ADI Newsletter October 2020 (GB)

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Responsible editor: Autodistribution International, Kortenberg, Belgium

Edition: 10/2020

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ad INtERNatIoNaL goEs VIRtuaL...

Dear Colleagues, Dear Partners, We are particularly pleased with the release of this first newsletter post-first-wave of COVID-19.

This first global health crisis and the measures the various governments have had to take have directly impacted our distribution businesses, especially during the isolation period.

However, this period has highlighted two fundamental points for our business: • Mobility is essential for every country even in the cases of the toughest isolation. The need for mobility of health personnel, employees of essential product stores and goods carriers has made it essential to maintain means of transportation.

These activities of automobile and heavy goods vehicle repair have also been considered a priority in just about every country worldwide.

Even though severely impacted, our market has continued to be active and AD International members have maintained their activity, although somewhat reduced. • The extraordinary resilience of our market: As soon as the isolation measures were lifted, everyone’s need for mobility was again evident. Vehicles are back on the roads and with them the needs for maintenance and repair and therefore the demand for spare parts.

This is an opportunity for our businesses that have done everything to seize the recovery opportunities that presented themselves. Whether a V-shaped or U-shaped curve, there is a real recovery in the automotive aftermarket in every country.

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ADI Contract suppliers in this edition.

I want to congratulate them for their work and their courage in this difficult period. We know that this crisis is not yet over and we also know that with the support of our supplier partners we have been able to weather it and emerge stronger.

We are therefore particularly pleased to highlight in this issue some of the supplier partners who have supported us and who have continued to innovate, as well as testimonials by our partners Birner, AD Central Asia, AD Israel.

AD International’s supplier portfolio counts more than 40 leading parts manufacturers, all with OE pedigree (more information on ADI or its contract suppliers on www.ad-europe.com).

Starting with this edition, each ADI Newsletter 2020 and 2021 (including the electronic version AD Flash) will contain fresh content from our contract suppliers.

Their aim is to provide you, our ADI audience, with information on their companies and product range, and their role in our and your businesses or in the automotive aftermarket in general.

ADI Contract suppliers in this edition:

Let us remain united to successfully get through this unprecedented crisis.

Happy reading to everyone!

StĂŠphane ANTIGLIO

IN THIS NEWSLETTER 4

The ADI post Covid approach : monitor market status and favour ADI contract suppliers

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How AD Central Asia copes with the Covid-19 pandemic

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SKF: reparing an engine and getting it right the first time

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Birner focuses on digitization

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Mann-Filter uses content platform for customer support

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TRW: True originals

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AD Israel believes in the strength of the market

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Valeo: Digital services designed with you, for you

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Bosch: Delivering safety everyday

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www.ad-europe.com: new design

latest news from the AD Group

Responsible editor: ADI cvba (Autodistribution International), Kortenberg, Belgium This magazine is distributed to all business relations and distributor members of the ADI group.

To subscribe or unsubscribe contact us at ADI cvba, Leuvensesteenweg 272, 3070 Kortenberg, Belgium, (T) +32 2 759 29 95 or (E) news@adi.be.

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tHE adI Post coVId fIRst WaVE aPPRoacH : MoNItoR MaRKEt status aNd faVouR adI coNtRact suPPLIERs When the sanitary crisis hit Europe end of March, the automotive aftermarket was not spared: confinement measures and restrictions imposed by the authorities all over Europe lead to steep drops in the working volume of repair shops, which in turn generated a demand crunch in the repair and maintenance business that only saw its turning point by mid May. While the OE parts manufacturers were suffering from a dramatic decline in new car sales and therefore had to adapt and reorganize their production schemes, distribution was struggling to keep warehouses and delivery channels operational to assure service for essential mobility functions.

At the deepest of the COVID curve and the months of recovery that followed, the biggest challenge for ADI and its partners – apart from keeping their teams healthy and coping with the general sales decline - was to follow the fluctuating demand in an unpredictable market: availability of parts and products became - more than ever - key.

