Automotive case interviews: what to know and a worked example

Knowing the size and wage structure of each segment helps you check your case math and spot where costs sit. According to the BLS Automotive Industry at a Glance table, U.S. employment is larger in retail dealerships and repair than on the factory floor. By our calculation from the BLS 2025 annual average not seasonally adjusted employment table, combining the four tracked segments equals 4,425.7 thousand U.S. jobs.

1. Part 1

   Within manufacturing, parts suppliers employ more (1)

   Within manufacturing, parts suppliers employ more people than vehicle assembly plants. Of the manufacturing employees in 2025, 524.7 thousand worked in motor vehicle parts manufacturing (54.3% of the manufacturing total, by our calculation from the BLS table), 285.8 thousand worked in motor vehicles manufacturing (29.6%), and 156.6 thousand worked in motor vehicle bodies and trailers (16.2%).

When an operations case asks where to site a plant or consolidate suppliers, U.S. manufacturing data shows a Midwest and Southern footprint. In the 2025 BLS state employment tables, Michigan is the largest state employer in both motor vehicles manufacturing (44.9 thousand jobs in 2025, rising to a preliminary 47.8 thousand in September 2026) and motor vehicle parts manufacturing (111.7 thousand jobs in 2025, and a preliminary 110.5 thousand in September 2026). In vehicle assembly, Texas is second among tracked states with 28.2 thousand jobs in 2025, followed by Kentucky (23.3 thousand), Alabama (22.4 thousand), Ohio (19.1 thousand), and Missouri (12.5 thousand). In parts manufacturing, Michigan is followed by Ohio (62.2 thousand), Indiana (51.8 thousand), Kentucky (32.3 thousand), and Alabama (29.4 thousand), while Indiana employs 38.6 thousand workers in motor vehicle bodies and trailers.

1. Part 1

   On the retail and aftermarket side (1)

   On the retail and aftermarket side, service bay labor is a key profit lever. Unlike a standard retail case interview focused on store traffic, auto dealerships rely on a specialized service labor market. According to the BLS Occupational Outlook Handbook, automotive service technicians and mechanics held 825,800 jobs in 2025 with a May 2025 median annual wage of $50,620 ($24.34 per hour). Employment is projected to grow 5% from 2025 to 2035 (adding 40,900 jobs to reach 866,700), faster than the 3% average for all occupations, with about 66,200 openings each year.

On its automotive overview and insights pages, BCG highlights five main themes and client benchmarks that match the problems you will face in an interview.

1. 1. The transition to

   The transition to electric vehicles

   The automotive industry contributes 12% of global emissions, according to BCG. Established automakers face slowing demand and new competition from companies with lower manufacturing costs. In one BCG engagement, a European premium vehicle manufacturer realized more than $7 billion in cash and EBIT improvement and lowered material costs to help fund its internal combustion engine (ICE) to battery-electric vehicle (BEV) transition. On the commercial side, Ford partnered with BCG on the Ford Power Promise to alleviate customer charge anxiety and drive EV sales growth.

2. 2. Software-defined vehicles

   Software-defined vehicles (SDVs) and ADAS

   Automobiles deliver features over the air and open subscription-based revenue streams. OEMs must decide when to buy, build, or outsource software capabilities and how to get consumers to pay for Advanced Driver Assistance Systems (ADAS). At one global vehicle manufacturer, BCG helped optimize the partner network for next-generation software-defined vehicles across more than 10,000 engineers and more than €2 billion in annual R&D spend.

3. 3. Artificial intelligence a

   Artificial intelligence across the value chain

   Tools like Auto AI by BCG X use machine learning to simulate the impact of price changes on sales volumes at a micro-market level and guide inventory management and volume allocation. BMW Group partnered with BCG, AWS, and BCG Platinion to use GenAI to streamline procurement tasks and supplier interactions, while General Motors partnered with BCG and Microsoft on AI-driven marketing targeting and measurement.

4. 4. Supply chain resilience

   Supply chain resilience and trade policy

   Chip shortages, critical mineral shortages, inflation, tariffs, and USMCA 2.0 force OEMs and suppliers to rethink where and how they manufacture. At an off-highway vehicle manufacturer, revamping the supply chain and engineering efficiency identified approximately $250 million in annual EBIT opportunity, a 10% reduction in engineering costs, and up to 35% faster speed to market.

