ADI Newsletter December 2017 (GB)

Responsible editor: Autodistribution International, Kortenberg, Belgium

Edition: 12/2017

news www.ad- europe.com

connecting to the future Neil Pattemore (Figiefa) explains WHY & HOW

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Dear business partners and colleagues, Dear friends, If we consider the development of our business figures over the first three quarters of 2017, it looks as if we can call it a good year. Development across all 28 European Member States has been positive, something that has not happened for a long time, and the IMF is reckoning on a solid 2.4 percent growth across the whole EU for the current year. Our 24 ADI members, who are themselves represented in 39 different countries, can even report growth of nearly 14 percent, which is about as good as a financial year can get.

But still, the other side of the picture cannot be ignored. For many colleagues, the turnover has been coerced through increased efforts and sinking margins; and the challenges ahead will necessitate massive investment into digitalisation and process optimisation. We are therefore very ambivalent towards the disruptive influence on our traditional value-added chain, although from our position of strength, we do perceive the resulting changes to our business models as a real opportunity. The smartphone generation is penetrating our industry, turning traditional structures on their heads. Things that involved repetitive processes yesterday will require a whole new approach tomorrow. This dynamic development is fascinating and only poses a threat to those who do not prepare for the changes soon enough. Often, there is a strong sense of fatalism which stands in the way of adapting within one’s own company, and this is, of course, coloured by a number of different individual factors, most of which are very understandable.

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And as much as it makes sense to stick with what has been successful thus far, the direction for a path towards the future must be defined in good time. We have seen this direction taken by many of our supplier partners in the last few years. To name just a few recent examples, ZF, Mann & Hummel and Valeo have attempted to get to grips with the ongoing process of technological change by taking over TRW, Wix/Filtron and FTE. Even within our ADI family, we see a lot of good examples. We can only take our hats off in respect of such associated vision and determination.

Whether or not the buzzwords of Industry 4.0 or digital transformation are used, at the end of the day, it is all about access to, processing of and efficient, networked use of data. Of course, in this context, I should also mention the topic of telematics and the political challenges which go hand in hand with it.

This is a topic we have dealt with for a number of years and which is handled with more knowledge, and also more volume and emotion, every year. This is reason enough to go into the topic in more detail with an article by Neil Pattemore in this edition of our newsletter. I very much hope that, by the time this newsletter appears, a joint declaration by FIGIEFA and CLEPA on the legislative needs from the perspective of the whole IAM will have successfully been drawn up, as this would resolve many of the controversies arising over the last 12 months. But even if joint ideas on future, hopefully equal access to data can be formulated, it is unfortunately already clear at this stage that it will not be possible to unite all international distribution groups and parts manufacturers on a shared platform and make the data there available in a standardised format for all possible target groups and their business models.

This means it must come to a competition between platforms, with the most efficient solution perhaps establishing itself as the industry solution over

time. However access to the data is provided and whoever it is collected and collated by, there are lots of potential users for this data and one of them will most definitely benefit from it: our ADI technology partner, Grup Eina Digital in Figueras! As you will know, Grup Eina Digital has been active for many years with a professional modern training centre and call centre in many European countries, where it has become an established presence. In order to secure this expertise for our customers and, of course, for ADI in the long term, our colleagues AD Parts and AD France have taken over the majority of Grup Eina Digital. I would like to extend my congratulations to them!

It is another example of a brave outlook on the future and shows that there are always clever ways of dealing with the aforementioned challenges. In this respect, we are investigating the areas relating to e-mobility, connected cars, e-calls, e-commerce, etc. with both respect and with a certainty that by working together, we can find the right answers.

This applies to the same extent to the increasing concentration in distribution and industry and to the invasion of financial investors and megasellers. We, in industry and distribution, all share the responsibility for market hygiene and sufficient margins at all levels and we are confident that strategic thinking and action is more prevalent among our business partners than a short-term focus on turnover, as this can quickly result in dependencies and falling revenues.

I would like to take this opportunity to wish you, dear business partners, colleagues and friends, a wonderful festive period and a healthy and happy New Year.