Since April, the ADI team in Kortenberg has been monitoring the status of its ADI Partners and sharing it with the ADI contract suppliers, allowing the latter to be reactive and adapt to a dynamic situation with geographical differences.

support in terms of logistics and delivery as the market was gaining momentum.

On September 9th, from its “virtual” studio, ADI invited another 150 participants to a follow-up online conference under the headline “Catch up with us”. Meanwhile, the 3000 outlets strong network of AD distributors was fully operational and focusing on opportunities offered by a “new IAM” that was clearly picking up speed. To illustrate these opportunities, Mr. Todd Campau (IHS Markit, Source for Critical Information and Insight) provided an interesting view on “Key Automotive Trends Impacting the European Aftermarket”. Analysing VIO (*) in Europe, he pointed out a positive shift in the aftermarket sweet spot (**) due to lagging new car sales (see slides of the IHS presentation on this page).

Todd Campau - Associate Further in the webinar, ADI Partners Director of Aftermarket from Romania, Lithuania, France, Solutions IHS Germany and Italy reported on their developments over the last few months, and gave insight in the multiple efforts taken by their organizations to protect their teams and businesses in these exceptionally harsh times. To conclude, the ADI Partners and the President continue to express their confidence for the rest of 2020 and the next year, however simultaneously convey their concern on the service level of parts manufacturers, as product availability remains the first and foremost challenge.

The “pandemic year” 2020 will be known as a particularly demanding year, challenging the resilience of both people and businesses in the automotive aftermarket and beyond, but also one in which co-operation and partnership were given a new dimension. In this Newsletter edition you will find further testimonials of ADI Partners on how they have experienced these last months. Stay tuned for more information, and make sure to note the date of ADI’s 3rd Webinar on December 9th (details will follow in due time).

On May 14th, as the first signs of recovery showed, ADI illustrated its Re-entry Playbook to some 180 participants in a first Webinar. After an introduction by Mr. Alexander Brenner (“Quo vadis IAM”, Roland Berger, strategy consultancy) on various recovery scenario’s, ADI Partners from Croatia, Finland, Russia and Spain explained the challenges but also the opportunities offered by the sanitary crisis in their markets.

The webinar was concluded by Stéphane Antiglio (newly elected ADI President since April 2020) with a message of confidence and a clear commitment of loyalty to the ADI contract suppliers, asking for their 4

(*) VIO = vehicles in operation (**) aftermarket sweet spot = age of the car when it is no longer covered by the manufacturer’s warranty and (usually) taken to an independent repair shop. The IAM sweet spot is usually set between 4 and 12 years old.

9 December 2020 ADI Webinar

Todd Campau pointed out that the Euro zone New Vehicle Demand has suffered significantly in 2020.

Central Europe will see growing volumes in young vehicles, less than 10 years of age. Eastern Europe will see a significant decrease in the 3 – 10 year old range, but will see growth in 10+ years old, which typically come to the aftermarket as well, although the products and strategy to capture that business may vary from the younger vehicles.

140 M Vehicles in Europe were 14+ years of age at the end of 2019, by 2024 we expect that number to grow to nearly 164M. In contrast vehicles typically under warranty – those 0 – 3 years old - will essentially stay flat at about 58M. Vehicles that are often considered in the sweet spot for the aftermarket – those 3 – 10 years of age - will grow from about 124M to about 131M – with Western Europe’s share of those vehicles will grow from about 90M to about 99M. Conclusion: there is really a lot of opportunity across the region, but having the right approach for the right country will be critical in the coming years.

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HoW ad cENtRaL asIa coPEs WItH tHE c oVId -19 PaNdEMIc The AD CA (Autodistribution Central Asia) was founded in 2012 as partner of ADI. AD CA is comprised of 9 countries: Azerbaijan, Armenia, Georgia, Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan, Uzbekistan and Mongolia. Current members of the AD CA consist of three companies: Araz Motors in Azerbaijan, Kulan Oil in Kazakhstan and Rahat Yol in Turkmenistan. The Head Office is located in Almaty, Kazakhstan.

