Partnerships between suppliers and distributors needed to drive aftermarket opportunities

It can safely be predicted that over the next 10 years car dealer networks will continue to rationalize, and that vehicle life will be extended from the current average of around nine years up to 12 or even 15. This will be an era of opportunity and threat for the Independent Aftermarket (IAM).

Aftermarket distributors need to “create added value for the whole distribution and repair chain,” says Robert Lightfoot, TRW’s Global Aftermarket Marketing Director. The historical advantage of the IAM installer – lower labor costs, strong customer relationships and a close proximity to the motorist, should sustain the market and create opportunities. However, a failure to offer more cost-effective supply-chain management and technical back-up will open up opportunities for other sectors of the market. Car manufacturers and their dealer networks could step in to fill the gap, or installers could create or join networks to provide the economies of scale to deliver the technical information themselves.

Supply chain management is another key element to the future success of IAM distributors. The transfer of production to best-cost economies has lengthened replenishment cycles and demands more sophisticated forecasting systems. To achieve this, and to fund the expanding parts count, will require both the component manufacturer and distributor to integrate the supply chain. Distributors will also not be able to offset margin erosion by playing one supplier against another, he believes. Long-term partnerships need to be forged with producers. “It’s of no benefit having the lowest acquisition cost if the part is out of stock,” he says.

Another major critical success factor for the IAM distributor, according to Lightfoot, is the ability to acquire technical information and provide it to the installer. “Installers will increasingly look to their suppliers to provide very complex and sophisticated tools”.
TRW Aftermarket is adapting to these changes through its globalization strategy, known internally as BIG RED. The first phase saw the launch of the Corner Module communication plan to provide a clear and unique definition of TRW Aftermarket’s technology base. BIG RED also sees geographical expansion particularly of Original Equipment Supply (OES) and IAM sales in Asia, and notably China. This is being achieved through the controlled expansion of distribution in China, and Asean markets. “In China, we are instrumental in developing the role of the IAM generalist distributor. We provide training and business tools to companies who are often entering the market for the first time,” says Alex Ashmore TRW aftermarket’s General Manager for Asia Pacific. “In North America, we have an established and successful aftermarket business that has a proven capability built upon excellent technical competence and a proven quality performance,” adds TRW Aftermarket’s North American General Manager John Nielsen. “Our challenge now is to introduce our Corner Module Program to the IAM. We believe we can demonstrate to distributors the benefit of partnership with a full program provider.”

Automotive Industries (AI) asked Lightfoot what new technologies TRW was working on.
Lightfoot: TRW has really worked hard within our positioning statement of “Cognitive Safety,” and has constantly delivered increasingly complex safety technology. Some of the latest examples are the continuous development of the Electronic Stability.
Control system, which a decade from its launch has evolved from a single system to integrative component featuring EPBi capabilities, the development of scalable airbag sensor systems for the developing market to provide safety in new automotive markets, or the FBS technology, which is braking technology for alternative powertrain solutions including hybrids and electric vehicles. Our lane departure and interactive radar systems are already employed by a number of our global customers. This is an area of significant anticipated growth.

AI: Please expand on your opinion that price sensitivity will impact the automotive aftermarket less than technological breakthroughs.
Lightfoot: With the trend toward harmonized global product specifications driven by Tier 1 OEM suppliers, product pricing is becoming more transparent and there is a tendency toward commoditization of consumable parts. However, the added complexity of an extended supply chain, the relentless movement from single components to integrated systems, and the increasing variety of powertrain systems offered within a single model program will all serve to ensure that supply chain effectiveness will be the largest single supplier qualifier, not the blunt instrument of price. Add to this the need for the industry to provide an effective solution to the current inadequate level of future technical competence of the installer, and you can see that component cost should not be a prime factor in the selection of a supplier to the distributor or installer.

AI: What do you expect from this year’s Automechanika Frankfurt being held from 11 to 16th September? What products/technologies can we expect from TRW?
Lightfoot: We will be exhibiting further range extensions within our Corner Module program, including our new Cotec pad range. This new pad formulation is designed to ensure effective bedding in process, and improves the braking co-efficient during the initial green phase prior to bedding in. This is a major improvement in overall safety and negates the need for the required bedding in process by the installer before handing the car to the motorist. We will also be demonstrating some of the information systems we are developing to assist the installer in accessing the all-important technical data. We will also be announcing the further development of our AutoDiamond Installer loyalty scheme.

AI: What are TRW’s strengths?
Lightfoot: Simply put, TRW Aftermarket provides the distributor a comprehensive and cohesive product portfolio that delivers OE quality parts, supported by leading application data and marketing back-up. For the Installer, it provides assurance of the very best quality products with defined features and benefits, delivering ease of fitment and peace of mind.

AI: Tell us a little about the solutions/products TRW Aftermarket offers OES and IAM markets – how do your strategies differ for these markets?
Lightfoot: In both channels we position ourselves as a long-term solutions provider. We are proud to be able to demonstrate our capability to grow the business of our customers through effective partnership. In the OES channel we develop logistical solutions to meet the individual need of each customer globally. We increasingly take responsibility for the finishing and packaging of product to improve efficiency.
For the IAM we offer a recognized and trusted brand, and add this to one of the most comprehensive ranges of braking, steering and suspension. With the increasing consolidation of the IAM distribution sector, we are developing unique logistical solutions for each customer and tailoring marketing programmes. This process will continue with the launch of our Customer Mapping process and Customer Experience organizational program to be launched over the next 12 months.