Yours Thomas Vollmar President of ADI

IN THIS NEWSLETTER 4

Connecting to your future digital business models

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Autodistribution: creating links at Equip’Auto

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ADI partners investing in the future of their repair shop customers

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AD Russia continues to develop

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AD Italia - Giadi: building a network together

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Carat Leistungsmesse 2017: increased turnover

latest news from the AD Group 3

Connec ting to your future digital business mo dels Today’s vehicles are changing tomorrow’s hicle data needed to run some of the more ‘data hungry and time critical’ applications like ‘prognostics’, but also to ensure business.

The rate of technological change sweeping the automotive industry has been phenomenal and is still increasing – impacting your business models as we know them today.

Previously, a vehicle would come into a workshop and the ‘repair process’ would start, either to conduct a scheduled service or to conduct a diagnosis of a vehicle fault that resulted in the replacement of a part to get the vehicle back on the road.

One of the most fundamental changes to our industry is created by the ability to now communicate with the vehicle remotely. With the mandatory fitment of eCall emergency call systems that introduce the basis for remote ‘telematics’ communication with the vehicle, together with automated systems and ultimately, autonomous vehicles, it is forecast that almost every new car and truck will have telematics capabilities within the next 5 years. The potential is therefore both the existing car park based on wireless transmission of the car data via ‘plug-in OBD dongles’, and the newly type approved cars using direct telematics systems embedded in the car.

This will change the way that the ‘repair process’ is conducted, and with it, a change to today’s Aftermarket business models.

Instead of waiting for a vehicle to come into the workshop, the ability to remotely monitor the vehicle and predict the service and parts requirements before it comes into a workshop creates THE competitive advantage.

However, to be competitive, these new ‘remote services’ require some of the Applications to be embedded directly in the vehicle to allow not only the direct real-time access to the ve-

that these predictive services can be offered directly to the vehicle driver via the in-vehicle display (the new ‘shop window’ for remote services) when these new services are needed.

Why remote access is needed With the increasing magnitude of ‘connected cars’, this remote access is increasingly important to the independent automotive aftermarket. Not only will remote access support better ways to do what is done today in the workshop and further increase the parts delivery efficiency; it will also allow the development of new services e.g. the precise monitoring of components and driver patterns (with the driver’s consent) which enables bespoke service offers to both consumers and to corporate customers to match their business requirements of a given repair network, insurance or fleet management philosophy.

Clearly, the data generated by the vehicle whilst it is being driven (technically known as ‘machine generated data’) is not only able to help analyse the vehicle’s correct functionality, but is valuable for other ‘digital trading’ services with other service providers, such as technical information providers, diagnostic companies, breakdown organisations and many others. This is the new digital economy and creates a whole new opportunity for new business models for the Aftermarket. The car will become the “Convenience Centre” for its owner and innovative links between the use of the car and its drivers ‘lifestyle choices’ will create entirely new business models based on an individual’s mobility requirements.

Legally yours?

Many people believe that the vehicle driver owns the data, but current legal doctrine in the EU is that this ‘machine generated data’ simply exists – a little like the temperature of the air – it is a value, but no one owns it. Equally, if it is used to provide a service and the car data can be linked to a real person, then the service provider must of course ensure the correct use, storage and handling of any data which could be considered ‘personal data’ to comply with the regulatory requirements.

The fact that the sensor- and machine-generated in-vehicle data are not owned by anybody does not prevent that factu-

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ally somebody makes these data captive – and this is where the problem starts. Vehicle manufacturers have designed their in-vehicle telematics systems in a closed manner, granting themselves timely and privileged access to the vehicle data.

Also, they have the ability to be in direct contact with the driver – the dashboard becoming the new shop window for these new services. Now, the repair process starts in the vehicle with the diagnostics and predictive capabilities being shifted into the vehicle. Vehicle repair has ‘gone digital’ and most critically introduces the vehicle manufacturer as a significant and privileged competitor in the Aftermarket. It is a fundamental question of whoever controls access to the vehicle, its data and resources (with the subsequent ability to both monitor the vehicle and what parts may be required), and the communication with the driver, will control the market.