The Covid-19 has disrupted and brought changes to the entire Central Asian region. Due to the proximity of Kazakhstan’s borders to China, Covid-19 has reached the country in March. Majority of the Central Asian countries has implemented severe restrictions on international travel, and entered a strict “lockdown” in April. Most of the companies reacted quickly to the virus and transitioned into online operation of the business. During this lockdown e-commerce increased for basic needs such as food, medicine and other home supplies. However, the automobile industry had a difficult time adjusting during quarantine and its sales dropped significantly, due to the closure of retailer markets and car workshops. In addition, freedom of movement was restricted between

“For the future, the priorities are finding new, strong partners in Armenia, Georgia, Uzbekistan, Tajikistan, Mongolia and Kyrgyzstan.” says Alibek Bishibekov, AD Central Asia Coordinator.

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cities as the government installed block posts on major roads in order to reduce chances of spreading the virus. As a result, there were limitations in the logistic system between cities, which affected our sales.

AD CA members were very proactive in protecting their employees during this challenging period. For example, during the first quarantine, partners sent 50% of their staff to work from home, and created short flexible schedule. After the first quarantine only 70% of the staff has returned to the office, due to the work limitations of the government. In order to adhere with the requirements to reduce the workforce, 30% of members of our team were either on paid or unpaid leave. In the work space, we supplied each employee with masks and sanitisers. We have maintained our teamwork by using online corporate systems like Bitrix and Lync.

Since August, majority of the Central Asia governments decided to make mitigation to the previous strict restrictions, and started to allow businesses to work in the usual work schedule. However, in order to avoid growing number of new COVID cases, they kept some limitations during the weekends. We are keeping our team informed and up to date with the government’s instruction through corporate channels and meetings.

Looking forward to the 2021, we started to implement new crisis management system in order to adapt to the new challenges worldwide. In the coming years, our priorities remain finding new, strong partners in Armenia, Georgia, Uzbekistan, Tajikistan, Mongolia and Kyrgyzstan.

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BIRNER focuses on digitization Birner is a successful family business - and has been for almost 90 years. As one of the largest automotive spare parts dealers in Austria with more than 600 employees, we offer more than 5000 workshops and dealers a range of wearing and spare parts, as well as accessories for motor vehicles & motorcycle and workshop equipment. For industrial companies we offer hydraulics, roller bearings, industrial filtration and pneumatic springs.

Birner offers 4 workshop concepts in Austria, which offer our partners the opportunity to appear together under a strong brand and thus have more impact on the market. The oldest concept, ad Autodienst, was established in 1996 and now comprises 130 partner companies throughout Austria. With the creation of this umbrella brand, which has become steeped in tradition and stands for quality and expertise for drivers, we can better support our partners in many areas – thus, marketing activities are centrally controlled across Austria and workshops do not need to concern themselves with this area.

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Finland: The delegation was hosted by Eero Broman

For 2020, Birner originally set itself the target of working on digitizing and modernising the company. The area of e-mobility was to be greatly expanded and new business areas and markets opened up. Many important project steps were also planned in the area of digitization for example, the replacement of our hardware at the data centre and the introduction of new software products.

The Corona crisis and the associated difficulties for the economy caught us by surprise too. As early as February, when an escalation of the situation was being reported in the media, we set up a crisis team to navigate our company through the coming months. Experts from all the specialist departments and, of course, management, were part of this crisis team. With this small committee, we were able to analyse the situation on an ongoing basis, discuss it and make quick decisions even in total lockdown. In this way, despite the difficult situation, we were able to ensure that our partners, who make an important contribution to maintaining the critical infrastructure, were constantly catered for and supplied with goods even during the national lockdown. In addition to this logistical tightrope act, we were also able to react very quickly to the newly emerging need for protective equipment and sanitizers. Thanks to cooperation with our long-standing chemical supplier Sonax, we were able to expand the range quickly and without unnecessary bureaucracy. We created the Clean & Care brand for this purpose in March. Since then, we have been

AD Hessumobiili in Klaukkala

many companies that had nothing Austria in Figures: to do with the automotive industry are now among our customers in the Clean & Care area.

