Automotive Case Interview: Brand Portfolio Case
| Case type | Profitability |
|---|---|
| Industry | Automotive / Manufacturing |
| Difficulty | Medium |
| Firm style | McKinsey |
The case prompt
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.
The exhibits
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 ($B): US, Europe, and China.
Show the data behind Exhibit 4
| Brand | US ($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
- Forge and Summit are the loss-making brands, with combined operating losses of $2.1B
- Forge has the weakest metrics: lowest loyalty (28%), lowest satisfaction (65%), highest SG&A ratio (22%), and -17.6% margin
- Summit loses money (-5.2% margin) but generates $8.9B in China — over 60% of Atlas's China revenue
- Shutting Summit would effectively exit the China market, forfeiting the fastest-growing region
- Apex and Valor are solidly profitable (8.9% and 7.0% margins) and should be the core portfolio
- Forge should be shut down — its $1.2B loss exceeds shutdown costs, and 28% loyalty means limited customer retention risk
- Summit needs restructuring rather than shutdown: cut SG&A, potentially merge onto Valor platform, and preserve China presence
Analysis Flow
- 1
Identify the problem brands (Exhibit 2)
- Forge: -$1.2B operating loss, -17.6% margin
- Summit: -$0.9B operating loss, -5.2% margin
- Combined losses of $2.1B are dragging down the profitable brands
- 2
Evaluate strategic value (Exhibits 3 & 4)
- Forge: Low loyalty (28%), low satisfaction (65%), minimal international presence
- Summit: Mid loyalty (45%), but $8.9B China revenue — over 60% of total China
- 3
Calculate total revenue (Exhibit 1)
- Total revenue = 180K*$62K + 850K*$42K + 620K*$28K + 380K*$18K + 95K*$55K = ~$76.3B
- 4
Recommendation
- SHUT DOWN Forge: Annual savings of $1.2B operating loss, worth the $2-3B exit costs
- RESTRUCTURE Summit: Cut SG&A from $3.2B, preserve China market access
- KEEP Apex, Valor, Titan as core portfolio
Final Synthesis
Shut down Forge to eliminate $1.2B in annual losses. Restructure Summit to preserve China presence (over 60% of China revenue). The core portfolio of Apex, Valor, and Titan generates $3.7B in operating profit.
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