The balancing of distinct market growth cycles in the global commercial vehicle (CV) industry remains one of the key challenges for all players. As the profitability of new vehicle sales declines in today's very competitive markets, leveraging the services value chain further downstream offers the best opportunity to stabilise and grow the OEM's (original equipment manufacturer) revenue stream. Previously, downstream products such as full service or maintenance contracts could be priced at a significant premium over perceived cost and were thus seen as very desirable elements of the OEM's downstream service portfolio; recently, however, greater competition has meant a pricing and profitability squeeze throughout the industry. Developing a comprehensive pricing logic is key to success. Three areas need to be considered: customer value analysis, competitive downstream analysis of TCO (total cost of ownership), and TCO cost analysis itself. Calculating the TCO of a vehicle means computing the total service and maintenance costs over the lifespan of the vehicle, as well as the distribution of these costs over time. The key issue, though, is that there is a significant difference between simply estimating the costs and capturing the real costs in a statistically relevant fashion. TCO Cost Analysis is therefore a holistic approach that requires an organizational commitment and interlinkage throughout the entire value chain to be successful. The key here is to capture sufficiently trustworthy data. The better this data reflects reality, the more realistic the final analysis will be. The highest level of TCO model sophistication is represented by a real-time system, linking online databases containing field data with a dedicated TCO software program. This is the only solution which allows for active control over the downstream contracts in each part of a vehicle's lifecycle, analyses of interdependencies of cost components, and proactive reaction on competitive and customer moves. The final step to opening the door to downstream revenue improvement is consolidating the three elements of the TCO pricing logic into sound downstream products and pricing.


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    Title :

    Total Cost of Ownership (TCO) - Door opener to downstream revenue improvements


    Additional title:

    Total Cost of Ownership (TCO) - Erschließung signifikanter Umsatzpotentiale im Downstream-Geschäft


    Contributors:


    Publication date :

    2007


    Size :

    6 Seiten, 3 Bilder


    Type of media :

    Conference paper


    Type of material :

    Print


    Language :

    English




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