THE EUROPEAN AUTOMOTIVE AFTERMARKET FACTS & STRATEGIES Josef Frank Senior Advisor Aftermarket CLEPA

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THE EUROPEAN AUTOMOTIVE AFTERMARKET FACTS & STRATEGIES Josef Frank Senior Advisor Aftermarket CLEPA. The European Automotive Industry CLEPA at a glance The European Automotive Aftermarket European Legal Framework Competition Safety Environment Conclusion. - PowerPoint PPT Presentation

Text of THE EUROPEAN AUTOMOTIVE AFTERMARKET FACTS & STRATEGIES Josef Frank Senior Advisor Aftermarket CLEPA

EUROPEAN AUTOMOTIVE AFTERMARKET FACTS TECHNOLOGIES STRATEGIES

CLEPA Aftermarket Department

THE EUROPEAN AUTOMOTIVE AFTERMARKET FACTS & STRATEGIES Josef Frank Senior Advisor Aftermarket CLEPA

111CLEPA Aftermarket DepartmentThe European Automotive Industry

CLEPA at a glance

The European Automotive Aftermarket

European Legal FrameworkCompetitionSafetyEnvironment

Conclusion

2

12 million jobs in total5 million in component manufacturing / 1 million in OEMs15 Billion RDI component manufacturing18 million vehicles manufactured per year270 million vehicles on the road all with combustion engines

The European automotive industry 2011CLEPA Aftermarket Department3

Trends and ChallengesDemographic change

Urbanization

Car Sharing/ Car pooling

Integrated Mobility solutions

Decarbonisation of road transportCLEPA Aftermarket Department4

Shift of geographic balance

China acquires global locomotive status

Regional markets demand localisation and Specific productsDouble Revolution of the Industry

Shift of powertrain technology mix

Conventional technology still dominating, but gets under increased Price pressure

New drivetrain technology will quickly become commoditized2CLEPA Aftermarket Department55Double Revolution of the IndustryBoth require massive investment

OEMs concentrate on cash-flow based financing

Global suppliers take on strategic partner roles

Partnership throughout the vehicle life-cycle

Starting at the business planning phaseCLEPA Aftermarket Department6Two Automotive WorldsBRIC Markets Growth Will ContinueLight Vehicle SalesNote: Triad comprises USA, Japan & W. Europe

Source: IHS Data InsightsCLEPA Aftermarket Department7777CLEPA Aftermarket DepartmentThe European Automotive Industry

CLEPA at a glance

The European Automotive Aftermarket

European Legal FrameworkCompetitionSafetyEnvironment

Conclusion

8Founded in 1959 Represents 92 corporate members of the worlds most prominent suppliers for car parts, systems and modules25 National trade and Europeansectorassociationsrepresenting more than 3000 member companies in total 2500 SMEsmore than 5 Million employeeswith 600 Billion salesPartner of the EU and the UNFacts about CLEPACLEPA Aftermarket Department9

Automotive Suppliers in Europe~ 40% of all automotive industry employees ~ 75 %of the vehicle is made by automotive suppliersAutomotive Suppliers have proven their leadership in developing products that are innovative, environmentally sound and safe, providing sustainable mobility for Europes citizensPeter Tyroller CLEPA President, Bosch~ 50% of the RDI budgetfor the automotive industryCLEPA Aftermarket Department10

CLEPA - What we doInfluencing legislative decision process

Ensuring harmonious development of international trade

Participation in EU consultation process CARS21

Actively endorsing the development of the necessary competitiveness

Framework conditions

Expertise on European project and fund raising

Industry networking and trade events

CLEPA Aftermarket Department11CLEPA Aftermarket DepartmentCLEPA WORKING GROUPS Aftermarket PolicyHuman Resources & DevelopmentLegal Advisory GroupResearch and Technology DevelopmentSMEsTechnical RegulationsTradeWarrantyProfile of CLEPA12CLEPA Aftermarket Department www.clepa.eu

Profile of CLEPA13CLEPA Aftermarket Department The European Automotive Industry

CLEPA at a glance

The European Automotive Aftermarket

European Legal FrameworkCompetitionSafetyEnvironment

Conclusion14Introduction to the AftermarketThe automotive aftermarket consists of:

Spare parts sales for the existing European car park

Repair and maintenance of the existing European car park

The European car park represents 270 million vehicles with anaverage age of 8.2 years.

CLEPA Aftermarket Department1515CLEPA Aftermarket DepartmentThe structure of the AftermarketThe annual volume of the automotive aftermarket is around EUR 100 billion for spare parts (consumer level without VAT).

It consists of 2 distribution channels, Original Equipment Sales (OES) and Independent Aftermarket (IAM), each having around 50% of the market at consumer level.

