University of Twente Student Theses


Structuring a Whole Life Cost model for the automotive sector

Aalst, G.R. van (2016) Structuring a Whole Life Cost model for the automotive sector.

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Abstract:The goal of this research is to formulate a Whole Life Cost (WLC) model for in order to support in the sales conversation with customers. It helps the customer to make a more informed decision when buying a vehicle. Customers tend to look solely at the purchase price while other cost factors are also significant when looking at the whole life cost. Multiple models are already being used internally; this thesis unifies them in a global format that can be specified to each market. The first part of the thesis consists of a literature review and collection of current models in order to identify the relevant cost factors and variables. The second part formulates the WLC model based on the data retrieved in part one, and assesses the model’s sensitivity to alterations of the variables. Appendix A states a clear structure of the model formulated. The model is divided up into three different sections namely financing costs, operating costs, and automotive taxes. Within these three sections relating cost factors are included. The sensitivity analysis shows financing costs, taxes, and fuel costs to be the most significant factors in the WLC. Most relevant variables for these factors are residual value, term, mileage, customer type, and tax incentives. The result of this research is a globally formatted WLC model where a The company vehicle can be compared to a competitor vehicle. Variables can be altered so that the calculations are specified to the customer and provides a representable review of the costs involved. This model is to be used by both Sales and Corporate Sales departments in the conversation with potential customers, and incorporated into the website so customers can get insight directly. Validation of the assumptions is difficult and as such the author suggests to use external databases the acquire values for the cost factors. Another solution would be to incorporate disclaimers into the model relieving The company Motors Inc. from possible claims. With regards to the roll-out strategy the author suggests a try-out per country to specify the global format to be applicable to the selected country, including possible tax incentives.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics
Programme:Industrial Engineering and Management MSc (60029)
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