First examples of ‘Extended Vehicle’: Publicity meets reality check!

What are vehicle manufacturers offering?

Even if this information being offered via Extended Vehicle was considered useful for independent service providers, the registration process is very burdensome: To get some information a service provider has to describe his business model (including the data needed and to be released following the driver’s consent) to the vehicle manufacturer and to confirm his customer’s details! It clearly shows that Extended Vehicle has serious deficiencies and that it is not a workable solution for the Aftermarket.

Whereas vehicle manufacturers themselves benefit from their own fully-fledged in-vehicle telematics systems, some of them have started offering a separate system for other service providers. This is the so-called ‘Extended Vehicle’ concept where vehicle data is sent first to the vehicle manufacturer’s own server and is only then made available to 3rd party service providers. Extended Vehicle has now been renamed the “NEVADA Concept”, but it is no more competitive since the only access to the data by this so called “neutral” server is still through the “Extended Vehicle” back end.

Today we have an independent access to the vehicle and its data via the standardised OBD connector, which establishes the basic principle of direct access to the vehicle to support independent entrepreneurship. However, with the increasing introduction of closed in-vehicle telematics systems, this means that we as independent market operators would become dependent on our competitors! We would have to rely on the vehicle manufacturers’ servers, where we would then only have access to a (restricted) set of data defined by the vehicle manufacturer, limiting innovation and the services that we can offer. Furthermore, the Extended Vehicle provides vehicle manufacturers with the fundamental ability to monitor and profile our companies’ servicing activities – getting insights into our business patterns.

The first practical checks of an Extended Vehicle model ‘going live’ showed just how much the advertisement of “fair sharing of data” and the reality differed. The quality of data being offered is poor: from the several thousand data points available today to e.g. diagnostic test equipment manufacturers, only some eighty ‘information’ (i.e. often not data) points are made available via the Extended Vehicle server. A big proportion of the information is of a nature that is already available to the driver when they are in or around the vehicle (e.g. is the door closed?), or is displayed via the dashboard. The information proved to be very limited in comparison to the data that is really needed to create competing automotive aftermarket services.

Also, hooking to 3rd party B2B marketplaces (i.e. also so-called ‘neutral servers’) behind the vehicle manufacturer’s server does not remedy the basic system errors, which provide limited benefits to the Aftermarket, whilst introducing additional costs, latencies and contractual conditions.

What does the independent aftermarket suggest?

A wide range of European Aftermarket sector associations, together with the European insurance industry, leasing and rental sector companies, have been advocating the creation of an interoperable, secure and standardised in-vehicle telematics platform (OTP), as also suggested by the European Parliament.

This provides the ability to develop independent applications that, most importantly, can be implemented safely and securely, but in particular directly into the vehicle, whilst also being able to display these services to the vehicle driver. Based on

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such a direct communication possibility with YOUR customer, he can then simply authorise the implementation of offered service applications by selecting and reviewing them on the in-vehicle display and pressing the ‘yes’ icon to confirm his consent.

What are the perspectives for this OTP? Thanks to the work of the European associations such as FIGIEFA and its partners, there is an increasing understanding within the European institutions “that something needs to be done” in relation to access to car data. The European Commission created a forum at the end of 2014 to evaluate how to address the remote access to ‘the vehicle, its data and resources’ and explored how the mandate from the eCall legislation for an ‘OTP’ could be implemented.

An external consultancy called TRL subsequently assessed various possible technical solutions forwarded by the forum stakeholders. The TRL Report concluded in the summer of 2017 that although the Extended Vehicle concept provided the quickest and lowest cost solution, it was the worst solution in relation to fulfilling the forum’s agreed five guiding principles and in particular, ‘undistorted competition’. Conversely, the OTP was the only solution that fulfilled all five of these agreed guiding principles. The TRL Report also emphasised that not only the technical solutions to address security, safety and privacy already exist, but that the benefits provided by this on-board application platform significantly outweighed the costs of implementation. Moreover, it mentioned that such a platform could be legally elaborated within 5 years, as the first examples of on-board application platforms already exist with some vehicle manufacturers (e.g. Toyota, GM and JLR), but they are not yet standardised or open to competing independent service providers.

