Customer Stories Toyota (GB) 2018-08-13T11:02:51+00:00

Toyota (GB) Plc
Improving Car Retailer Profitability Through Cost Control

Background

A profitable and efficient retail distribution network is critical to Toyota’s market success, and the company works consistently with its retail partners to help improve performance, in this case in their management of their used car businesses.

Business Issue – Cost Control

Managing a successful used car retailing business requires a number of different skills. The focus in this case was on cost control, driven by the answers to two key questions:

  • How many used vehicles should retailers hold in stock, bearing in mind that the value of cars falls over time (depreciation) and that there is a financial cost to tying up valuable capital in vehicles (finance charges)?
  • How long should they be held in stock before they should be traded away (stock ageing)

Based on anecdotal evidence from different sources Toyota were aware that many of their retail partners were not managing this as well as they should at a time when retailer profitability was under pressure.  If they could identify which retailers needed help, show them the benefits of addressing the problem and how to do it, they could help retailers cut costs significantly.

Mazepoint provides business intelligence solutions for Toyota

Information Required

Mazepoint Improves Car Retailer Profitability for Toyota

To implement the programme, Toyota needed the following information:

  • Given a retailer’s used car trading levels, what would be the optimum number of cars they should hold in stock ?
  • Which of their 250 retailers were holding more stock than they needed?
  • Which of their retailers were holding stock older than 60 days (an industry stock turn benchmark)?
  • Having identified the target retailers, how can Toyota demonstrate the cash savings and efficiencies that would result from changes in working practices?
  • By retailer, what would be the optimum used car stock levels and stock turn?

How Mazepoint Helped

  • A full set of data providing the necessary context around the issue
  • The data’s quality and reliability had been proven over years of work
  • The data was presented in a format that the analyst could experiment with quickly, without having to rely on scarce and less informed IT resources

By providing the analyst with the ability to design different scenarios and test for the optimum benchmarks Mazepoint helped save weeks of time and enabled the analyst to produce much more accurate action plans than was possible before.

Mazepoint provides data analysi for Toyota

Results

Mazepoint provides business intelligence for Toyota

Using Mazepoint’s information system, Toyota’s analysis revealed that the majority of their retailers were holding on average 12 cars too many. Taking into account finance costs, depreciation, and the opportunity cost of the dealership space used, this represented a significant additional cost for the network.

A campaign was organised with Toyota’s field staff and as a result used car stock levels were significantly reduced across the network, stripping out over £2m of costs.