signal future shortages in other nations, leading to a persistent increase in prices as countries attempt to distance themselves from Russia.
Can’t wait to read more? Download the Insight now!
Dr. Jan Burgard (1973) is CEO of Berylls Group, an international group of companies providing professional services to the automotive industry.
His responsibilities include accelerating the transformation of luxury and premium OEMs, with a particular focus on digitalization, big data, connectivity and artificial intelligence. Dr. Jan Burgard is also responsible for the implementation of digital products at Berylls and is a proven expert for the Chinese market. Dr. Jan Burgard started his career at the investment bank MAN GROUP in New York. He developed a passion for the automotive industry during stopovers at an American consultancy and as manager at a German premium manufacturer.
In October 2011, he became a founding partners of Berylls Strategy Advisors. The top management consultancy was the origin of today’s Group and continues to be the professional nucleus of the Group. After studying business administration and economics, he earned his doctorate with a thesis on virtual product development in the automotive industry.
Featured Insights
utomotive COOs know environmental, social and economic considerations are the new license to operate – but making sustainability the guiding principle also creates value.
Driven by environmental legislation and customer demand, sustainability
is transforming the automotive industry. Carmakers are shifting from making
fossil fuel engines to vehicles powered by electric motors, and this profound
change has forced OEMs and their suppliers to transform the operational processes they have honed over decades.
However, to meet the ambitious emissions reductions targets set by governments and by OEMs themselves, it is not only the end product that must
change. As we identified in our COO Agenda, sustainability has far-reaching
industrial implications and must now be the guiding principle throughout automotive production and supply chains
To find out more, download our in-depth analysis!
Timo Kronen (1979) is partner at Berylls Group with focus on operations. He brings 17 years of industry and consulting experience in the automotive industry. His focus is on production, development and purchasing as well as supplier task forces. Some of his recent projects include: Restructuring of the Procurement Function (German Sports Car OEM), Supplier Task Force for an Onboard Charger (German Premium OEM), Strategy Development for the Component Production (German Premium OEM).
Before joining Berylls, Timo Kronen worked at PwC Strategy&, Porsche Consulting Group and Dr. Ing. h.c. F. Porsche AG. He holds a diploma degree in industrial engineering from the Karlsruhe Institute of Technology (KIT).
Featured Insights
Munich, April 2022
arketing efficiency, measured by the amount of budget needed to reach conversions within the marketing and sales funnel, is a critical success factor for OEMs.
We analyzed different OEMs concerning their marketing efficiency, by comparing the media budgets they spend to achieve certain levels of website visits, started configurations, finished configurations, and vehicle sales.
What we found is that the budget needed to reach a comparable funnel performance differs dramatically between OEMs. Having a more detailed comparison between Hyundai and Nissan, for example, shows that Nissan would need to spend roughly 9 times as much to reach the same number of finished configurations as Hyundai.
The conclusion we draw is that marketing efficiency can be improved by viewing marketing performance more holistically across all channels. While often, there is still too much focus on Paid Media as a silo, it is critical to concentrate on the combination of all marketing activities and view the entire funnel performance.
Improved targeting, an outstanding touchpoint experience and an optimized media mix are the key to more efficient media spend. Revisiting your Paid Earned Shared Owned (PESO) dashboard to uncover and focus on the most successful funnel will help you achieve more for less.
To find out more, download our in-depth analysis!
Sascha Kurth (1987) is a Principal at Berylls Mad Media, the Sales & Marketing Transformation unit of Berylls Group, a group of companies specializing in the automotive industry. He is an expert in building KPI & data-driven sales- and marketing-organizations and can look back on many years of experience in data-driven marketing and e-commerce environments.
Sascha Kurth has been advising automobile manufacturers in a global context since 2013. He has in-depth expert knowledge in the areas of goal-oriented sales & marketing planning, data management platforms & customer data platforms, e-commerce platforms, programmatic advertising, customer relationship management, smart KPIs and management dashboards.
