Miguel Ángel García
Director General
Federal-Mogul de México
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View from the Top

Component Numbers Rise as Technology Advances

Mon, 09/01/2014 - 10:27

Q: What are your most successful products in the Mexican aftermarket?

A: We have been the market leader for years in several product segments, including spark plugs, chassis, and suspensions. We have also been very successful in wheelends, namely the mold bearings and seals. Apart from that, we have been gaining a lot of market share in the friction side. Brake pads have been one of our absolute successes over the last three years.

Q: Cars are built to last a lot longer nowadays. Where do you draw the line in terms of continuously improving the quality of parts to keep the aftermarket going?

A: We certainly see that as a dilemma. On top of that, OEMs constantly require us to come up with more innovative products, materials, and solutions. Such strong products obviously reduce aftermarket opportunities. We have seen this in product lines such as spark plugs and engine bearings, but that is the way the industry is growing now. One new aspect we are seeing is that new vehicles incorporating new technologies require better performances from their components. This implies that the aftermarket products have to comply with these quality standards. We have seen six-year-old vehicles in need of chassis components, despite still being relatively new. This does not just concern the chassis. Engines now include many new technologies, but these require greater numbers of new components, which increases the chance of components breaking down. This can happen with engines that are on the road for less than a year, depending on how cars are being driven and how careful their drivers are. To conclude, components are indeed getting better, but as there are more of them, a large aftermarket opportunity remains. Fortunately, we are able to take advantage of both sides of the industry: OE and aftermarket.

Q: You compete with rivals on many different aspects such as price, quality, and service. How do you distinguish yourself from other companies in the market?

A: Our aftermarket customers recognize when they are dealing with an OE supplier, and our superior quality makes up for the higher cost of our products. That quality creates confidence, along with the performance, warrantees, and support we provide. An important factor is that we provide a full range of products. We do not just concentrate on the top few products; we offer a solution for the entire car market. Quality and service are a given for us, although pricing is always a challenge. We have developed a competitive pricing strategy in many cases, as having manufacturing locations in Mexico gives us that opportunity. These manufacturing locations make our pricing strategy for products manufactured in Mexico more competitive. The challenge becomes larger with products coming from overseas, but the market recognizes that as well. There is a big difference in market recognition between products coming from the US or Europe as compared to China.

Q: Federal-Mogul has been making changes to its logistics and distribution processes. How have these changes been manifested in the company’s operations?

A: A major improvement we made is Federal-Mogul’s distribution center in Tlalnepantla, State of Mexico. It is really focused on the aftermarket, which means that all the products Federal-Mogul makes globally are gathered there. This required a more robust system to manage all the logistics resulting from increased SKUs due to the amount of products, brands, and applications being stored. We recently installed a new warehouse management system that gives us the flexibility, speed, and productivity to respond to the needs of the market.

Q: Imported used vehicles from the US need a lot of replacement parts and maintenance but take away OE opportunities. How big a concern is this for you?

A: It is difficult for Federal-Mogul to differentiate between these two demands as both markets are very important to us. Last year, around 400,000 used vehicles were imported, which is a lot compared to total domestic sales. That is obviously great for the aftermarket, especially for firms selling oil, belts, water pumps, and other parts that typically experience a lot of wear and tear during a vehicle’s life. At the same time, we are affecting the long-term quality of Mexico’s auto market. To deal with this, Federal-Mogul is focusing on vehicles ranging from being brand new to 15 years old. We have limited coverage for the imported cars from the US as they do not represent a long-term business.