Any original equipment manufacturer (OEM) aspiring to strengthen its global reach would be lured to Asia, with its promising overall growth and even higher profit growth amidst a market segment shift toward more sophisticated trucks. This was an attractive proposition for a leading European OEM truck manufacturer, but several challenges stood in the company’s way.
The European multinational faced rising competitive pressure from Indian and Chinese players exporting more competitively priced models to the region, along with other triad players pushing domestic and better localized models. It also had to contend with its own interesting, yet fragmented footprint in developing Asia, where it had an assembly volume of around 50%, but a far larger sales volume standing at 80%.
To capture additional market share and secure a strong position in an important region, the company needed a regional business model that would leverage the strengths of its existing organization in Asia. This fresh approach would offer several key benefits:
BCG partnered with the OEM on three waves of action:
The project was supported by an enhanced regional governance model that enabled the OEM to remain agile to the dynamic marketplace in Asia.
The overall result was a fundamentally new Asia business model featuring a strong growth trajectory and a significant profitability boost.