Before joining Berylls Mad Media, he supported leading OEMs, e-mobility start-ups and fast moving consumer goods manufacturers in their sales and marketing transformation for PricewaterhouseCoopers
Featured Insights
Über den Zwang der Autobranche, sich mit Metaverse zu beschäftigen
Die digitale Welt ist auch für die Autobranche interessant, wenn nicht sogar für den Kapitalmarkt verpflichtend. „Meine Empfehlung: Man muss sich damit beschäftigen und den Grundsatz verstehen, was es für das eigene Geschäftsmodell bedeuten soll.“ Das heißt: Nicht nur Gewinne, sondern auch Kostenersparnisse berücksichtigen. Die Entwicklung sieht Burgard dennoch mit Skepsis: „Es gibt nicht wenige unzufriedene Menschen, die ihr Leben virtuell aufzuwerten versuchen.“
Quelle: Börse hören.
https://www.brn-ag.de/40389
Dr. Jan Burgard (1973) ist CEO der Berylls Group, einer internationalen und auf die Automobilitätsindustrie spezialisierten Unternehmensgruppe.
Sein Aufgabengebiet umfasst die Transformation von Luxus- und Premiumherstellern, mit besonderen Schwerpunkten auf Digitalisierung, Big Data, Start-ups, Connectivity und künstliche Intelligenz. Dr. Jan Burgard verantwortet bei Berylls außerdem die Umsetzung digitaler Produkte und ist ausgewiesener Spezialist für den Markt China.
Dr. Jan Burgard begann seine Karriere bei der Investmentbank MAN GROUP in New York. Die Leidenschaft für die Automobilitätsindustrie entwickelte er während Zwischenstopps bei einer amerikanischen Beratung und als Manager eines deutschen Premiumherstellers.
Im Oktober 2011 komplettierte er die Gründungspartner von Berylls Strategy Advisors. Die Top-Management-Beratung ist die Basis der heutigen Group und weiterhin der fachliche Nukleus aller Einheiten.
An das Studium der Betriebs- und Volkswirtschaftslehre, schloss sich die Promotion über virtuelle Produktentwicklung in der Automobilindustrie an.
Featured Insights
Munich, April 2022
ith Vehicle as a Service (VaaS) expected to increase its market share by close to 33% by 2025, OEMs need to get ready for the impact on aftersales
The global aftersales business – parts sales and maintenance services
through the dealer network – is a major profit pool for automotive OEMs and
dealers. It accounts for as much as 40% of the overall profit of some carmakers
and large, full-range dealerships.
How did aftersales become such a stable cash cow? This is mainly attributable
to the fact that for vehicles under warranty, OEMs have close to no competition
for the service and care of the cars they sell as most customers remain loyal
to the manufacturer they bought the vehicle from. Once cars are passed on to
their second or third owners, OEMs increasingly face the competition of the independent aftermarket (IAM) – repair shops offering cheaper labor rates and
parts to customers who are more price sensitive.
To find out more, download our in-depth analysis!
Paul Kummer (1983) joined Berylls Strategy Advisors, an international strategy consultancy specializing in the automotive industry, as a partner in October 2021. He is an automotive downstream expert.
He has been advising automotive manufacturers in a global context since 2010. He has in-depth expert knowledge in the areas of sales and aftersales. His other areas of expertise include growth strategy development, business model development, portfolio optimization and digital transformation.
Prior to joining Berylls Strategy Advisors, he worked for Monitor Deloitte and Accenture.
Paul received his MBA from WHU Otto Beisheim School of Management and his Industrial Engineering degree from DHWB Mosbach.
Featured Insights
Munich, June 2022
n our recent viewpoint on NEVs in China we looked at China’s vital first-mover advantages in battery cell production and charging infrastructure and how critical it is for German and other foreign OEMs not to rely on their previous and current success with ICE vehicles.
There is no other way to put it: Chinese NEVs are leaving traditional German car brands far behind in the NEV sector, and not only in sales growth. Mainland customers are also giving Chinese NEVs rave reviews, as Berylls’ Big Data research reveals.
So, a swift reaction by German OEMs should be top of their CEOs’ agendas, in order to win back customer approval for their electric models and compete more effectively with China’s NEV start-ups. The following sales numbers in 2021 show the dramatically changing composition of China’s NEV market:
In contrast:
Now to be entirely fair: Each of the German OEMs mentioned above are coming up with numerous new NEVs that are entering the Chinese market this year. Volkswagen and Audi for instance are introducing the VW ID.5 and the Q5 e-tron this year.
Mercedes-Benz customers can prepare for a double debut: EQS and EQE are both celebrating their world premiere this year in China.
