June 23, 2020

Audi PRO Margin Analysis

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Due to product cost pressure and changing demand, Audi must innovate in retail marketing and sales to maintain and increase their margin. The aim of Audi PRO is to understand the current and future allocation of costs and revenues in order to make the right decisions that lead to a more profitable retail marketing and sales model. We expect that this will enable Audi to build a new scalable data driven foundation that can generate between 1 and 4% additional retained margin within 2 years.

To do this, we started with a profit margin analysis by mapping the margin development in that last two years and  creating a breakdown of all cost- and revenue drivers. To identify all cost- and revenue components from the factory all the way to the end consumer, we started by conducting 20 interviews within Pon Automotive and mapping all relevant data sources. We then combined all of these data sources and added up all cost- and revenue drivers, allowing us to compute the net margin per individual car. Based on this dataset, we created a tool that allows Audi to view the cost breakdown and net margin per car, model, engine, fuel type, customer segment and dealer location.

We are now starting phase 2 of the project, in which we will add additional data about fleet sales, financial products and customer demographics to the tool. The next step is to make the tool real-time, allowing Audi to make data-driven marketing and sales decisions and closely monitor the effect of such decisions on the net margin.