CSG Product & Business Support

Optifit

CSG Product & Business Support

Bart Dehouwer

Toyota Motor Marketing Europe

Agenda / content
• Review of Optifit
– Origin
– Positioning
– Arguments for AR
– Obstacles for further growth
– Proposition
– Life Cycle Management
• Products under development
• Optifit Sales review
• Discussion on way forward

Toyota Motor Marketing Europe

Review of Optifit
Origin
¾ Originally introduced as MVP (Market Value parts), developed to
recover losses on OE products at TMC (incl. Yen fluctuation impacts).
Still today TMC is loosing money on OE pads, clutches & mufflers,
whilst Europe is making profit.

¾ Range was expanded to have parts with adjusted specifications in

order to sell popular W&T products and to react to
ƒ Growing market pressure (fast fit => easiest option to find
alternative solution)
Growing Toyota UIO attracts more competition of OES and AM
parts suppliers, Quick fitters and independent workshops

Toyota Motor Marketing Europe

Review of Optifit
Origin cont’d

ƒ Environmental pressure
Competitor offers and ELV legislation did create the need for
environmental friendly solutions leading to a fast growing Reman range.
ƒ Customer Perception
Customers perceive Toyota parts as very expensive although pricing
surveys show Toyota is priced average vs OEM (see graph). Optifit
will help to change this customer perception.
Perception cultivated by: - High labour rates AR’s
- Strong advertising of fast fit chains
- Profit driven AR approach to W&T segment
- No active use of Optifit to tackle perceptions

Toyota Motor Marketing Europe

 Review of Optifit
Origin cont’d - A Gap in price position and perception
Facts Voice of Customer

AVG
MM5 OE parts survey April 2005 B-segment
ERRP
Value for
Transparenc
140 money

Emotional level
y

Rational level
120
100 Accessibil
ity Personal
80 Requirements treatment
60 on service
40
Quality
20
of work Atmosphere
0 Convenience
Toyota Ford GM Nissan Renault VW Peugeot & Time

Today we are CHEAP versus Other Makes for the first High Price perception confirmed in
time driven by high introduction prices for new vehicles Customer expectation survey
like Golf5,P407

Toyota Motor Marketing Europe

 Review of Optifit
Positioning “Image”
100% quality
Price OE Q

OE Optifit

Customers
OES request

AFTERMARKET

Quality
3 7 10 years

Value for money without compromising Toyota

performance/safety standards
Toyota Motor Marketing Europe
Review of Optifit
Positioning
Why Sub-Brand?
¾ Approved Toyota quality = genuine parts logo
¾ Dedicated value for money offer for older vehicle sector
¾ Offer opportunity to up-sell to OE or down sell to Optifit
(link to Customer expectations)
¾ Develop ongoing & effective promotional platform to primarily AR staff
¾ Supplement to OE for mechanical trade business

¾ Expand the genuine service available from the Toyota dealership

TMC stopped pilots to explore a 2nd brand range
=> Optifit (includes Reman) is the official genuine parts
sub - brand of Toyota.

Toyota Motor Marketing Europe

Review of Optifit
Arguments for Authorised Repairers

¾ Genuine parts product range

¾ Competitively priced versus OE
¾ Focus on older vehicle UIO (CR tool)
¾ Ideal for workshop sales via EPC and menu pricing
¾ Easy for ordering (OSS)
¾ Supporting eventual mechanical trade business
¾ Competitive offer versus Independents and Quick Fitters
¾ Optifit + Menu Pricing + Express Service = CCS

=> AR should not actively communicate Optifit as Sub-brand to end

customers:
There is only 1 genuine Toyota offer

Toyota Motor Marketing Europe

Review of Optifit
Obstacles for further growth

¾ Cannibalization of OE and Optifit with direct impact on T/O

¾ 2 offers for 1 solution (supermarket idea) => difficult to offer customers
a choice
¾ Optifit quality perception versus OE => Expect OE quality at “low” price
¾ Reman is difficult (return, surcharges,…)
¾ Poor market information to justify any business expansion (statements
rather then facts)
¾ Warranty
¾ Poor commitment to achieve a competitive price

Toyota Motor Marketing Europe

Review of Optifit
Obstacles for further growth cont’d
¾ Highly competitive products are sold at “Captive like” margins
NMSC + DLR
NMSc margin (after PL21) DLR margin margin Index vs ERRP

