Automotive Case Interview: Worked Brand Portfolio Case
| Case type | Profitability |
|---|---|
| Industry | Automotive / Manufacturing |
| Difficulty | Medium |
| Firm style | McKinsey |
What does this automotive case ask about the brand portfolio?
Your client is Atlas Automotive Group, a major US automaker with 5 brands. They've been losing money overall and want to know which brands to keep, restructure, or shut down.
Atlas Automotive Group operates five car brands: Apex (luxury), Valor (trucks/SUVs), Summit (mid-range sedans), Forge (compact/economy), and Titan (performance). The company has been unprofitable for two consecutive years and the board is considering brand rationalization. We've been hired to analyze the portfolio and recommend a strategy.
Which exhibits compare the brands?
Exhibit 1
Sales Volume (K units) and Average Price ($K) by Brand
Show the data behind Exhibit 1
| Brand | Volume (K units) | Avg Price ($K) | Revenue ($B) |
|---|---|---|---|
| Apex | 180 | 62 | 11.2 |
| Valor | 850 | 42 | 35.7 |
| Summit | 620 | 28 | 17.4 |
| Forge | 380 | 18 | 6.8 |
| Titan | 95 | 55 | 5.2 |
| TOTAL | 2,125 | - | 76.3 |
Exhibit 2
Operating Profit by Brand ($B)
Show the data behind Exhibit 2
| Metric | Apex | Valor | Summit | Forge | Titan |
|---|---|---|---|---|---|
| Revenue ($B) | 11.2 | 35.7 | 17.4 | 6.8 | 5.2 |
| COGS ($B) | 8.4 | 27.8 | 15.1 | 6.5 | 4.2 |
| Gross Profit ($B) | 2.8 | 7.9 | 2.3 | 0.3 | 1.0 |
| SG&A ($B) | 1.8 | 5.4 | 3.2 | 1.5 | 0.8 |
| Operating Profit ($B) | 1.0 | 2.5 | -0.9 | -1.2 | 0.2 |
| Operating Margin | 8.9% | 7.0% | -5.2% | -17.6% | 3.8% |
Exhibit 3
Customer Loyalty (%) vs Satisfaction Score by Brand
Customer loyalty (%) vs satisfaction score (1-100) by brand; operating profit ($B) by brand shown in the data table.
Show the data behind Exhibit 3
| Brand | Customer Loyalty (%) | Satisfaction Score (1-100) | Operating Profit ($B) |
|---|---|---|---|
| Apex | 72% | 88 | 1.0 |
| Valor | 68% | 82 | 2.5 |
| Summit | 45% | 71 | -0.9 |
| Forge | 28% | 65 | -1.2 |
| Titan | 78% | 90 | 0.2 |
Exhibit 4
Revenue by Region ($B)
Revenue by brand and region ($B). Region totals: US $51.6B, Europe $10.0B, China $14.7B (Atlas total $76.3B).
Show the data behind Exhibit 4
| Brand | US ($B) | Europe ($B) | China ($B) | Total ($B) |
|---|---|---|---|---|
| Apex | 7.8 | 2.2 | 1.2 | 11.2 |
| Valor | 28.6 | 3.6 | 3.5 | 35.7 |
| Summit | 5.9 | 2.6 | 8.9 | 17.4 |
| Forge | 5.4 | 0.8 | 0.6 | 6.8 |
| Titan | 3.9 | 0.8 | 0.5 | 5.2 |
| TOTAL | 51.6 | 10.0 | 14.7 | 76.3 |
McKinseyProfitability · medium
Atlas Automotive Brand Portfolio
Automotive / Manufacturing
How a strong candidate structures it
A strong framework for this brand portfolio case would cover
Alternative valid frameworks include: brand-by-brand evaluation matrix, or growth-share matrix approach.
Question by question
- 1
Case context
Understand the Case
“Can you summarize the situation and what we need to figure out?”
- 2
Clarifying
Clarifying Questions
“What clarifying questions would you ask before diving into the analysis?”
- 3Drill the structure
Structure
Framework
“How would you structure your analysis of this brand portfolio?”
