Industry: Automotive Aftermarket

Project description:
A Japanese automotive Tier 1 supplier manages its Independent Aftermarket (IAM) business in EMEA from Japan. The absolute size of the business and the growth rates are unsatisfactory.

Objective
Establishment and implementation of a profitable IAM organization in Europe, which can also access series products from the European production plants, establish additional distributors in relevant markets and exploit market potential.

The project in keywords:

  • Market development in EMEA from Japan not satisfactory
  • New processes within an existing organization enable new organization IAM
  • Go Live with strong profitable growth after only 6 months of preparation

Number 3 worldwide in series production, but with disproportionately low EU spare parts business

A Japanese conglomerate is the global number 3 in the field of exhaust gas turbochargers and supplies automotive OEMs with series products from plants in Japan, China, Thailand, the USA, Italy and Germany.

In the downstream Independent Aftermarket (IAM) business, i.e. the supply of the manufacturer-independent spare parts market, a Group subsidiary from Yokohama, Japan, works with independent distributors worldwide, including in Europe. Exhaust gas turbochargers were supplied to these under the brand of the Japanese Group, which were then supplied via wholesalers to the independent workshops (such as ATU, Bosch Car Service, 1a Autoservice) for repair purposes.

The Interim Manager (IM) Christian Lukas was commissioned to identify solutions as to how sales and earnings in the European IAM business can be significantly and quickly increased.

He analyzed 3 key weaknesses:

  • No access to series products manufactured on tools owned by European OEMs
  • Gaps in understanding of the European IAM market
  • Difficult interaction between Japanese IAM headquarters and the European group plants and external customers (= distributors)

Go Live after six months of preparation

The IM set up a cross-functional project team from existing employees from the four locations in Germany and Italy and managed it for the duration of the project. The team analyzed and evaluated options and decided to set up a regionally independent IAM sales organization for EMEA (Europe, Middle East, Africa) in Germany. The logistics location was moved to the plant in Italy, from where all EMEA customers are supplied with IAM goods from a warehouse.

The IM quantified the total costs and investments required over the next three years and anchored these in the European company’s budget planning. The new IAM processes were defined and integrated into the existing SAP ERP system.

At the same time, IM organized the creation and group-wide coordination of a new brand for global use in IAM and commissioned external agencies to create a corporate IAM design and set up an independent website with an integrated B2B portal for customer connection.
IM concluded new, updated distributor contracts with existing customers (from the previous collaboration with the Japanese IAM headquarters in Japan) and with newly acquired customers in EMEA and changed the pricing model to “market based”.

At the same time, the IM negotiated tool usage agreements with the German OEMs in order to manufacture IAM products on the tools owned by the OEMs against payment of a per-piece license fee.

Successful go-live after six months of hard preparationIM communicated regularly with the key stakeholders (Group management in Japan, management in Germany and Italy, works councils, employees, customers…), thereby increasing understanding of the lucrative IAM business model.

He coordinated the gradual development of the new IAM organization in Germany and Italy with a mix of existing employees with product and process experience from the series business and with new external employees with IAM market experience.

In the first full financial year, sales grew by 42% compared to the previous market cultivation from Japan, and by a further 50% in the following financial year – despite the coronavirus crisis. From the second financial year onwards, this new division contributed a considerable profit to the overall result of the European subsidiary.

After 12 months, the IM successfully handed over the newly created IAM area to the new IAM manager and withdrew completely from this project after 15 months.