Pricing software boosts carmakers’ profits by $1bn, according to court documents
Carmakers including Renault, Jaguar Land Rover, and Peugeot, have boosted revenues by over $1 billion in the past decade by using sophisticated pricing software, according to sales presentations prepared by the software vendor, Accenture, and other documents filed in a court case.
The software works, Accenture told prospective clients, by identifying which spare parts in a manufacturer’s range customers would be content to pay more for, how much to raise prices by and which prices should not be hiked.
The latter would include, for example, radiators and body parts that may feature in French automotive insurer group SRA’s basket of parts that measures them for inflation, according to a court filing by the software creator, Laurent Boutboul.
Documents relating to the case were obtained by French news site Mediapart and shared with Reuters and EIC, a network of European investigative news outlets. The client presentations and court complaints seen by Reuters cover the period 2009 to 2015.
Jaguar Land Rover (JLR) acknowledged still using the Partneo software but Reuters was unable to determine which other car makers, if any, currently use it. Accenture denied its software was unfair to motorists and said its focus was on increasing clients’ efficiency.
“Solutions of this type, which enable companies to assess and manage their products, are commonplace across industries. They help companies analyze spare part visibility and availability,” it said in a statement.
Boutboul is claiming 33 million euros from Accenture over what he says is damage to his reputation because Accenture broke European competition rules.
He says it did this by using non-public information taken from Renault to help configure the pricing systems it set up for PSA and potentially other manufacturers. His lawsuit did not specify the exact information.
Boutboul’s lawyer said Boutboul could not comment on the details of an ongoing legal action. Accenture said it rejected his claims.
Renault, Jaguar Land Rover (JLR) and Peugeot said their pricing strategies for spare parts were legal, did not take advantage of car owners and were focused on efficiency and ensuring availability for motorists.
Peugeot said in a statement its replacement parts strategy “consists in offering ranges of spare parts that meet the needs of all customers, regardless of their budget, at the highest level of reliability and safety.”
Renault said it “strives to provide its customers with a wide variety of quality spare parts, the price of which is calculated based on parameters that Renault considers fair and equitable”. JLR said it used Partneo to “deliver consistency in pricing across our spare parts range to ensure that we are appropriately priced against our competition”.
In the past two decades, pricing software has become widely used. Aaron Roth, Associate Professor of Computer and Information Science at the University of Pennsylvania, said using software to try and identify the highest prices people were willing to pay was merely an extension of long-established practice among manufacturers and retailers. “Already, prices for products are set trying to maximise profits,” he said.