• 8.8 M people Our way of working within the • 84 000 km² surface company was also influenced and • 5 M passenger Cars altered by the Corona crisis. During • OES vs IAM: 60/40 lockdown it was necessary to shift large areas of the company to mobile working in order to guarantee the safety of employees and nevertheless maintain business operations as well as possible. These alterations will remain with us beyond the crisis. selling key products for Corona prevention, such as sanitizers, surgical masks and spit protection for checkout areas, under this name.

In the first step, due to the shortage on the Austrian market, these goods were reserved for companies that were of paramount importance for maintaining the necessities of life. These included large food retailers, as well as medical practices and pharmacies. In times of great need, we were able to create a completely new business area for Birner and enter into important new partnerships and collaborations here.

Even after the lockdown and despite improved availability of these products on the market, we are continuing to operate this business area. The range is being constantly modified and expanded in order to adapt to requirements. In the meantime, however, the product groups have become available not only to the critical infrastructure the products are offered to end customers in our branches, but also

Due to the new way of working, our system landscape and the supporting software also had to be adapted to ensure smooth operation. Thus, video conference solutions and a chat tool were introduced very quickly to make direct communication as easy as possible for employees.

We resumed our projects in the field of digitization as early as June 2020 because the Corona crisis has shown us that we were on the right track with our plans for modernisation and digitization.

In 2021 we still expect some turmoil and aftershocks from the economic crisis that was triggered by the pandemic. Nevertheless, we are looking forward to the new year with confidence and are working flat out on important future projects. We are convinced that we have steered Birner through this crisis well and that we are well prepared for the months of this international pandemic to come.

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TRW_1

TRUE ORIGINALS TRW has over 100 years of experience delivering market leading original equipment parts to the world’s leading car companies and you will get just the same exceptional quality from TRW Aftermarket.

We offer you exceptional coverage from a refined range. That means installers and garages can spend less time searching for parts and more fitting them,keeping jobs moving through the garage to increase business.

For a truly great performance, rely on True Originals.

trwaftermarket.com As part of ZF Aftermarket, every TRW part is built to meet the challenge, just like the dedicated people around the world who bring them to you.

Backed by a global network of aftermarket experts TRW products set the standards for safety and quality.

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31/03/2020 10:14

ad IsRaEL BELIEVEs IN tHE stRENgtH of tHE MaRKEt AD Israel, locally known as Comet & Progress, was founded in 1956 by Mr. Yacov Benjamin as a trade company dealing with automotive spare parts.

During the last 64 years, the company has significantly grown to become one of the leading Automotive Aftermarket distributors in Israel. A dedicated team of 85 employees is coordinated by an experienced, young and dynamic management that oversees a large sales and logistic organization. Covering both the Israeli and the Palestinian Authority markets, Comet & Progress serves more than 1,450 customers on a regular basis (representing more than 70% of the potential market).

Comet & Progress operates through three divisions specializing in Automotive Spare Parts, Refinish Paint & Non Paint Materials and Work Shop and Body Shop Equipment. Among our customers are almost all OES importers, all major international rental companies and leasing fleets, Governmental Organizations, bus assembly manufacturers, public transportation companies, PTI (periodical technical inspection) stations, garages and body shops, car dealers, spare parts retailers and large institutions.

Since joining AD in May 2017, Comet & Progress has diligently increased its traditional supplier base. The well-established Mann and Hummel

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and Valeo accounts (both served since the early 1960’s), were swiftly stimulated with thousands of SKU’s made by prominent ADI suppliers such as Philips, Metelli, Nissens, SKF, Delphi and Wix, and by other suppliers such as AYD, Sasic and more.

Comet & Progress has entered 2020 with significant growth plans based on the launch of Gates and KYB products that were introduced into stock late in 2019, and also driven by an acquisition of a local distributor of the popular HiQ Abrasion brand, an OEM product in most Asian made Passenger Cars, that hold a 70% share in the PC fleet.