BMW goes even further: five pure electric products will be presented to the Chinese market: the BMW i3 (launched March 31st already), iX, iX3, i4 and i7.
Most of these models come with significant technological innovations and improvements that don’t just demonstrate a step forward under the hood but also at least equally important in China, visible for the customer in terms of a more “techie interior feeling” inside of the car.
However, NEVs are just the start of where we see a gap opening up between German and Chinese OEMs. The next area where German OEMs will need to catch up is already emerging: ICVs (Intelligent Connected Vehicles), a new collective term that stands for deep integration of connectivity and autonomous driving. And the risk is imminent that Chinese ICV players will repeatedly outcompete their German competitors.
During the recent „Two Sessions“ (the National People’s Congress and the Chinese People’s Political Consultative Conference), ICV and autonomous driving were one of the hot topics for the automotive industry. New laws and regulations were approved to promote the faster development of ICVs, with special emphasis on the implementation of autonomous driving.
ICVs are yet another case where one can see the advantage enjoyed by new Chinese players that can keep up with the dynamics of national policies and make rapid responses and adjustments. While traditional car companies are still studying „digital transformation and software defined vehicles“, these new Chinese players are already introducing them. Meanwhile, they have shifted their attention to ICV hardware and software upgrades for connectivity and autonomous driving functions.
For instance, the NIO ET7 has seven times the computational power of Tesla’s Hardware 3.0 (HW3.0), the US company’s AI self-driving hardware, released in 2019, which is deployed in the latest Tesla models. NIO’s Adam supercomputing platform within ET7 uses four NVIDIA Orin chips, with a total computational power of 1016 total operations per second (TOPS). In contrast, the computational power of Tesla’s HW3.0 is 144 TOPS.
Chinese players are also pioneering new sensors. For instance, Xpeng’s P5 uses a fusion of millimeter wave radar, camera and Lidar, while NVIDIA’s Xavier is used for autonomous driving (called XPilot), which can provide 30 TOPS of computational power. Equipped with twin Lidar sensors, the Xpeng P5 can deploy navigation-guided piloting (NGP) in urban environments. Moreover, the car roof is equipped with solar panels, which can provide 62W charging
But are Chinese players paying so much attention to ICVs, in particular spec and functionalities, as a means to extend their spec lists beyond their competition? Probably not.
It is more likely to be because they truly understand that “customer centricity” and digitalization go hand in hand. Customer demands are more diverse than ever before. It is not enough to offer just a digital customer interface with rich functions; in addition, timely software updates and rapid system upgrades are essential to react to these diverse and changing demands. All these capabilities require a strong technological base.
Even a traditional car with some smart functionality requires powerful hardware at the start of production (SOP). But updates are very limited and usually come with a facelift or at least require a physical service appointment. This means that car features are rigid, with little room for changes. Moreover, there is no application development ecosystem, with only a small range of applications developed by OEMs or Tier 1 suppliers.
However, with the advent of ICVs, hardware has become very powerful at the time of release as it has to have the ability to support future software updates. Software can be continuously updated remotely (over the air, or OTA) and new software functions added at any time (functions on demand, or FOD), while third party partners can engage in the development of software. The car’s functions and applications will be richer, since vehicle features are no longer rigid and can be extended via connection to the cloud. Chinese players have got the message that the accompanying hardware development cannot be ignored and must, more than ever, be a top priority.
To be fair, German players have not been sitting idle either.
For instance, the BMW iX is equipped with two Mobileye EyeQ5H chips, which are mainly used for visual perception processing. The computational power of a single chip is 24 TOPS. Two Intel Denverton 8-core processors, together with EQ5H, are responsible for data fusion, decision-making and planning.
However, according to BMW, this system only supports L3 level autonomous driving, as L4 / L5 levels require up to three EQ5H chips together with five Lidar sensors and seven cameras. A gap still exists with the current BMW iX configuration, which only has six sensing cameras, four surround cameras, one Lidar sensor, five millimeter wave radars and 12 ultrasonic radars.
VW Group, Mercedes-Benz and Audi do not make public as many specifics as BMW and are still at the planning stage. Audi has launched the Artemis Project, which will focus on new technologies including electrification and high-level autonomous driving. Its first model is due for release in 2024, with no further detailed information.
The same goes for Volkswagen, which will first launch Trinity, a flagship model to be produced in Wolfsburg and released in 2026. Again, there is no detailed information about the car.