Overall A B C Overall A B C Overall Overall

Pads OE 34,1% 39,9% 37,1% 25,2% 45,8% 42,3% 50,0% 46,0% 64,3% 114,3
Optifit 28,1% 28,0% 33,6% 25,2% 47,7% 49,3% 50,0% 46,0% 62,4% 117,1

Starter OE 44,9% 53,9% 42,6% 25,2% 26,1% 19,2% 16,0% 46,0% 59,3% 98,1
Optifit 40,4% 54,9% 49,4% 20,7% 29,1% 16,0% 30,0% 35,0% 57,8% 120,2

Alternator OE 35,7% 39,8% 38,9% 5,0% 21,2% 16,3% 16,0% 46,1% 49,3% 83,0
Optifit 38,9% 46,7% 46,5% 23,9% 28,5% 16,7% 30,0% 35,0% 56,3% 116,5

Clutch OE 37,2% 38,7% 36,7% 36,0% 42,1% 39,3% 42,0% 45,9% 63,6% 133,3
Optifit 36,5% 32,1% 36,7% 38,4% 43,6% 38,0% 42,3% 46,0% 64,2% 141,2

Steering OE 47,4% 57,2% 43,6% 29,6% 23,3% 19,3% 16,0% 33,0% 59,7% 90,7
Racks Optifit 45,7% 54,2% 45,3% 39,5% 29,2% 19,0% 30,0% 35,0% 61,5% 128,2

OE total 38,2% 45,5% 38,0% 27,5% 40,0% 34,7% 43,5% 43,5% 62,9% 111,0
Optifit Total 37,2% 45,5% 40,4% 31,8% 39,0% 29,0% 41,2% 41,9% 61,7% 124,7

Shocks OE 38,9% 50,1% 39,2% 24,9% 41,4% 33,8% 42,0% 46,0% 64,2% 121,5
Strut OE 32,3% 38,0% 38,9% 24,9% 42,4% 36,2% 42,0% 46,0% 61,0% 105,3
OE 33,8% 39,9% 39,0% 24,9% 42,2% 35,9% 42,0% 46,0% 61,7% 108,4

Toyota Motor Marketing Europe

Review of Optifit
TMME margin for Optifit products after logistic costs

Gross Margin 15%, of which 3% is royalty

TO also

¾ Recover engineering costs

¾ Tooling expenses
¾ Support towards NMSCs

Toyota Motor Marketing Europe

Review of Optifit
Proposition
For any repair made under manufacturer's warranty, the product used
should be OE (brake pads, mufflers, wiper blades etc), unless it is clearly
stipulated that the dealer should use an applicable Optifit part (batteries,
reman ATM, reman starters & alternators, reman ac compressors etc).
PRODUCT MANUFACTURER'S WARRANTY PRODUCT WARRANTY
Batteries Mandatory in years 1 and 2 3 years
Strongly recommended in year 3 unlimited mileage
Reman Automatic transmissions Mandatory 1 year
Reman Starters Mandatory 1 year Supp
Reman Alternators Mandatory 1 year warranty
Reman A/C Compressors Mandatory 1 year
Reman Power Steering Racks Mandatory 1 year
Light Bulbs Not to be used 1 year
Remanufactured Cylinder head Not to be used 1 year
Remanufactured Engine Not to be used 1 year
Remanufactured Short block Not to be used 1 year
Focus
Brake pads (front and rear) Not to be used 1 year CR/COO
Mufflers Not to be used 1 year
Reman Clutch kits Not to be used 1 year
Wiper Blades Not to be used 1 year

Toyota Motor Marketing Europe

Review of Optifit
Proposition

however, if the customer is paying for the replacement and it is within the
manufacturer's period, it can be either OE or Optifit. As the customer is
paying, it is not a warranty job and, therefore, the can pay for either

Toyota Motor Marketing Europe

Review of Optifit
Life cycle Mgmt
Need For Optifit
% of OE
Vehicle Age Requirement Customers Product Range

