OEM TEREX

Project Overview:

The business wanted to define a common vision for the establishment of equipment dealerships. This Standards Document focused on the distribution of compact construction equipment in North America. The project needed to overcome two significant issues:

1) Profitability. A lack of machine population has a negative impact on parts and service revenues. 

2) Dealer Commitment to overall market penetration in sales, service and rentals.

Resources:

One senior consultant worked with project team focused on "Dealer of the Future"

Project Required:

Strategy / Marketing / Fleet Modeling 

Duration:

6 months

Highlights:

The OEM learned the overall value proposition being offered to a new dealer. They were able to better understand the overall cost structure of a dealership operation and exactly how much revenue and sales margin it takes to generate a profit. Two major lessons learned”

A) If dealers are not structured correctly, their chances of being profitable are reduced, and will therefore not be viable long term. 

B) If the distribution channel for products is not uniform, the overall satisfaction for the end users will be short lived and the value of the brand will diminish. 

Establishing a new brand is difficult, especially when trying to make a start-up dealer profitable. Usually, the major profit areas are parts and service. When the brand is new, there is no machine population (meaning no parts sales) and unless you repair other brand machines, then no service work either. That leaves sales margins to carry the overhead of the operation. That is where rental comes in as it has high margins similar to parts and service.

Project Success:

The project impacted the corporate organization causing the marketing, finance and product support groups to view and coordinate their efforts in delivering a true "value proposition" for new dealers.