Where next?

The whole subject of access to the vehicle, its data and resources is a multi-faceted and dynamic situation, both technically and politically.

Today we have a direct access to the vehicle and its data via the standardised OBD connector, which establishes the basic principle of ‘direct access to the vehicle and its data’. However, the basis of being able to access the necessary data through the OBD port is under severe threat of closure by vehicle manufac6

turers, as only emissions-related data is mandated by existing legislation. The introduction of higher levels of vehicle safety and security are also likely to introduce the requirement to use an electronic certificate procedure to enable access to the vehicle and its data. This is already a requirement for some new vehicle models coming into the market.

FIGIEFA and its partner organisations are active in Brussels to obtain an independent and legislatively supported process to define and control the use of certificates, but there is a very real danger that the Aftermarket would still be denied ‘fair and undistorted’ access to the vehicle, its data and functions unless there is legislative control of this certification process.

The way forward For an interim period, we will have to rely on the communication with the vehicle via the OBD connector and on bridging solutions, e.g. third party B2B marketplaces, such as the NEVADA concept. However, if the independent aftermarket still wanted to have an independent future where it can innovate and compete on an equal footing, then there is no way around legislation. Also, bilateral talks for more than one year between vehicle manufacturers and first equipment suppliers (have not to our understanding) resulted in any major advances in terms of the release of data by vehicle manufacturers.

The solution must be based on robust and detailed legislation that defines the ability for a safe, secure and direct access to the vehicle and its data and functions via an on-board application platform. Only this solution over the mid to longer term can truly support the independent Aftermarket with the ability to implement its in-vehicle applications that can directly access

in-vehicle networks, data and resources, but work on this solution needs to start as soon as possible, as new vehicle technologies and services continue to evolve at an even faster pace.

The focus should only be on legislation that will provide the basis for this solution to be implemented and accessed – there is no point in trying to legally fix ‘interim’ solutions – this would just waste time and only be a distraction from focusing on the required solution of the on-board application platform.

Given this background to the developing challenge of remotely accessing the vehicle, FIGIEFA has been increasingly active in promoting its new ‘Direct Access – Driving progress’ campaign (www.direct-access.eu), aimed at ensuring that undistorted competition can continue in the new digital services era. FIGIEFA are actively working to achieve the solution that emanated from the eCall legislation proposing an in-vehicle ‘Interoperable, standardised, secure and open-access’ platform – and that has now been supported by the TRL report.

Neil Pattemore Technical Director at Figiefa

Therefore, for your own future business models, we invite you to support FIGIEFA’s efforts and campaigning to decision-makers, both directly with your local legislators and through your support of ADI and FIGIEFA at the European level.

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ADI Partners investing in the future of their repair shop customers …

EureCar figures (2017):

• 1512 technical trainings organised • 17 435 mechanics trained

Finland: The delegation was hosted by Eero Broman

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AD Hessumobiili in Klaukkala

® The Eure!Car training program provides ADI Partners access to training content and technical know-how from dedicated training providers and Eure!Car industrial partners.

The training program is completed by technical magazines (EureTechFlash) and the online technical blog “EureTechBlog” (www.euretechblog.com).

Visit of AD Bosch in Spain

CARAT Leistungsmesse 2017: increased turnover • stable visitor numbers • 12 percent increase in sales • entry into e-Commerce good. The products at the centre of the anniversary offensive were very well received. The E-MOBILITY FORUM also aroused the interest of visitors to the fair. The Live Workshop completed the picture, demonstrating the practical implementation of a great many exhibited products.

Entry into e-Commerce

From 13 to 15 October Kassel once again hosted the CARAT Leistungsmesse (trade fair). Almost 21,000 visitors made their way to the metropolis in North Hesse to find out about innovations in the workshop arena. 220 exhibitors presented their products and services to visitors. An important indicator brought a smile to the faces of both organisers and exhibitors: turnover at the fair increased by a fantastic twelve percent.

