Automotive & Mobility

Target-Costing with Respect to a Passenger-Car Class Under Development


Systematically reducing the cost of applicable materials in order to meet the currently unmet top-down objective prior to the development of the product-requirements document

Problem-Solving Approach

Deriving target costs in a bottom-up approach and assessing the customer benefit for single applicable-material items:

  • Defining the premises (e.g. planned CIP-rate) and formats
  • Deriving the target costs based on the agreed specifications of the bought-in applicable materials
  • Evaluating the contributions to the overall customer benefit and estimating the required budgets for meeting the desired product characteristics
  • Presenting and approving target costs in review meetings and documenting the target costs for the single applicable-material items

Comparing the bottom-up with the top-down target costs for all applicable-material items of the entire vehicle (‘matching’):

  • Aggregating the target cost for the single items to an overall sum
  • Matching the bottom-up with the top-down target cost
  • Agreeing on a target-cost structure

Defining specific paths for meeting the target costs for all single bought-in applicable-material items:

  • Allocating the deviations between the expected and targeted costs to levers
  • Identifying chances and risks regarding meeting the target costs
  • Developing an action plan

Ambitious target costs for all single bought-in applicable-material items calculated and documented in a standardized way


Contribution of the various applicable-material items to the overall customer benefit with respect to the target positioning of the vehicle assessed and considered


Gap between expected and targeted costs completely closed and alignment of the target-cost structure for all applicable-material items achieved


Work plan with specific measures for achieving the target costs for prioritized applicable-material items developed