- 4Drill the brainstorming
Analysis
Sales & Profitability Analysis
“Using Exhibit 2, identify the brands creating value versus destroying value.”
- 5Drill the brainstorming
Analysis
Loyalty Analysis
“Using Exhibit 3, how does loyalty and satisfaction change your view on which brand to cut first?”
- 6Drill the math
Math
Profitability Impact Calculation
“Can you calculate the total operating profit if Atlas shuts down Forge and keeps the other four brands?”
- 7Drill the brainstorming
Analysis
Summit Deep Dive
“Using Exhibit 4, what should Atlas do about Summit, given its China presence?”
- 8Drill the synthesis
Synthesis
Final Recommendation
“What is your final recommendation to the board?”
The worked path
The numbers that decide it
- Profitable brands earn $3.7B and loss-making brands lose $2.1B, leaving positive $1.6B brand operating profit. Reconcile this with the company-loss brief.
- Forge has the weakest operating profit, margin, loyalty and satisfaction, making it the first restructuring or exit assessment.
- The $2.8B remaining-brand sum after removing Forge assumes unchanged surviving-brand profits and full removal of its loss.
- The $2-3B stated closure obligations exceed one year of the $1.2B loss. Full-benefit simple payback would be 1.67-2.5 years before other effects.
- Summit accounts for 60.5% of Atlas China revenue. Its removal would leave $5.8B before spillovers, not eliminate the entire China business.
- Shared-platform costs, supplier commitments, regional profitability and customer migration must inform the final decision.
Final synthesis
Compare brand operating profit first: Apex $1.0B + Valor $2.5B + Titan $0.2B = $3.7B; subtract Summit $0.9B and Forge $1.2B to get positive $1.6B. Reconcile this with the company-loss narrative. Forge combines the worst operating margin and customer metrics, supporting priority assessment of exit versus restructuring. Removing its reported loss gives $2.8B for the remaining brands only if their profits are unchanged and the loss is fully avoidable. Evaluate $2-3B closure obligations plus stranded costs and platform effects. Summit contributes $8.9B of $14.7B China revenue, or 60.5%, so prioritize a credible restructuring assessment without assuming China revenue is profitable. Keep the profitable core, subject new investment to return analysis, and recommend final actions after validating incremental cash flows and implementation constraints. The exhibits do not prove automatic Forge closure or unconditional Summit retention.
McKinseyProfitability · medium
Atlas Automotive Brand Portfolio
Automotive / Manufacturing
Why this case
This automotive profitability case tests portfolio rationalization, not just margin repair. A generic profitability case might stop after finding the two loss makers. Here, Summit's $8.9B China revenue makes a shutdown strategically dangerous, while Forge combines a $1.2B loss with 28% loyalty. The industry trap is treating brand economics and market access as separate decisions.
FAQ
- Should Atlas shut down both unprofitable brands?
- No. Forge loses $1.2B at a -17.6% margin and has 28% loyalty, making it the clearest exit candidate. Summit loses $0.9B, but contributes $8.9B of China revenue, over 60% of Atlas's China revenue. The stronger recommendation is to restructure Summit by cutting SG&A and preserving its China platform.
- What should I analyze first in an automotive portfolio case?
- Start with revenue and operating profit by brand, then compare margin, customer loyalty, satisfaction, and regional exposure. That sequence surfaces Forge's -$1.2B operating result and Summit's $8.9B China contribution before you decide whether each brand should be kept, restructured, consolidated, or shut down.
- How do customer metrics change the recommendation?
- They help distinguish a fixable loss maker from a weak strategic asset. Forge has 28% loyalty and a satisfaction score of 65, the lowest in the portfolio. Summit is stronger at 45% loyalty and 71 satisfaction, so its customer and market position deserve preservation while its economics are repaired.
- What is the final recommendation in this case?
- Shut down Forge, restructure Summit, and keep Apex, Valor, and Titan as the core portfolio. Forge removes $1.2B of annual operating loss, while Summit's $8.9B China revenue argues against exit. The recommendation should also flag shutdown costs, labor and dealer disruption, and the need to validate Summit's SG&A plan.
McKinseyProfitability · medium
Atlas Automotive Brand Portfolio
Automotive / Manufacturing