AutoRev

AutoRev – Revenue Management in Automotive Sales

Client: Volkswagen AG

Duration: From 2009 to 2011

 

Responsible

  •  Thomas Volling
  • Andreas Matzke

 

Project Partners

  • Volkswagen AG

 

Initial Situation and Problem

Revenue management approaches are applied, if scarce capacities go along with uncertain and temporally distributed demand. The goal is to maximize profits by using capacity control or dynamic pricing mechanisms.

In the automotive industry, scarce resources and unsecure demand impose major challenges. In contrast to conventional revenue management applications, there is a parallel production of vehicles built to customer order and vehicles that are based on generating the forecasts and stored up for sale (hybrid production). Stored vehicles are needed to serve customers with short delivery time expectations. Since certain configurations exist only in small numbers, these stock cars are to be regarded as scarce resources. The subject of revenue management in hybrid car production is therefore the economically optimal allocation of stored vehicles to dynamically incoming customer inquiries.

 

Objective and Approach

Particular challenges of revenue management approaches in the automotive industry result from the decentralized distribution structure with a large number of independent dealers and highly variable vehicle configurations. Appropriate approaches are not yet known. Against this background, the aim of the project is to design a revenue management concept that increases profit in automobile sales. The work will be carried out in cooperation with Volkswagen AG.

 

Further Information

This and similar projects of our institute led to numerous publications: