Strategic importance of refurbishment for 4R concepts and mulit-cycle sales models

Munich, February 2023

Strategic importance of refurbishment for 4R concepts and mulit-cycle sales models

Munich, February 2023
O

EMs face increasing pressure to cut their environmental impact.

This means reducing their carbon footprint, but also their raw material and resources consumption, and making their operations and business model more sustainable (not focused solely on selling more and more cars). In response, OEMs are starting to put in place Refurbish, Remanufacture, Reuse, and Recycle (R4 or the “4Rs”) strategies to maximize their reuse of valuable materials.

Increasing focus on sustainability brings refurbish, remanufacture, reuse and recycle strategies to the forefront

Source: Berylls Strategy Advisors

However, their strategies are at the moment neither comprehensive nor consistent. On the one hand, they usually focus on end-of-life applications, such as recycling and reuse of vehicles and battery modules. Recycling and reuse are the “2Rs” that appear to be the most profitable at present (if you want to learn more, please also have a look on Berylls’ Battery Re-X study. On the other hand they tend not to consider an important prerequisite for their strategies: Being the legal owner of the vehicle throughout and particularly at the end of its lifetime (around 8-10 years).

During the 8-10 year period, OEMs will need to redeploy the car to different end customers for different types of contract, as part of a multi-cycle Vehicle-as-a-Service (VaaS) sales model, rather than selling the car outright when it is new (if you want to learn more about the Berylls point-of-view on VaaS, please have a look on our dedicated website.

This multi-cycle sales model will put vehicle condition in the spotlight, as it will be essential to maintain a certain standard of quality so the car is available for as many types of business models as possible.

Vehicle condition becomes an essential part to ensure it can be used in as many types of offerings as possible, reducing the turnaround time between customers

Source: Berylls Strategy Advisors

Efficient refurbishment operations to maintain the quality of vehicles between different use cycles will therefore become a strategic enabler for both multi-cycle sales models and for OEMs’ holistic 4R strategies.

BERYLLS’ VISION FOR REFURBISH, REMANUFACTURE, REUSE, AND RECYCLE

We believe that taking a lifetime view of vehicles and components has significant strategic and commercial benefits

Source: Berylls Strategy Advisors

THE IMPORTANCE OF 4R STRATEGIES in the context of business model and sustainability transformation is increasing rapidly and only few players are starting to get prepared. Now is the time to decide whether to bea pioneer or a laggard in two of the most relevant future fields of action!

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Strategic importance of refurbishment for 4R concepts and multi-cycle sales models
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Authors
Christopher Ley

Partner

Heiko Weber

Partner

Florian Tauschek

Associate Partner

Tobias Detzler

Project Manager

Christopher Ley

Christopher Ley joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) in October 2021 as Partner. He has over 14 years of top management consulting experience with focus on new business models and market expansions within the automotive & mobility industry. He is an expert around Vehicle-as-a-Service, comprising vehicle finance & leasing, fleet management and mobility services. Christopher Ley is advising OEMs, Captives, Financial Services Companies, PE & VC Investors, Leasing & Rental Companies, Fleet Managers and Mobility Startups around the transformation from one-time sales towards use-based multi-cycle business models on a global level.

Prior to joining Berylls, Christopher Ley has been working for other international management consulting firms, amongst others Monitor Deloitte and Alvarez & Marsal. He holds a diploma degree in business administration from Johannes Gutenberg-Universität in Mainz and an MBA from Colorado State University.

Heiko Weber

Heiko Weber (1972), Partner at Berylls by AlixPartners (formerly Berylls Strategy Advisors), is an automotive expert in operations.

He started his career at the former DaimlerChrysler AG, where he worked for seven years and was most recently responsible for quality assurance and production of an engine line. Since moving to Management Engineers in 2006, he has been contributing his experience and expertise to projects for automotive manufacturers as well as suppliers in development, purchasing, production and supply chain. Heiko Weber has extensive experience in the development of functional strategies in these areas and also possesses the operational management expertise to promptly catch critical situations in the supply chain through task force operations or to prevent them from occurring in the first place.

As a partner of Management Engineers, he accompanied the firm’s integration first into Booz & Co. and later into PwC Strategy&, where he was most recently responsible for the European automotive business until 2020.

Weber holds a degree in industrial engineering from the Technical University of Berlin and completed semesters abroad at Dublin City University in Marketing and Languages.

Florian Tauschek

Florian Tauschek has 8 years of experience in strategy consulting. He focuses on business & sales model strategies for flexible Vehicle-as-a-Service (VaaS) offers.

He is an expert in topics such as customer & vehicle lifetime value optimization, the transformation of the underlying automotive sales model from one-time asset sales towards multicycle models generating recurring revenues as well as market entry strategies for various VaaS products such as operating lease or subscriptions. Furthermore he is the author of several market leading studies around VaaS.

He holds a Master of Science degree in management from HHL – Leipzig Graduate School of Management.