The ABC of Choosing the Right Auto Consulting Firm for your Organization

Posted by Vaishali on February 24th, 2021

As indicated by the name, ‘auto consulting’ is a type of business consulting that caters to the automobile industry. An auto consultant is someone whose chief goal is to help improve the efficiency or add value to any of the multiple business entities involved in this industry. Some of the principal stakeholders in the automobile industry are:

• OEM/auto manufacturers
• Dealers
• Aftermarket distributors/retailers
• Tier I auto spare parts suppliers
• Tier II suppliers, etc.

So, what exactly does an Auto Consultant do to help these stakeholders?

The primary purpose of auto consultants in their engagements with companies is to help increase their sales and/or reduce cost and thereby increase profits. For this, auto consultants are engaged by companies in different parts of the value chain. Their service may involve helping with improving manufacturing efficiency, supply chain efficiency, distribution network design, improvements in administrative and human resource management, financial management advice, market research, consumer analysis, new market entry, dealer development, advertising and branding, etc. While most of these areas tend to be common across industries, the major areas in which auto consultants help are:

-          Manufacturing and supply chain

There is a heavy demand for auto consulting in the manufacturing side of this industry. Some of the services provided by auto consultants in this sphere include improving the auto design, increasing efficiency of manufacturing, integrating supply-chain, ensuring operational efficiencies, creation of effective distribution networks, helping automobile companies create and sustain better and more productive relationships with governments, auto spare parts manufacturers, etc. The engagements of auto consultants to improve operational efficiency may be with Tier 1 suppliers, Tier II auto spare parts manufacturers or OEMs.

-          Marketing, sales and branding

Other areas in which consultants tend to be involved are market research, consumer analysis, new market entry, dealer development, advertising and branding. Auto companies often hire consultants to help train their dealers, or to help in making their dealerships consistent, so as to give a unified brand experience to their end consumers. Auto companies or sometimes the auto dealers themselves may also hire automobile consulting firms to give them recommendations on how to increase their sales through better and more efficient marketing and advertising, ways and means to retain their customers, improve the look and feel aspects of their show rooms, etc.

OEMS may also hire consultants to help improve availability of spares in the aftermarket since availability of service and spares is key to excellent sales of their products. Auto spare parts manufacturers, especially the original equipment suppliers also often take the help of auto consultants to develop their own brands for the aftermarket since the aftermarket is an additional source of earning for them which becomes extremely important when the auto business is going through a recession.

-          Strategy consulting

Auto organisations seek the expertise of automobile consultants to help them develop and implement business strategies. While the ultimate objective is to focus on the customers, the strategy consultants enable this through the development of multiple strategies aimed at various levels - corporate, organisational and/ or functional.

Strategy consultants are expected to help automobile organizations by helping them conceptualise and articulate their vision and mission statements, develop robust strategic plans, and set up implementation roadmaps (including, details of the various activities that would be part of the implementation, along with the resources required for the same). A very common expectation of automobile companies from their strategy consultants is to enable them to enter a new market segment.

What to look for in an Effective Auto Consultant- The Do’s and Don’ts

While there can be no doubt that automobile consultants bring in enormous value to all the stakeholders in the supply chain, what needs to be understood very clearly is that OEMs, auto part manufacturers, etc. need to know what kind of an auto consultant they should hire to help them get the best out of the consultants. Equally, they should have the capability to evaluate if a particular auto consulting firm is the right fit for them. The pointers outlined below will help you evaluate the plethora of auto consulting firms out there, and to kickstart the consultancy project.

• Are you clear about the goal? (Be very clear as to the global outcomes you expect from the engagement)
• Have you understood the challenges within your organization – the ones you want the auto consulting firm to solve? (Have a clear idea about the challenges faced by your organization; but do not think that you have uncovered all your issues.)
• Have you done the right level of research before zeroing in on the consultant? (Look for the right consultants – the right consultants are like good doctors. They identify and treat the core issue in your company, and not merely the symptoms. They have a clear roadmap of how the implementation should progress to give the best benefits.)
• Have you probed the capabilities and fitment of the consultants in depth? (Interview the consultant thoroughly and gain an understanding of the direction of the solution they are suggesting for your challenges, and the logic behind it. A good rule of thumb to follow while evaluating an offered solution is to see if the steps of the implementation create a virtuous cycle of real cashflow that then funds further steps of the implementation. This will ensure that the risk of engaging that particular auto consultant is not very high for your firm.)
• Draw up a comprehensive and lucid contract prior to operationalising the consultancy engagement. (Outline the scope of work, terms of payment, timelines, etc. However, while a contract is important, mutual trust is more important!)
• Remember the adage, “Well begun is half done” – set your consultant to succeed. (The consultants can do their job only if all key company personnel co-operate with them, are open and honest with them, and are not apprehensive of the impact of the consultancy on their jobs, etc. Therefore, ideally, the first step of an engagement should be an open two- way conversation to address reservations, if any, and to solicit a complete buy-in of the entire team for the implementation.)
• Empower your consultant to succeed. (Once you have called in a consultant you trust, give them a reasonably free hand - be open to all the consultant’s recommendations.)
• Be patient. (Depending on the type of improvement project undertaken and the challenges encountered, all projects would need time to mature and give results.)

As you can see, identifying the right auto consulting firm for your organization can be a challenging task. Word of mouth feedback from a source that you can trust about a particular auto consulting firm is the best and least risky way to proceed here. Tap into your network, and evaluate multiple candidates before choosing one. But, having chosen one after conducting a thorough due diligence, do not have misgivings. Have faith in your own home work, and give the auto consultants a reasonable amount of time to prove their capabilities. Very often, someone who is removed from the day to day operations of your organization, and who is not emotionally attached to the firm, will have the objectivity and the courage to identify the root cause of the problem, and suggest much needed changes. Benefit from their domain expertise in auto consulting.