
Our client, an integrated automotive services provider covering logistics, vehicle maintenance, certified pre-owned (CPO) vehicle reconditioning and sales, and financial services, developed a vision to strengthen its CPO competitiveness and enhance synergies across its business lines. To achieve this vision, the company partnered with Looxent to launch a comprehensive Value-Up project.
The domestic used car market has grown substantially, with annual transaction values reaching KRW 30 trillion, now exceeding the scale of the new car market. However, the market continues to face challenges as a classic "lemon market," where concerns about vehicle quality, pricing, and transparency persist. Certified pre-owned programs are emerging as a solution to these issues, fostering trust between buyers and sellers. The essence of a CPO program lies in accurately evaluating vehicle condition, quality, and history while transparently providing this information to consumers along with guarantees. This requires meticulous vehicle inspections for reconditioning and the establishment of a transparent, no-haggle pricing system.
Our client was preparing to launch its Autoplus Trust Center (ATC), a dedicated CPO reconditioning hub, and organizing a task force to strengthen profitability through optimized vehicle allocation and pricing strategies.
Wave 1 Objectives and Key Activities
The first wave of the Value-Up project focused on building foundational systems for profitability and operational excellence. Through diagnostic assessments and collaborative workshops with internal teams, Looxent identified key improvement areas and defined a master plan. Over six months, the project delivered two primary outcomes: a profitability management framework centered on allocation and pricing and a structured CPO reconditioning process. Key activities included:
1. Profitability Management Framework for Allocation and Pricing
- Channel Allocation Logic: Designed a channel allocation logic based on profitability and branch-specific allocation logic accounting for vehicle type and optimal inventory levels.
- Depreciation Logic: Introduced market-driven pricing benchmarks using normalized residual value rates and developed depreciation calculation logic for various attributes.
- Process Standardization: Established clear processes, roles, responsibilities (R&R), and due dates for each step from vehicle intake to sales preparation.
- Profitability Monitoring: Developed a monitoring system to track adherence to allocation and pricing policies, enabling consistent profitability evaluation.
2. CPO Reconditioning Process Framework
- Standardized Workflows: Defined standard tasks and labor requirements for each stage of the reconditioning process.
- Repair Order (RO) Matching: Developed criteria for matching repair orders with standardized reconditioning workflows.
- Time Management: Implemented a framework for tracking in-and-out times for each vehicle and process stage.
- Process Metrics: Established key process indicators, such as workload and labor variance, and set up regular review mechanisms for continuous improvement.
Project Outcomes
The foundational Value-Up activities significantly enhanced operational capabilities, achieving the following results:
- Pricing Consistency: A 61% improvement in pricing logic adherence.
- Reconditioning Capacity: A 40% increase in reconditioning throughput.
- Process Efficiency: A 53% reduction in lead time for allocation and a 25% reduction in reconditioning lead time.
These improvements equipped the client with the ability to consistently operate under newly defined standards and processes, enabling sustained operational excellence and profitability.
Next Steps: Wave 2 Expansion
Building on the success of Wave 1, the client and Looxent are proceeding with Wave 2 to further refine and expand the Value-Up framework. The next phase will focus on:
- Profitability Simulation: Developing simulation tools to manage profitability under varying purchase and sales conditions.
- Reconditioning Standards: Enhancing frameworks to align profitability and cost management with varying reconditioning levels.
- Real-Time Purchasing Systems: Establishing systems for securing stable inventory and enabling real-time purchasing decisions.
Wave 2, planned over four months, aims to deliver strategies for optimizing purchasing and sales conditions, while ensuring seamless integration across functions. By advancing from stabilization to growth-oriented operations, the client seeks to unlock additional profitability and achieve long-term competitive advantage in the CPO market.
Our client, an integrated automotive services provider covering logistics, vehicle maintenance, certified pre-owned (CPO) vehicle reconditioning and sales, and financial services, developed a vision to strengthen its CPO competitiveness and enhance synergies across its business lines. To achieve this vision, the company partnered with Looxent to launch a comprehensive Value-Up project.
The domestic used car market has grown substantially, with annual transaction values reaching KRW 30 trillion, now exceeding the scale of the new car market. However, the market continues to face challenges as a classic "lemon market," where concerns about vehicle quality, pricing, and transparency persist. Certified pre-owned programs are emerging as a solution to these issues, fostering trust between buyers and sellers. The essence of a CPO program lies in accurately evaluating vehicle condition, quality, and history while transparently providing this information to consumers along with guarantees. This requires meticulous vehicle inspections for reconditioning and the establishment of a transparent, no-haggle pricing system.
Our client was preparing to launch its Autoplus Trust Center (ATC), a dedicated CPO reconditioning hub, and organizing a task force to strengthen profitability through optimized vehicle allocation and pricing strategies.
Wave 1 Objectives and Key Activities
The first wave of the Value-Up project focused on building foundational systems for profitability and operational excellence. Through diagnostic assessments and collaborative workshops with internal teams, Looxent identified key improvement areas and defined a master plan. Over six months, the project delivered two primary outcomes: a profitability management framework centered on allocation and pricing and a structured CPO reconditioning process. Key activities included:
1. Profitability Management Framework for Allocation and Pricing
2. CPO Reconditioning Process Framework
Project Outcomes
The foundational Value-Up activities significantly enhanced operational capabilities, achieving the following results:
These improvements equipped the client with the ability to consistently operate under newly defined standards and processes, enabling sustained operational excellence and profitability.
Next Steps: Wave 2 Expansion
Building on the success of Wave 1, the client and Looxent are proceeding with Wave 2 to further refine and expand the Value-Up framework. The next phase will focus on:
Wave 2, planned over four months, aims to deliver strategies for optimizing purchasing and sales conditions, while ensuring seamless integration across functions. By advancing from stabilization to growth-oriented operations, the client seeks to unlock additional profitability and achieve long-term competitive advantage in the CPO market.