Automechanika Reveals Developing Markets

Automechanika is the largest automotive aftermarket trade fair in the world. At least that is its boast, and there seems to be no reason to doubt the claim.

This year’s Automechanika attracted no fewer than 163,564 visitors from 145 nations, to visit 4,500 exhibits from 72 countries, covering some 2.2 million square feet.

Regardless of the raw numbers though, it is an impressive event to behold, and one of a rather different nature than many of us are used to in North America. Certainly there are a variety of European conventions that we don’t see at trade shows in Canada or the U.S.–such as three-hour-long meetings over beer, wine and food in the booths–as well as the closed nature of the booths themselves, that put a premium on arranged meetings over dropping in.

It is not an absolute of course. I was able to stop by many booths and be fully introduced to the product lineup. After pounding the carpets, and pounding in a sintered valve seat courtesy of KS, I also took the opportunity to talk to attendees about the European market, and more specifically about the German market.

Automechanika does draw international visitors from virtually every part of the world, but it is in Germany, and as such is very much of Germany–fully 61% of the visitors are domestic.

“This market is completely different from what people in the U.S. [or Canada] call the independent aftermarket,” says Dirk Beckman, marketing manager, Aftermarket Germany, Hella KgaA. “Basically we have a mixture between accessories and crash parts. A typically German WD distributes both sides.

“In Germany you have ATU, which is basically a chain store, but besides that it is a very traditional market where you have fewer players because of consolidation.” A group of large, traditional companies have grown from regional to national players, and recently have begun to make inroads internationally.

“All have an intention now to go over the borders,” says Beckman.

These days this is much more significant than it has been for some time, as a result of European Union pressures to free up the aftermarket.

Currently there is a significant discussion occurring regarding, primarily, body panels. This discussion is reminiscent of efforts to lock out aftermarket body panels, except that it is the aftermarket that is pressing the point that the current OE exclusivity, which crosses many product categories, costs consumers money without providing any additional benefit.

Beckman says that price pressures could have an unexpected downside for the aftermarket.

“There is always a gap for less expensive products, but the Europeans are completely different from the Americans. If you talk to a German garage, the biggest fear they have is a claim.

“They can’t afford to lose customers. They do not have the time for claims.”

Still, the opening up of the market does present concerns. The current laws protect the automakers from competition in markets affecting the design of the vehicle; this includes body panels and areas such as lighting.

“It protects the Audis of the world, but it also protects those who are OE suppliers. If we have the appropriate contract, we are allowed to sell in the independent aftermarket. But if somebody comes up with a copy, he will be in deep, deep trouble. This is now to change.”

Beckman says that the additional market potential excites him, but the investment and engineering that goes into OE designs deserves a payback.

“With Hella, as with every other company in Europe and the world, you have to invest to stay OE. And if all of a sudden there is somebody with less overhead with less investment and is, as we say in Germany, passing you on the right, it is really unfair. But we can’t do anything about it.”

On the plus side, they could provide applications that they are not currently OE suppliers to, but Beckman says that on balance because they, and companies like them, would have to keep the same quality level to retain their reputation, it would be an overall negative for their business.

Nevertheless, it is a situation that is expected to play itself out over the next few years.

On the more immediate front, more than 20 Canadian companies exhibited this year. Most had been at the show before and view their presence in different ways.

“We already sell in 50 countries,” says Voiko Loukanov, CEO of D&V Electronics Ltd., of Woodbridge, Ont., which manufactures testing equipment for use by remanufacturers. “All the high-level people know us,” he adds, “but there are a lot of other, smaller companies that stay in their own markets.” Loukanov says the show is always an eye-opener when it comes to discovering where markets are developing.

Wallace Quan of Toucan Inc., an accessory supplier based in Toronto, Ont., is more sanguine about the European market. “The products are different, all the lighting has to be E-marked, and if you want to sell in Germany you have to get TUV approvals, but the demographics are the same.” Performance and accessory customers in Europe are almost indistinguishable from those in North America. “They listen to the same music, though it might be in a different language, and they wear the same clothes. People tend to think that the Europeans are different, but they are the same.”

Lighting supplier Hamsar Diversco of Burlington, Ont. was also present at the show. Fred Kelly, president, says that he has enjoyed being a bit of a pioneer–having exhibited for several years. “Everybody is looking for a different angle. For us, what we’re looking for on the European side is a pretty structured business. You want to look into that,” he advises. “It makes it tougher, but once you’re in, you’re in.”

Canadian companies exhibiting have mostly been doing so for several years. This year one of them, Litens Automotive Group, even won an innovation award in partnership with ContiTech for its oval timing belt sprocket. Litens SmartSprocket/CTC acts as a vibration damper by opposing engine forces.

It was just one of the many innovations honoured at Automechanika, providing a window on today’s market, and tomorrow’s.