We have limited Spanish content available. View Spanish content.

Case study

An Auto Parts Company Revs Up Its Competitive Position

A combination of resetting the cost base, pruning the portfolio, and strategic M&A created a new global contender.

$150M

year-one value delivered

250

transformation iniatives

$150M

year-one value delivered

250

transformation iniatives

The Story

Prompted by activist shareholders, a multinational conglomerate took a hard look at its portfolio and concluded that its automotive business was underperforming. Its various subsidiaries tended to be fifth, sixth, or worse in their respective markets, a situation that the new CEO vowed to change. The company developed a new portfolio strategy, divesting some of its auto parts units and investing in the remaining ones, with the goal to make each a top-three players in its market.

We worked with AutoPartsCo to, initially, create a cost structure that would enhance its competitive position, applying our Accelerated Performance Transformation approach to its product portfolio and operations across six global regions. This effort began with a six-week due diligence phase that identified key sources of value, including commercial excellence, procurement, SG&A, quality, and plant operations. Over the next 12 months, we worked alongside AutoPartsCo to design more than 250 initiatives that would deliver nearly $150 million in year-one value and  expected to reach five times that figure in year-four run rate.

A New Company Is Born

These efforts enabled the company to adjust to rapidly changing market dynamics, and overcome some internal resistance to change, restoring it to a solid footing. That laid the groundwork for an even bolder transformation. Working closely with our M&A teams, AutoPartsCo embarked on a journey to divest certain units, acquire other companies, and essentially create an entirely new entity optimized for the rapidly evolving realities of the automotive market.

We helped the company conduct a rigorous portfolio strategy exercise to determine which non-core businesses to divest in order to fund investment in its core business. We also helped identify four companies that it could acquire within key sub-verticals, to bolster core segments and transform its competitive position.

Covid-19 and the resulting impact on supply chains posed some challenges, as did creating a new company comprising businesses from various global regions, with different corporate cultures and styles of working. We deployed micro-battles in the first year, to make demonstrable progress and show that change was possible. In years two and three, we applied our post-merger integration approach to help teams align, communicate, and find common ground. The end result proved transformative, as the new company became a significant competitor to the two established leaders in its industry. It is now well positioned to push further into electric powertrains, autonomous driving, and related next-generation technologies core to its strategic vision.

We take our clients' confidentiality seriously. While we've changed their names, the results are real. 

Want to continue the conversation

We help global leaders with their organization's most critical issues and opportunities. Together, we create enduring change and results