Business Unit VW Group at Leoni: Dynamics of Change in Pricing
As part of the study on pricing processes in the automotive supplier industry, Prof. Dr. Hans-Christian Riekhof conducted an interview with Peter Becker, Head of Business Unit VW Group at Leoni.
Professor Riekhof: Are there research results from our study on pricing processes at automotive suppliers in 2017 that particularly caught your eye and that you did not expect?
Peter Becker: No, although the result is quite sobering, the study provides a very clear and, in my view, honest picture of the current state of the industry in terms of pricing.
Riekhof: What changes is pricing in your industry undergoing? Is there a certain dynamic of change or are prices established today in the same way as ten years ago?
Becker: From my point of view, there is a decent dynamic of change. Changes are slow to take effect, but are driven by the industry’s desire to increase the professionalism and profitability of business transactions.
Riekhof: The automotive industry is currently undergoing a profound change towards the expansion of electromobility in its various forms. Does this also change the framework conditions for strategic pricing? Will it become easier for suppliers to differentiate themselves in their value contribution, so that price pressure may also decrease?
Becker: Yes, I see it that way. The change in this time is very fast. Furthermore, industry partners are more dependent than ever on mastering the challenges together. Creating value and offering new services also allows differentiation with corresponding positive effects on pricing.
Riekhof: What opportunities do you see for value-based pricing (Value-Based Pricing) at Leoni?
Becker: The chances for value-based pricing at Leoni are good. Appropriate measures are slowly being introduced into the company. However, your study’s statement that the focus on profit improvement measures mentioned still enjoys higher priority today is correct.
Riekhof: Are there tools and procedures in your company as part of pricing management that you would describe as groundbreaking? Or does your pricing follow industry-standard rules and practices for good reason?
Becker: Personally, I do believe that the “industry-standard” approach needs to be questioned in one place or another. Innovative ideas and above all focused approaches in companies in terms of pricing can create new tools for pricing. We at LEONI are doing this, and under the program headline “Sales Excellence” several concrete approaches are bundled.
Riekhof: Leoni has very different business areas that operate their market segments with high autonomy. Are there processes in your company to define cross-divisional pricing strategies for certain customer and market segments?
Becker: Yes, there are very different business areas at LEONI. However, where the mechanisms at the customer are the same, e.g. in our business area WSD of LEONI (on-board networks), an approach is feasible to optimize processes across divisions and customers, and we are working on it.
Riekhof: To what extent have you already exploited the value creation potentials in your company that lie in professional pricing?
Becker: On a scale of 1 to 10, I would – as of today – settle for 4. So there is still a lot to do. But we are moving in the right, value-creating direction!
