CaseStudy - Open access

MAGNA Drivetrain

Achieving 20% product cost optimization of a transfer case

MAGNA Drivetrain is a leading international manufacturer of drivetrain components and systems in the automotive industry located in Graz, Austria. The company belongs to MAGNA International Inc, one of the largest automotive suppliers worldwide, with annual revenue of $15.35 billion in 2003. Major clients are currently DaimlerChrysler, BMW, VW/Audi, Land Rover, GM and Renault.

PA Consulting Group supported the product cost optimization of a new transfer case family for four-wheel-drive cars with a projected high annual quantity.

Four years before the start of production, the estimated product costs of the transfer case were above budget. Because of the high annual quantity and the different variants, savings of at least 10% of the actual cost had to be realized to ensure the profitability of the project.

PA was asked to conduct a benchmarking project to compare five competitor transfer cases and to transfer all relevant best practice to the new design.

After finishing the first three phases, potential cost reduction savings of 20% were identified. After the first six months of the implementation phase – supported by PA – savings of 12% were achieved by the project. Our support also helped to improve cost transparency for the transfer case and the results could be used as a basis for supplier negotiations to realize further savings. The cost for this project amortized within two weeks due to the savings achieved.