Mercedes-Benz is cooperating with NVIDIA and has announced that the next generation of its models will use an NVIDIA platform, which will be launched in 2024.
It seems, therefore, that Chinese players are already far ahead when it comes to ICVs. They are putting out finished models while German players are still deciding what to do. Viewed from this angle, the traditional German players appear much slower than new Chinese competitors, which of course has a lot to do with the Germans’ scale, legacy and culture.
As customer demands become more unpredictable and competition increasingly fierce, staying ahead in China will become the overarching objective. This is why, in the digital era, customer centricity will remain the common key value for every NEV player. A genuine mindset shift from product-orientation to customer-orientation should be the starting point for all moves by all players along the value chain.
To be specific: What do customers want? How can OEMs make customer demands transparent? How can they translate customers’ expectations into real products and services? And how can OEMs systematically deploy customer requests along the entire value chain, to meet different individual needs? To answer these questions, OEMs need data.
We believe that data fusion, analysis and processing will greatly assist OEMs in creating transparency around present and future customer needs. It is therefore critical to design a data strategy and deploy dual systems for data analysis and action derivation.
From the outset, data is fundamental in creating strategy. Customer data is required to forecast future customer needs, demands and preferences, so that OEMs can develop a proactive rather than a reactive strategy. The entire value chain needs to be covered by the strategy which has customer-centricity at its core, hence the importance of data collection and analysis.
It is then time to review the strategy and proposed actions. Firstly, data needs to be collected, analyzed and processed in a modular way, so it can be classified into categories such as marketing, retail, customer interface, and products. Regular reviews and analysis of the collected data are required to determine the difference between customer expectations and the products or services provided by OEMs.
Secondly, it’s time to plan & start actions based on the results from each category, which need to be distributed to the relevant departments. Using this data, each department then needs to find solutions and actions that close the gap between customer reviews (for cars on the road and customers’ demands for future models) and adapt the existing strategy in the short, medium and long term. Deep integration of upstream and downstream functions is more essential than ever.
If there is one lesson to be learned from two years of COVID-19, resource shortages and now war, unfortunately, it is that OEMs can’t rely on strategies built on hypotheses and leadership experience. Instead, traditional German players should anticipate potential shocks, size up new situations, reposition themselves and master the rules of the new game as soon as possible. This change needs to happen in a structured way, rather than reactively following the trend. In particular, it’s time for them to rethink their whole value chain, redefine cars and be game-changers in the digital era when it comes to setting new trends and getting ahead of China’s agile and aggressive NEV start-ups.
Featured Insights
EMs know they need more flexibility in production – and soon – to meetdemand for greater individualization and better cost competitiveness. Here’s how...
Automakers’ need for production network flexibility has never been more urgent. Demand for customized vehicles is growing at the premium end of the
market, while at the volume end the opposite force prevails, and product complexity is being cut for cost reasons. Development cycles are growing ever-shorter, resulting in more frequent production-line changes, and increased geopolitical volatility is affecting demand and global supply chains. The last point has come to the fore in the wake of Russia’s invasion of Ukraine, causing shortages from auto suppliers there.
Faced with these disruptive forces on both the demand and the supply side,
OEMs are taking more radical positions when it comes to the degree of product
individualization they offer, as well as what level of value creation will be kept inhouse. As a result, new production archetypes will emerge that will shape OEMs’ future manufacturing networks.
To read more, download our full report!
Heiko Weber (1972), Partner at Berylls Strategy Advisors, is an automotive expert in operations.
He started his career at the former DaimlerChrysler AG, where he worked for seven years and was most recently responsible for quality assurance and production of an engine line.
Since moving to Management Engineers in 2006, he has been contributing his experience and expertise to projects for automotive manufacturers as well as suppliers in development, purchasing, production and supply chain. Heiko Weber has extensive experience in the development of functional strategies in these areas and also possesses the operational management expertise to promptly catch critical situations in the supply chain through task force operations or to prevent them from occurring in the first place.
As a partner of Management Engineers, he accompanied the firm’s integration first into Booz & Co. and later into PwC Strategy&, where he was most recently responsible for the European automotive business until 2020.
Weber holds a degree in industrial engineering from the Technical University of Berlin and completed semesters abroad at Dublin City University in Marketing and Languages.
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