Global Commercial Operations Case Study 2[70]
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Apr 3, 2024
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Case Study Question: What is the month-by-month allocation of fleet vehicles during the first year across retail stores, retail test drives, pop-up test drives, mobile test drives, service loaners and remarketing? It's week one and you’ve spent your first few days meeting with key leaders across Rivian’s commercial organization. As you learn more about their organizations and goals, you note competing objectives for Rivian’s internal vehicle fleet (R1T only; does not include R1S or delivery / flatbed trucks) o Retail: wants fleet vehicles for press / media events, store display, test drives from retail stores or pop-up events, with the objective of converting Rivian preorder holders to purchasers, and to entice new Rivian customers o Commercial Operations: wants fleet vehicles to deliver mobile test drives (test drives taken to the consumer), but does not have a sales objective; rather it is to utilize and mobilize fleet vehicles in the most efficient manner o Service: wants fleet vehicles for service loaners (the vehicle loaned to a consumer if their vehicle is in the shop for a lengthy period of time) o Remarketing: wants fleet vehicles retired so they can be resold as used/remarketed vehicles You note that the leaders have slightly different vehicle requests o Test-drive vehicles should have mileage below 20,000 for a positive consumer experience o Service loaners don’t have a mileage or condition criteria o Remarketing doesn’t have a mileage criteria, but prefers vehicles below 30,000 which can be resold at a higher price The first 50 vehicles off the line will be allocated to the internal fleet. After that, you think 1% of vehicles produced will be allocated to the internal fleet but have not received confirmation -- every vehicle that is diverted to the internal fleet means one less delivery to a consumer
Data & Assumptions e Internal data suggests 40% of preorder holders will need a test drive before purchasing a Rivian, and 80% of the general population need to test drive a vehicle before purchasing any car e At SOP, Rivian has the following physical footprint: o Manufacturing 1. Normal, IL o Retail stores only 1. San Diego, CA 2. Dallas, TX 3. Washington DC o Retail stores and Distribution Centers: 1. San Francisco, CA 2. Denver, CO 3. Atlanta, GA e There are 10,000 preorder customers. Preorder customers distribution is clustered around these 15 US cities (e.g, the city and the surrounding metropolitan area) o New York, NY: 3% Los Angeles, CA: 17% Chicago, IL: 3% Denver, CO: 15% Phoenix, AZ: 5% Philadelphia, PA: 8% Detroit, Ml: 5% San Diego, CA: 7% Dallas, TX: 14% San Francisco, CA: 10% o Atlanta, GA: 13% e Preorder customer aside, the distribution of non-preorder Rivian customer demand is expected to follow the distribution of US automobile registrations by state o https://www.statista.com/statistics/196010/total-number-of-registered-automobiles- in-the-us-by-state/ e At SOP, Normal will manufacture 100 vehicles per day e Test drives last 30 minutes per consumer (excluding vehicle prep or additional drive time) e Service estimates 5% of vehicles will be in the shop during the first year (needs a service loaner) with the average duration of 3 days per service event 0 O O 0O 0O 0 0 0 © Additional assumptions e There is only 1 vehicle model to consider e There are no legal restrictions in place dictating activities between an OEM and a consumer (e.g., all states are “open”)
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