During the fair, CARAT CEO Thomas Vollmar gave the go-ahead for a new project by the name of MECANTO25 which signals the beginning of online trading for CARAT. The atmosphere at the fair was extremely positive. Besides information and sales, there was also time for celebration. Sarah Connor’s concert on Saturday evening really got the overflowing exhibition hall fizzing.

Feedback about CARAT’s new products and services was very

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“The mood in the sector is good”, said CARAT CEO Thomas Vollmar at the trade fair. “Despite everything, we are facing major changes. By that, I mean the entire value-added chain, from industry through trade to workshops. We must set ourselves new challenges.”

The CARAT Group wants to address this issue with a completely new approach by launching e-Commerce. Vollmar says, “CARAT will become omni-channel.”

Aggressive parts marketing will begin on the internet through the online shop MECANTO25. CARAT places particular emphasis on price and availability. What is new about MECANTO25 is that it provides genuine added value for customers. Not only can they purchase spare parts at very reasonable prices, but they can book the appropriate workshop service immediately.

At a fixed price. The green light for the project is in the spring of 2018.

Great interest in electromobility A further highlight of the fair was the training offensive on eMobility. CARAT held a draw for a total of 1000 places on an online training course on high-voltage systems and three places

on a Level 2 training course “Electrician for HV systems in motor vehicles”. The interest was enormous. With their completed attendance certificate, many interested trade fair visitors indicated that they would like to be at the forefront of electromobility.

New parts catalogue and more New at CARAT is the electronic parts catalogue Masterbrain. It is based on data from DVSE and thus offers benefits to all those workshops which prefer this kind of data processing. They immediately feel at home in their familiar data world. This makes purchasing from CARAT dealers even more convenient. The further complemented in-house parts brand COREXX was very well received at this year’s Leistungsmesse. CARAT had launched this quality brand in 2015. It has been well received since then and is expected to grow further in the future.

Commercial vehicle professionals also got their money’s worth at the fair. Truckdrive presented the Future Truck, which showed how HGVs on our roads might look in the future. For rustic fans, there was a tractor shooting, which guaranteed much laughter and a very good atmosphere, just like YouTube star Olli and his “Witz vom Olli”. New to the workshop concept was a customer replacement vehicle on extremely attractive terms.

Concert finale with Sarah Connor The second day of the trade fair ended with a concert by Sarah Connor. She ensured that the festive mood at the fair lasted until long into Saturday evening. 5000 concert goers celebrated in high spirits in the exhibition hall.

New ADI agreement: Liqui Moly With around 4,000 items, LIQUI MOLY offers a global, uniquely broad range of automotive chemicals: Motor oils and additives, greases and pastes, sprays and car care, glues and sealants. Founded in 1957, LIQUI MOLY develops and produces exclusively in Germany. There it is the undisputed market leader for additives and is repeatedly voted the best oil brand. The company led by Ernst Prost sells its products in more than 120 countries and generated 489m euros in sales in 2016.

LIQUI MOLY looks back to a long lasting cooperation with the Carat group. In 2017 the company was distinguished as Carat top supplier. And in Austria, Ireland and Russia LIQUI MOLY is already supplying ADI partners. From 2018 on LIQUI MOLY becomes official ADI supplier and looks forward to growing the business of the ADI partners all over the world. The company’s philosophy is to establish long term partnerships instead of chasing the quick money. It wants to be not only a supplier but a partner supporting to develop the business for mutual success.

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Autodistribution (France) : Creating Links at Equip’Auto!

For the 2017 edition, the automotive aftermarket fair Equip’Auto returned to its roots alongside the “Boulevard Périférique”, at Paris Expo - Porte de Versailles. As usual the leader of the French automotive aftermarket, Autodistribution, fully exhausted this biannual opportunity to expose its entire portfolio of services required by the independent aftermarket of today … and tomorrow!

During the 5 days of the show more than 7000 visitors passed on the AD stand, attracted by the many demonstrations and points of interests such as: • ISOTECH, the exclusive brand for parts and equipment • A virtual 3D tour through the new warehouse Logistéo (Réau) • The new version “V3” of Autossimo, Autodistribution’s electronic catalogue • AD AutoConnect, a telematics solution and loyalty tool for the garage, linking the car to the repair shop (AD AutoConnect was rewarded with the Grand Prix de l’Innovation of Equip’auto!).

