Even Experienced Players Face Entry ChallengesFri, 09/01/2017 - 16:23
Entering the Mexican aftermarket is challenging for even the most experienced players. Valeo is already a strong player in the global aftermarket but its focus in Mexico has been the original equipment segment. The company has 10 production plants distributed across five Mexican states but now it wants to build a strong position for its service division, says Thomas Kerkhoff, Division General Manager of Valeo Service Mexico.
The aftermarket represents 11 percent of Valeo’s global sales and in Mexico, Valeo is in the startup phase. Fortunately, the company has a wide enough reputation to start building a name in this segment. One in every three clutches sold globally in the original equipment segment is Valeo and in 2016, six out of the 10 mostsold vehicles in Mexico had a Valeo clutch. Kerkhoff says that this is the kind of recognition Valeo wants in the aftermarket. “Although repair shops know our brand thanks to our presence in original equipment, most distributors still need to become familiar with Valeo. It is easy to communicate the tremendous business potential they could have by working with Valeo as we have a very strong original equipment footprint and are a leading technology company.”
Gaining wide visibility is the main concern for Kerkhoff. Valeo competes with more than 800 entities that commercialize spare auto parts and the company is not yet a household name. “Valeo only started to have a more serious presence in the Mexican aftermarket five years ago. Now, our goal is to elevate our status to the same level we have in Europe,” he says. “This is possible if we strengthen our leading position with radiators as well as making our clutch offering available in Mexico. We are also launching our leading range of windscreen wipers in 2017 to the Mexican aftermarket.”
Kerkhoff thinks a strong service and support approach is key to achieving these goals, coupled with competitive prices and coverage of the main product lines in the country. But to achieve this, the company cannot drag its heels. “Mexico is a diversified market, making time one of our main constraints. We must make our locally produced spare parts available to the Mexican market to strengthen our presence and make us attractive to customers.” Of course, the company knows that it cannot succeed alone. Strong foundations in the market will depend on a wellstructured distribution network and the company is relying on wholesalers to insure its development plan. “Our wellbalanced distribution network means we can choose the right partners who are looking for new and fresh business,” says Kerkhoff.
Along with the need to grow as a company, Valeo’s motivation is fueled by the opportunity that exists in the aftermarket. Mexico’s vehicle park comprises almost 40 million vehicles, according to INEGI and the expectation for growth arising from an increase in new vehicle sales has inspired Valeo to adopt an aggressive strategy for Mexico. “We are the main windscreen wiper provider globally but we do not sell a single unit in Mexico,” he adds. “That is only one of many examples of the massive market potential that is encouraging us to develop a firm market share here in the next five years.”
Rushing into this unexplored market has not blinded the company to inherent challenges of servicing the millions of vehicles in the country. “Unfortunately, in Mexico many vehicles are sold in their most austere versions and sometimes they do not even have basic safety systems like ABS brakes. This relegates some products with advanced technology to the bench,” Kerkhoff adds.
The company’s experience in Europe handling technological advances is less relevant in Mexico, which is still growing in terms of its vehicle renovation. “Connectivity and autonomy features are available in Mexico but only in the high-end segments. There is still time for the volume production aftermarket to develop enough to supply more advanced technology,” he says. Valeo will have to test the water and adapt accordingly. “As we make our way into the Mexican aftermarket, we will determine the kind of technology we can bring to clients and the business potential for each of our product lines.”