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STU - Session-3-2024

Michelin is transitioning from a tire manufacturer to a mobility company, focusing on digital services and opportunities. The Digital Service Platform (DSP) could potentially generate significant revenue, with estimates suggesting a $112.5 million commission that could enhance profitability. However, dealers are resistant to adopting DSP due to technological, cultural, and process-related challenges, and Michelin may need to consider strategies like offering DSP for free or opening it to non-Michelin dealers to encourage adoption.

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Dhruv Agarwal
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14 views4 pages

STU - Session-3-2024

Michelin is transitioning from a tire manufacturer to a mobility company, focusing on digital services and opportunities. The Digital Service Platform (DSP) could potentially generate significant revenue, with estimates suggesting a $112.5 million commission that could enhance profitability. However, dealers are resistant to adopting DSP due to technological, cultural, and process-related challenges, and Michelin may need to consider strategies like offering DSP for free or opening it to non-Michelin dealers to encourage adoption.

Uploaded by

Dhruv Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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20-12-2024

MICHELIN: MOBILITY COMPANY NOT A TIRE COMPANY

“We are no longer a tire


manufacturer. We are a
mobile company”

Florent Menegaux, Michelin


SESSION – 3 CEO
EVERY BUSINESS IS BECOMING DIGITAL
TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

Does DSP provide a large revenue


opportunity for Michelin?
Opening question: Already invested _________ in last 3 years (Dimenna)

What is the USP of DSP? $30 M in page no - 8

TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

1
20-12-2024

LIGHT MECHANICAL REPAIR MARKET: POTENTIAL REVENUE OPPORTUNITY IS THIS A BIG DEAL FOR A COMPANY WITH REVENUES OF OVER €24 BILLION (EXHIBITS – 2)
(E U R O ) ?

Total commercial trucking tire business in the U.S.


$6 billion per year (page 4)
Potential revenue opportunity We have 33-35% market share of the tire business in North
America. (page 4)
$2.25B * 5%
$112.5 million If DSP has the potential to generate $112.5 million (previous
slide) in commission, and a large portion of it is profits, it has
the potential to increase Michelin’s profitability substantially.

TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

What are the benefits from Dealers point of


view if adopting DSP?

DSP@ ECO-SYSTEM: DEALERS &


FLEET
TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

2
20-12-2024

ANNUAL BENEFIT FOR DSP FOR DEALER WITH 6 LOCATIONS


(ESTIMATED TO REACH BY YEAR 3)
DEALER COSTS
Dealer Benefits

Total annual benefit = $174, 608 Total annual cost = $70,200

TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

Is this benefit a big deal for dealers?

What is the Net benefit to a dealer with 6


locations ?

~$105 k for 6 location (net benefit)


This is a substantial increase of almost 12%
(i.e., $350K/$3 million) to a dealer’s annual
~$350k for 20 location (net benefit) income
TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

3
20-12-2024

DEALERS’ RESISTANCE
Why is Dealer’s resisting to adopt DSP?
What should Michelin do to accelerate
Can you think in categorizing like - DSP adoption ?
Technological
People & Cultural
Process oriented

TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

Two Options :
Offer DSP for free ?
Open DSP to non-Michelin dealers ?

TEDB (FOR ACADEMIC YEAR 2024-25) PREETI KHANNA

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