Growth in the independent aftermarket is now part of the global policy of the Japanese components giant, Denso Corporation, with Europe the latest target for expansion. According to its Netherlands-based, European aftermarket senior co-ordinator Yasuyuki Kamada, the company now plans to build on the replacement parts initiative that it introduced here last year. Ian Wagstaff reports.
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Initially this was spearheaded by iridium electrode spark plugs. “Following this we want to grow our air conditioning business in Europe and then our next expectation is diesel,” says Mr Kamada.
Rotating electrics – starters and alternators – are also being now promoted. Unlike most of its competitors in this field who major on re-manufactured units, Denso mainly sells new product thanks to its status as an original equipment supplier. However, this position means that, unlike for spark plugs, it is not really able to offer an all-makes programme.
Three European countries have been deliberately chosen as targets, as Denso seeks to greatly increase its replacement parts business. This move follows last year’s announcement that it had overtaken Visteon into third spot in the league table of the world’s major component manufacturers. The trio is the UK, an obvious choice given the number of Japanese cars here, Italy and Russia, with its vast potential.
Mr Kamada points out that Denso, or Nippon Denso as it was then, first started exporting spark plugs to the Netherlands some 35 year ago. However, for over three decades there was little or no drive to expand this. The only European region in which the company really had any strength was Scandinavia. Countries such as Italy, France and the UK, Mr Kamada admits, proved difficult for Denso. However, around 10 years ago Toyota, the vehicle manufacturer with which the company has traditional ties, began to “have a stronger policy” in Europe. This has led to a change in Denso’s thinking regarding the replacement parts business here.
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By GlobalDataThe company first deliberately began to strengthen its aftermarket business in Asia and the USA about seven years ago. Now, according to Mr Kamada, the UK – where it has a strong manufacturing base – has “priority” among Europe’s major markets. For this reason, last year, a Coventry-based, dedicated aftermarket division, with a local warehouse, was created specifically for the UK. At the time Denso announced its intention to increase its share of the European spark plug market, an area in which it had traditionally been ranked among “others” and in which it can offer an all-makes programme, as well as create a brand awareness.
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Denso F1 spark plug |
According to the assistant manager of its UK aftermarket sales operation Marko Wowczyna, NGK currently enjoys 48 per cent of the UK spark plug aftermarket, Bosch 20 per cent and Champion 17 per cent. Denso, he says, languishes among the 15 per cent taken by “the rest”. These market shares have altered radically over the past couple of decades, with NGK replacing Champion as undoubted market leader, and now Mr Wowczyna hopes that Denso can start showing on the chart. “Coming from a very low base we see the market as a greenfield opportunity,” he says.
He admits that the spark plug aftermarket is experiencing a three per cent year on year decline in volume terms, but points to the growth of the market size by value. Worldwide, Denso ranks as the second largest OE spark plug supplier, but is in only sixth place when it comes to the aftermarket. “Now Denso has woken up to go into the aftermarket,” says Hitoshi Kurata, general manager of its sales and marketing department in Japan.
One particular strength is in long life spark plugs. Here Denso, a pioneer with NGK of the 100,000kms plug, claims world OE/aftermarket leadership with a share of 27 per cent. Platinum has now been superseded by iridium, with Denso claiming that this has enabled it to produce a plug with the world’s smallest electrode.
Spark plug sales in the UK are now influenced by buying groups. However, Mr Wowczyna believes that there is a demand for “an alternative brand.” The company is already one of the nationwide Factoring Services Group’s three nominated suppliers. During the summer it was also chosen as the spark plug supplier for MG Rover’s new XPart all-makes programme. This contract means nationwide distribution of the range via XPart’s new “factor-style” service.
“We want to grow market share but we have got to have balanced distribution,” says Mr Wowczyna. Prior to 2003 Denso had a policy of UK distribution via Europe.
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Kamada-san (left) in conversation with Japanese retailer |
By contrast with the UK, no sales office has yet been established in Italy. However, Mr Kamada points out that the country is also important, Denso having, following a long time commercial co-operation, acquired Magneti Marelli’s climate control operation in 2003. It had taken over the Italian group’s rotating electrics business some years before. Demand is greatly assisted by the fact that it enjoys Fiat’s original equipment air conditioning business. Denso’s aftermarket diesel components are, as in a number of other European countries, distributed in Italy through the Delphi aftersales network. Air conditioning parts are distributed here through Rhiag. In the UK it uses the distributor AutoClimate for these products.
Russia, where Denso now has five national distributors, including Moscow-based Auto Master Trading, is seen as a major opportunity for expansion. The fact that Denso is Japanese is viewed as a “plus point” in Russia, says Mr Kamada. Last year saw a 60 per cent growth for sales of the company’s products there.
Growth in the diesel and air conditioning sectors would probably see a re-evaluation of Denso’s current distribution of such products. For example, its common rail business should expand following the start of an original equipment contract to supply the Ford Focus from 2006. As mentioned, Denso currently uses Delphi for the distribution of this in such as Italy and the UK. However, Mr Kamada is unsure as to whether Delphi will be able to “cover everything” once this happens. He also points out that an air conditioning network is “quite difficult to manage. In the past nobody gave to proper technical information to the market.” The main problem, he admits his company faces, is to persuade garages to change, given the fact that similar products from major players are well established. An increase in OE business would, he say, assist the aftermarket initiative.
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Denso F1 radiator |
Mr Kamada also states that Denso is poised to use its involvement with the Toyota Formula One team in order to assist in its aftermarket programme. It became a corporate partner of the Cologne-based operation in March, too late, he admits, to really it make use of it this season, although a campaign is already underway in Japan. However, next year will see the link being used “much more in consumer related campaigns.”
Denso took the opportunity in 2003 to enter the Grand Prix world by manufacturing and designing the nickel electrode spark plugs for the Toyota Grand Prix car, as well by making the radiators. However, it is only this year that the Denso name has appeared large on the engine cover. Toyota Motorsport technical director Keizo Takahashi admits that Denso is “developing other technology” for use by the team. Mr Kamada adds that this will include the engine management system as well as the alternator. Given the company’s wide portfolio of products for passenger cars, this is a logical step.
Denso now has a travelling stage with Toyota F1 show car. This made its debut at Automechanika and was seen for the first time at a race meeting during the Japanese Grand Prix at Suzuka. “We expect a lot from this display,” says Mr Kamada. “We need more common, global (aftermarket) ideas; we need to more visible. This is a good opportunity.”