•

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A delegation of the National Pronto Association and Federated Auto Parts was present at the Equip’Auto and seized the occasion to visit Autodistribution France’s new warehouse Logistéo in Réau.

Both Pronto and Federated are associates of ADI’s global organization 1Parts (www.1parts.net).

• ID Garages (www.idgarages.com), an online platform bringing additional business to repair shops registered on the system.

• Diag’issimo, demonstrating on a Eure!Car training vehicle the powerful link between diagnostic tools and the online catalogue and technical database

AUTODISTRIBUTION STAND: • 650m² (centre of the main hall) • Staff: 60

Yannick Savina, Marketing Director of Autodistribution France concludes: “The consistency of Autodistribution’s offer and the slogan of the stand (“Creating Links”) truly fulfilled the commitment of this Parisian formula of Equip’auto. We’ll be back in 2019 for sure!”

EQUIP AUTO 2017 (17-21/10/2017): • 1 200 exhibitors and brands from 40 countries • 95 000 professionals from EMEA • Exhibition space: 100 000 m² (3 halls)

Next edition: 15-19 October 2019

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AD Russia continues to develop AD RUSSIA continues its development with the opening of 10 new branches all over the immense territory of the Russian Federation in 2017.

The last economic crisis has tangibly affected the Russian economy, hurting all indicators of the economy, including consumers buying power. At the end of 2017 Russia did not manage to catch back the level of 2012, either for investments, or for retail trade turnover, or for household incomes.

Over the past few years, faced with a very difficult economic situation in the country, the Russian car aftermarket has experienced several serious blows. Due to a considerable decline of the economic activity, the market began to consolidate rapidly, changing the power balance in the industry.

The thresholds and boundaries of price segments have shifted under crisis pressure. We noticed a redistribution of consumer demand to lower boundaries of price segments.

The worst impact was with the “middle” and especially the “middle plus” price segments which were heavily impacted.

The “emotional” buyer became a rational and demanding consumer with a clearly defined economical buying strategy.

However, AD Russia Partners remain optimistic about the future and continue their active investment strategy, react-

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ing quickly to the rapidly changing market environment and laying a solid foundation for future growth. We are expanding product-ranges, qualitatively and quantitatively, we are developing client and service programs, and above all expanding our territory coverage, continuously opening new branches, improving our product availability and ever prompter delivery service to the customers.

Only in 2017, 10 new branches were opened in different regions of Russia, in the cities of: Belgorod, Vologda, Ekaterinburg, Kaluga, Krasnodar, Murmansk, Novosibirsk, Petrozavodsk, Rostov-on-Don, and Yaroslavl. Moreover, similar plans are set for 2018.

Investments, efficiency, people and trust are the pillars of our future development.

AD ITALIA – GIADI: building a network together!

The President Ugo Carini with Manuel Van Royen (AD International) and the AD Italia/Giadi members.

“Building a network together” was the baseline of AD Italia/GIADI’s Convention from 10-17 September.

The venue for this year’s Convention: the hospitable Veraclub Suneva Club on the sunny Costa Rei (southeast of Sardegna)!

More than 300 participants – AD Italia/Giadi members, suppliers, and repair shops from all over Italy - joined Ugo Carini (President), Renato Zerbini (General Manager) and their team to discuss the business and … enjoy the pleasant atmosphere of the island.

During the meeting session on Wednesday evening the AD Italia/Giadi team presented their tools and services to tackle the present and future challenges of the market. To do that they focus on the support for repair shop customers with • online tools such as the two portals Autossimo (for AD Garages) and MyService (for G-Service garages) • the tablet app “Service for you” (integrated in Autossimo and MyService) to help mechanics with the vehicle reception in their work shops.

• technical training with augmented reality technology and online courses • the TexaCare telematics solution to transmit vehicle data directly to the repair shop.

AD ITALIA/GIADI IN FIGURES: • 13 members • 20 platforms • 181 AD Garages (Officine AD) • 595 G-Service

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