5. 5. Supplier portfolio shifts

   Supplier portfolio shifts and aftermarket pressure

   As revenues from traditional ICE components plateau, Tier 1 suppliers must refocus their portfolios and adapt to a new automotive software stack. Meanwhile, the €64 billion aftermarket auto parts business in Europe faces shifting dynamics through 2035 that threaten revenue and profits.

Build your structure around the specific decision the client must make. Even when a prompt resembles a consumer goods case interview on pricing or product launch, automotive requires you to account for multi-year R&D cycles, factory capacity, dealer networks, and aftermarket service.

1. Part 1

   McKinsey publishes five sample cases on (1)

   McKinsey publishes five sample cases on its interviewing page, including Talbot Trucks, which asks whether a leading European truck manufacturer should invest in producing and selling electric trucks. Most automotive cases fall into five types.

Here is a worked case written by our team. The company and numbers are invented for practice. Try structuring each step out loud before reading our answer. Prompt: Your client is Great Lakes Drivetrain, a Tier 1 automotive parts supplier in Michigan whose ICE transmission revenue is plateauing. A major U.S. automaker has invited Great Lakes to bid on a 5-year contract to supply 200,000 electric drive units (e-axles) per year at a fixed wholesale price of $1,650 per unit. Winning the contract requires $180 million in upfront retooling and R&D capital expenditure at its Michigan plant. The CEO wants to know if the contract achieves a payback period of 4 years or less on the upfront investment, and whether Great Lakes should sign the deal. Step 1: Clarifying questions. You ask three questions: (1) Does the 4-year payback test use undiscounted annual operating profit before upfront capex? Yes. (2) Do we need a new building? No, we retool an existing Michigan line whose ICE contract ended, spending $180 million upfront plus $12 million per year in dedicated fixed overhead. (3) What are the variable costs per unit? Each e-axle requires $1,120 in raw materials, magnets, and semiconductors, $80 in shipping and warranty reserve, and 4.0 hours of direct labor at $31.00 per hour in wages plus $9.00 in benefits ($40.00 loaded hourly cost). Step 2: Quantitative analysis. Calculate the annual operating profit and payback step by step.

1. 1. Revenue per e-axle

   Revenue per e-axle

   $1,650.

2. 2. Direct labor cost

   Direct labor cost per unit

   4.0 hours times $40.00 loaded hourly wage = $160 per unit.

3. 3. Total variable cost

   Total variable cost per unit

   $1,120 (materials and chips) + $160 (direct labor) + $80 (shipping and warranty) = $1,360 per unit.

4. 4. Contribution margin per

   Contribution margin per unit

   $1,650 minus $1,360 = $290 per unit (17.6% margin).

5. 5. Total annual contribution

   Total annual contribution margin at 200,000 units

   200,000 times $290 = $58 million per year.

6. 6. Annual operating profit

   Annual operating profit

   $58 million minus $12 million dedicated fixed overhead = $46 million per year.

7. 7. Payback period

   Payback period

   $180 million upfront capex divided by $46 million annual profit = 3.91 years (about 3 years and 11 months), inside the 4-year limit.

8. 8. Break-even volume for

   Break-even volume for a 4.0-year payback

   $180 million / 4 = $45 million annual profit needed. Adding $12 million fixed overhead requires $57 million in contribution margin. $57 million / $290 per unit = 196,552 units per year. If EV volume falls more than 1.7% (3,448 units) below forecast, payback exceeds 4 years.

Step 3: Follow-up probe. The interviewer asks: 'What is the biggest risk in those numbers, and how could Great Lakes protect itself in the contract?'

1. Part 1

   At 200,000 units, payback is 3.91 (1)

   At 200,000 units, payback is 3.91 years, leaving little buffer if the OEM's electric truck sells slowly or if semiconductor and critical mineral prices rise. A $10 per unit increase in chip or magnet costs cuts annual profit by $2 million (200,000 times $10) to $44 million, pushing payback to 4.09 years ($180 million / $44 million).

