Automotive News International
BERLIN - Two of the world's largest automotive suppliers soon will unveil new aftermarket strategies as they try to increase their share of an industry worth $500 billion a year.
Delphi Automotive Systems Corp. has been recruiting aftermarket specialists over the past few months. Speaking at the Automotive News Europe Congress here last month, Delphi Chairman J.T. Battenberg III said his company's aftermarket sales totaled just $2 billion a year.
'There is a lot of potential in this area for us,' he said. 'We have been hiring a number of key people and will be announcing our aftermarket strategy in the next few weeks.'
Visteon Automotive Systems - Ford Motor Co.'s in-house parts supplier - is pursuing a similar strategy.
'The aftermarket is very important to us,' said Visteon President Craig Muhlhauser. 'It will be particularly helpful in our strategy to increase business outside Ford.'
Two of Visteon's major aftermarket products include radiators and air-conditioning systems.
Both chief officers also see the potential to diversify out of the auto industry as protection against cyclical downturns.
'We obviously want to be in control of our own destiny,' Muhlhauser said. 'What has been successful in the past will not be necessarily so in the future, and we have to change.'
For example, Visteon has the know-how to build a variety of products used in power generation, such as natural gas compressors, blowers and fans..
The obvious attraction is that margins likely will be much higher outside the auto industry. 'We make engine-control units similar to those found on airliners, but ours are one-fiftieth of the cost and we still make money,' Muhlhauser said.
Delphi also is expanding its product line outside the auto industry, Battenberg said.
'Nonautomotive provides us with an opportunity. We already have wiring business with Boeing and our computer business is small but significant. We have just acquired Daesung in South Korea, which has half of its business in consumer electronics.'