Automobile Forecasting Case Study

The planning horizon can be considered a medium range horizon since the new car model is planned for introduction into the market in two years’ time.

Aggregated demand should be estimated and is critical for production and supply rate for the new car model even if the car is being manufactured in an existing plant and will share around 40% of the components of two other models built at the same production line (i.e. sharing facility for production and it is anticipated that the production line can accommodate increased volumes or peak in demand that might sustain adding a third shift.)

A master production schedule must be used to set a commitment to sales planning and production. It requires significant planning to undertake the launch of

This is a radically new car and market share approach is valuable even if the effect of seasonal change in volume is ignored for the time being. Each model will react in a unique way to overall market demand depending on the stage of its lifecycle, customer segment, its status in the market and the basic relative success or failure of each segment, model or derivative.

Is the economy improving and are we out of recession? What type of car financing is available on the market and at the dealership (Personal Contract Purchase PCP or other) and what is the interest rate for car financing? Good financial deals are a primary factor driving new car sales. What is the delivery lead time or customer expectation? The use of economic indicators such as GPD and interest rates will give us a better understanding of the demand for this new product. What is the purchasing power of the consumer or levels of disposable income? What is the age of the park, the cost of

Lifecycle Forecasting should be used since a new product will tend to have less predictable demand pattern than the existing product. Comparisons with the launch of the previous car and the use of casual modeling to anticipate sector demand is crucial. The use of probability is as important as the Lifecycle Forecasting. The launch of a new product will tend to have less predictable demand patterns than the existing product but the new product should generate an increase demand over a product it replaces. In order to reduce all these unknown factors and uncertainties comparison with the launch of previous similar cars is key.

Sales lifecycle forecasting is also important for the run out and ramping of product where production lifecycles overlap and especially when this new model is replacing a previous model. It is important to know at what point a product is within its lifecycle, when it is due to be replaced and how the transition of production and supply from one model and the next is to be managed.

Since a major car rental company has been approached to showcase the new product in the market management should be aware of large fleet orders. What if this new convertible model is extremely popular, profitable and always in demand at the rental company especially during the summer season?

This unknown demand should be accommodated within sales and production planning even if