There are 3 main players: The Original Equipment Manufacturers (OEM) as multinationals, Independent Operators (IO), which are mainly SMEs and Parts Manufacturers (PM) (which are both multinationals or SMEs).IAMOES100 BillionEuroIOPMOEM1616Parts DistributionOEM Distribution NetworkIndependent DistributionNetworkService DeliveryOEM affiliated garagesOwned and franchised dealersMulti-branddealersService DeliveryIndependent garagesIndependentAftersalesServiceProvidersSmall garages/gasstationsIntermediariesOEMsInsurance CompaniesAutomobileClubsLeasing FirmsPolitical Decisionse.g. Scrapping SchemesConsumersBusinessFleetPrivateParts ManufacturingOEMsOEPart Manufacturer(PM)Generic PartsManufacturersOEM brandGenericDual branding(OEM / PM)Mainly OEM and PM brandedMonobranding (PM)The Landscape of the AftermarketMonobranding (PM)InternetCLEPA Aftermarket DepartmentSource: McKinsey, CLEPA171718The market can be divided by age of the vehicles in segment I (0-4 years), segment II (>4-8 years) and segment III (> 8 years). Segment I vehicles used to be served mainly by OES, segments II and III mainly by IAM~25%~75%Segment I (0- 4 years)~50%~50%Segment II (>4 - 8 years)~85%~15%Segment III ( >8 years)OEM pressureOES channelIAM channelSource: A.T. Kearney, SupplierBusinessOn the one hand, due to technical reasons such as better quality of components and increase of electronic parts, valuable repair and spare part sales shifted in Segment II and the OEM want increase theirshare.On the other hand, due to intermediaries like leasing companies, insurances and new business models there is an increasing demand for maintenance from the IAM in Segment I.IAM pressureDrivers for change inthe AftermarketCLEPA Aftermarket Department18CLEPA Aftermarket Department3 players - 2 Distribution channels - 1 Market OES(Original Equipment Sales)

IAM(Independent Aftermarket)

OESOESIAMIAMThe consequence for the Aftermarket 19CLEPA Aftermarket Department

Technological Trends

Steer-By-WirePassenger Safety Systems (Airbags etc.)Brake-By-WireCockpit modules and instrument clustersDynamic Navigation, Telematic systemsABS/ASR ESP Car managementSystem CartronicModern lighting technologyGasoline Direct Injection (DI Motronic)Alternative energy supplies (H2, Fuel Cell)Adaptive Cruise ControlHigh-pressure Diesel Injection Systems Increasing share of electronics of production costs: 22% in 2000; 35% in 2012The car has become a computer on wheels2020Decisive factors to be part of the AftermarketKnowledge is power

To stay in this market all participants need access to Repair and Maintenance Information (RMI) to maintain and repair the vehicles and

Access to the Vehicle Identification Number (VIN) for unequivocal parts identificationCLEPA Aftermarket Department21CLEPA Aftermarket DepartmentConsumers (car drivers or owners) must have the freedom to get repaired and maintained their vehicle in the workshop of their choice, either independent or authorized. The workshop and the consumer must have the opportunity to order or buy spare parts from a supplier of their choice, independent (IO-network) or authorized (OEM-network).

It must be assured that vehicles can be maintained and repaired properly and according to the regulations with the right spare parts in all workshops.CLEPAs Principles22CLEPA Aftermarket Department The European Automotive Industry

CLEPA at a glance

The European Automotive Aftermarket

European Legal FrameworkCompetitionSafetyEnvironment

Conclusion23CLEPA Aftermarket DepartmentFOCUS

1.Competition for the sake of the consumer *

Increasing Safety on European Roads *

Protection of Environment *

Regulatory Simplification and internationally recognized rules *

* Extracts from CARS 2020(Competitive Automotive Regulatory System)

European Legal Framework24CLEPA Aftermarket Department25Vehicle retailing

Automotive aftermarketTransitional period until 31 May 2013:Former MVBER 1400/2002As from 1 June 2013:General Vertical BER 330/2010 & sector specific + general guidelinesSince 1 June 2010:New sector-specific BER 461/2010("new MVBER" or "Aftermarket-BER") & sector-specific guidelinesWhere sector-specific instruments are silent: General Vertical BER 330/2010& general guidelines

The new Automotive Framework for Competition2525CLEPA Aftermarket DepartmentThe content of the Competition FrameworkThe EU Commission makes it very clear with the new MVBER and guidelines that, in order to preserve competition between authorised and independent repair and sales channels, particular attention will be paid to:

Access of independent repairers to all spare partsAbility of parts manufacturers to sell directly to the aftermarketAbility of parts manufacturers (PM) to apply their own logo to parts supplied to the vehicle manufacturer (OEM)Ability of authorised repairers to source quality spare parts from the supplier of their choiceAccess of independent operators to technical information, tools and trainingMisuse of legal and extended warranties2626CLEPA Aftermarket DepartmentRepair and Maintenance Information for Euro 5/6 PC / LCV and Euro VI for HVC Modern vehicles are computers on wheels

EU implemented described regulation fo Repair and Maintenance Information (RMI)