Israel in Figures: • 9.1 M people • 22 000 km² surface • 2.95 M passenger Cars • Average Passenger Car age: 7 years • OES vs IAM: 68/32

Following a strong and positive first two months, COVID-19 has suddenly emerged into our lives, quickly turning from a remote threat into an issue affecting normal life, threatening lives and businesses. Although the Israeli Government was a pioneer in imposing restrictions on international travel, sadly, as Israelis are truly business and leisure frequent travellers and as Israel in winter is an attractive tourist destination, steps

taken were ineffective and the Virus started spreading exponentially, leading the authorities to impose severe limitations on day-to-day lives. Since March 19th, Israelis were obliged to adhere to a “stay home” legislation, and were only entitled to leave for work or other essential activities. Limitations on businesses were tightened gradually. All consumer outlets not selling groceries or pharmaceutical products were allowed to provide online services only; open markets were closed; All businesses were directed to gradually dilute the workforce, reaching a dilution of 85%.

Although automotive workshops were allowed to remain open, workload has decreased significantly as people were entitled to receive such services only if they are essential, and other means of travel such as public transportation, car rental etc. were essentially terminated. Overall, throughout this period, turnover has decreased by 70%.

Comet & Progress was proactive in taking measures to maintain business continuation and full support to our customers: Early in March we have completely separated our logistic team from the rest of the company, and switched into a two shift working schedule; We have taken all possible measures to protect the health of our staff by providing all available protective equipment; we are keeping our team updated and informed by conveying the government’s instruction to all employees in internal corporate channels; We have maintained our teamwork using zoom and similar VC tools. In order to adhere with the requirement to reduce the workforce, many members of our team were on either paid or unpaid leave. Our sales reps spent most of their time supporting customers under guidelines taken to ensure their health. Other team members were working from home. Apart from the real fear from the Virus, our biggest concern during the lockdown was the inability of many customers to meet their financial obligations, as many took advantage of the general negative atmosphere and simply canceled deferred paying instruments.

The Government of Israel took certain measures to support businesses in these difficult times, mainly by providing a guarantee for interest-free business loans designated to support liquidity and ensure business continuity. However, obtaining such loans was not simple, and most of our customers were not able to utilize them. Other Financial aid was relatively limited.

Early in May, following a dramatic decrease in the spreading of the Virus, the Government has very quickly lifted all limitations. To everyone’s surprise, the market has swiftly recovered and demand and turno-

ver have risen well above LY figures, enabling companies in the Aftermarket to recoup a large portion of the lost sales during the lockdown. The strength of the market following the first lockdown can be explained by the following trends: (1) COVID has caused many individuals that were using public transportation to take the financial effort and purchased a used vehicle; (2) two million Israelis that were travelling abroad every month were (and still are) confined to stay in Israel. They are driving to work and taking their vacations domestically; (3) people are postponing a purchase of a new vehicle, and are maintain their current vehicles instead. As a result, driven milage has grown significantly and demand for repair and spare parts has increased accordingly.

The rapid recovery of the economy, along with the sense of victory that has accompanied the successful first lockdown, has resulted in an irresponsible behaviour of the general public and have somewhat blinded decision makers. A growing number of people have started to ignore social limitation guidelines resulting in a growing number of new COVID cases, resulting in Israel taking the undistinguished first place in the world for cases per capita.

As these words are being typed during the second half of September, the number of severe cases is exponentially growing to a degree that is jeopardizing the ability of the Health system to function. As a result, the Government has now declared a second lockdown, in which most businesses are, currently, allowed to operate normally, with limitations on the provision of services to the general public. Consumers are once again restricted from leaving home. However, people are not as scared from the Virus as they were in March, and compliance with the restriction is not satisfactory.

While this is good for trade, since there is not a significant decrease in demand, the breathing lockdown is not likely to result in the desired effect on the number of COVID cases. Therefore, the Government is currently conveying a message that current limitations are insufficient, and hence we are expecting a second full lockdown in which we foresee a significant decrease in business activity and sales, creating uncertainty as to how this year is going to end.

Looking further into 2021, and based on the experience gathered during the last six months, we are more than ever convinced of the strength of the market. We are still maintaining our plans for growth an of expansion – through both the addition of new suppliers from the ADI list of vendors and by acquisitions.

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