0-3 Quality & Service 90% OE + Optifit Reman

4-6 Value For Money 55% OE/Optifit

7 - 10 Value For Money 30% OE/Optifit

10 plus Price Sensitive 20% Optifit only

Toyota Motor Marketing Europe

 Review of Optifit
Life cycle Mgmt for Brake Pads, Mufflers, Bulbs, Wiper blades

OE parts Optifit & OE Optifit

Share only only

OE

1 – 3 years 3-10 years 10+ years Vehicle Life

Cycle

Toyota Motor Marketing Europe

 Review of Optifit
Life cycle Mgmt for Batteries

100% Optifit
Share

1 – 3 years 3-10 years 10+ years Vehicle Life

Cycle

Toyota Motor Marketing Europe

 Review of Optifit
Life cycle Mgmt for Reman

Optifit & OE Optifit & OE Optifit

Share
only

OE

1 – 3 years 3-10 years 10+ years Vehicle Life

Cycle

Toyota Motor Marketing Europe

 Product under Development

Toyota Motor Marketing Europe

Product under Development
W&T
Batteries Available Pricing 60% -70% below OE
Brake Pads (Front) Available Pricing 30% -35% below OE*
Brake Pads (Rear) Available Pricing 20% -25% below OE*
Reman Clutch Available Pricing 30% below OE*
Muffler Available Pricing 30% below OE*
Axle Boot Kits Pilot Fitted price 30% below OE
Shocks Not Available (Technical constraints)
Discs Not Available

Maintenance
Light Bulbs (Kits) Available Pricing 50% -60% below OE
Wiper Blades Available Pricing 50% below OE blades
Wiper Rubbers Available Pricing 50% below OE refills

* Subsidised OE pricing

Toyota Motor Marketing Europe

Product under Development
Repair

Reman Alternator Available Pricing 50% below OE

Reman Starter Available Pricing 50% below OE
Reman ATM (Torque conv) Available Pricing 20%-25% below OE
Reman Compressor Available Pricing 30% below OE
Reman PS racks Available Pricing 30%-35% below OE
Reman engines/Short blocks* Available for Pricing 15%-20% below OE
some applications
Reman Callipers Not available
Reman MTM Under study
Reman Turbo Under study

* Dress codes is not 100% same

Toyota Motor Marketing Europe

 Optifit Sales Review

Toyota Motor Marketing Europe

Optifit Sales Review
Overall Optifit Share

7%
6% 6%

5% 4,8%
4,5%
4,2%
4% 3,8% 3,8%
3,4% 3,5%
3,2% 3,2% 3,3%
3% 2,8%
2,5%
2,2% 2,4%
2% 1,9% 2,0%
1,4%
1%
0%
EUR ITA Pol UK Spa Gre Ire Ger FR Por Nor Aus DK Fin Swe Swi BE NL

Overall Optifit sales in 2004 has grown 13.1% versus 2003

Toyota Motor Marketing Europe

Optifit Sales Review
Wiper Blades Optifit Share

100%
90%
80%
72%
71%
70%
60%
50% 51%
45%
44%
44%
40% 40%
36%
35%
33% 33%
32%
30% 27%
25%
23%
20% 19%
13%
10% 9%
0% 0%1%
Europe I SC DK AU B ESWISSES FR NOR CZ G F HU UK SW PL HEL IRE NL

Staggered intro in 2005 Some markets are launching aggressively

Toyota Motor Marketing Europe

Optifit Sales Review

Brake Pad Optifit Share

55%
45% 42%
39%
35% 35%37%
33%
30%
27%
26%
25% 24%25%
19% 20%
15% 15%
11%12%
6% 8% 9%
5% 4%4%

-5%
EuropePL UK ES I CZ IRE HU HEL FR G F BE SC NORSW DK NL AUSWISS

Toyota Motor Marketing Europe

Optifit Sales Review
Clutch Optifit Share

80%
70%
64%
60%
53%55%
50% 49%
45%
43%
40% 39%
35%
32%
30%
24%
20% 18% 19%20%
15%17%
10% 10%11%
4%
0% 0% 1%
Europe
HEL I ES FR SC HU UK NOR IRE PL AUSWISSBE G DK CZ F NL SW

Toyota Motor Marketing Europe

Optifit Sales Review

Starter Optifit Share

100%
91%
87%90%
87%
80% 80%81%
76%
74%
68% 71%
65%
64%
60% 56%
54%54%
46%
40% 40%
38% 41%

24%
20%

0%
Eur opeHU PL CZ SW I UK IRE SC HEL ES G F AU FR DK BE NOR NLSWISS

Reman commitment from the network in some markets still needs attention

Toyota Motor Marketing Europe

 Discussion on way forward

Toyota Motor Marketing Europe

 Extend current Establish full
range Optifit range

Optifit COO
Relaunch
Strategy

Price Communication
Training
positioning

Toyota Motor Marketing Europe

 Thank You

Toyota Motor Marketing Europe