2. 2. Step 4

   Step 4

   Final recommendation. Example answer written by our team. The applicant is invented. 'I recommend that Great Lakes Drivetrain sign the 5-year e-axle contract, provided we negotiate a volume floor or material cost pass-through with the OEM. At 200,000 units per year, the contract generates $46 million in annual profit and pays back the $180 million investment in 3.91 years, meeting your 4-year target while shifting our Michigan plant into electric powertrains. However, our margin of safety is thin: if annual volume drops below 196,552 units, just 1.7% below forecast, or if material costs rise by more than $5 per unit, payback exceeds 4 years. Next, we should ask the OEM for a take-or-pay minimum of 195,000 units per year and index the $1,650 price to raw magnet and semiconductor costs.'

In the U.S. Securities and Exchange Commission's EDGAR system, automakers are classified under Standard Industrial Classification (SIC) code 3711 (Motor Vehicles and Passenger Car Bodies). For example, Ford Motor Company (CIK 0000037996), headquartered in Dearborn, Michigan, has a December 31 fiscal year end and filed its 2025 Form 10-K on February 11, 2026, and its Q3 2026 Form 10-Q on October 29, 2026. Skimming an OEM's 10-K on SEC.gov shows how management separates internal combustion, electric vehicle, commercial, and financing segments.

1. Part 1

   On its interviewing page, McKinsey states (1)

   On its interviewing page, McKinsey states that using AI to polish your resume, practice interview questions, and ask for explanations of concepts or frameworks during prep is encouraged. However, McKinsey prohibits using AI during assessments (unless specifically permitted) or generating real-time answers during an interview, and advises virtual interview candidates to disable installed AI software such as note-taking tools or virtual assistants, keep their camera on with virtual backgrounds and blurring disabled, and use pen and paper.

The answer avoids a generic revenue-and-cost template and goes straight to how dealership service departments work: wait-time leakage, physical bay capacity versus skilled technician availability, high-margin safety system calibrations, and a clear first data request.

1. 1

   Your client is a large U.S. franchised automobile dealership group with 45 locations. New vehicle gross margins have compressed over the past year, and the CEO wants to grow operating profit by expanding its parts, service, and maintenance bays. How would you structure your analysis to decide whether and how to expand?

   Show the sample answer

   Sample answer. Example answer written by our team. The applicant is invented. I would structure this decision around three areas: local service demand, technician capacity and labor economics, and financial payback per bay. First, on demand, I want to look at our local vehicle parc and service mix. Owners are keeping vehicles longer and newer cars need advanced safety sensor calibrations, so I would segment demand into warranty work, routine maintenance, and complex electronics or EV repairs, and check how much business we currently lose to independent repair shops on wait times. Second, on labor and bay capacity, physical bays only make money if we can staff them. Service technicians earn a median annual wage of $50,620 ($24.34 per hour), and skilled diagnostic talent is in high demand. Before building new bays, I would check our current utilization: can we extend evening or weekend shifts or improve technician billable hours per day in our existing bays? Third, on payback, I would compare the upfront capex of adding lifts and diagnostic equipment against the incremental contribution margin per billed labor hour and attached parts sales. I would start by checking current service bay utilization and wait times across our 45 stores to see if we are demand-constrained or technician-constrained.

   The answer avoids a generic revenue-and-cost template and goes straight to how dealership service departments work: wait-time leakage, physical bay capacity versus skilled technician availability, high-margin safety system calibrations, and a clear first data request.

Use this checklist to prepare for an automotive case round, then practice out loud on case interview practice with an AI interviewer.

1. 1. Step 1

   Step 1

   Learn the four value chain buckets (parts suppliers, vehicle assembly, dealerships, and repair and maintenance) and how employment and hourly wages differ across the BLS table above.

2. 2. Step 2

   Step 2

   Work McKinsey's Talbot Trucks sample case and our Great Lakes Drivetrain case above with pen and paper.

3. 3. Step 3

   Step 3

   Tie strategic themes like charge anxiety, ADAS subscriptions, or tariffs back to unit volume, price, variable bill of materials, or fixed R&D and tooling capex.

4. 4. Step 4

   Step 4

   Practice a case free, no sign-up, or run an interactive session with Soreno's AI interviewer to get your structure and math scored.

   From U.S. Bureau of Labor Statistics: Automotive Industry at a Glance (Employment, Earnings, and Hours).