Hella may be synonymous with automotive lighting but the company is extending its aftermarket business and is targeting electronics and air-conditioning systems. In this interview, Martin Herbst, director with responsibility for Hella#;s Aftermarket and Special OE business division, describes Hella#;s strategy.
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Mr Herbst, you took over responsibility for the business division Aftermarket and Special OE as a director at Hella KG Hueck & Co. in June of last year. How would you describe the present situation in this business division?
Martin Herbst: Five years ago we began to transform a pure sales and marketing organisation into a completely new Aftermarket Division with its own product development and production. In the meantime we have our own development and production resources available. We have thus prepared the basis for successful aftermarket business, since we are now no longer dependent on the original equipment products, and are currently growing – in contrast to the general tendency in the branch.
What lies behind this development?
Martin Herbst: One of the factors is certainly our advance into new fields such as automotive electronics, for example. This was on a solid basis right from the beginning. The Hella Group already makes more than one quarter (740.9 million euro) of its Group turnover of 2,856 million euro in the Automotive Electronics business division. This broad product basis was a great advantage for the expansion of the aftermarket business, as was our global sales network which we have been continually building up for years.
You then expanded this basic range of electronic products by a sales cooperation with Siemens…
Martin Herbst: In the first electronics expansion phase we agreed in 1999 to cooperate with Siemens Automobiltechnik for the sales of replacement parts for automotive electrical/electronic systems in Europe and added a series of Siemens products to our aftermarket range. Further partnerships were added in this division later, and we have also been able to significantly expand our range of electronic parts through the acquisition of other companies, too. This is why the electrical/electronic systems range makes up around one third of our overall aftermarket turnover at present. We are very pleased with this development because the growth rates in this particular area are extremely high.
The name Hella is synonymous with automotive lighting worldwide. How do you intend to convince wholesalers and independent workshops of your extended competence, while at the same time preparing for future electronics business?
Martin Herbst: In the past few years Hella has successfully developed from a lighting specialist into a specialist for lighting, electrical/electronic systems and air-conditioning equipment. Selling such a range of products is of course much more complex than it was in the past with more simple lighting technology products. We still have a lot of hard work to do here. First we have to make wholesalers aware of products they have had no experience of as yet. And as far as the workshops are concerned, we want to make them conscious of the fact that the wholesaler they deal with is also their supplier of electronic and air-conditioning parts.
In their turn, the wholesalers must be able to guarantee the availability of the parts in their region and their delivery within a few hours.
Could separate sales and workshop concepts be created especially for electronic parts in the long term?
Martin Herbst: There are already some smart owners of independent workshops who have recognised that electronics and air-conditioning servicing are the business of the future. Specialists with a wide range of repair knowledge and know-how are being concentrated here, and it is certainly conceivable that such specialists can take over a leading function for other smaller workshops in their vicinity and provide them with their services.
What role does the Europe-oriented concept “Hella Service Partner” play in the electronics business?
Martin Herbst: Our Service Partner concept covers the four modules Lighting, Electrical Systems, Electronic Systems and Air-conditioning. This means that specialists are being developed in these areas, since our concept not only includes the supply of replacement parts but extensive training as well. At present, repairs to electronic systems only make up around five percent of overall repairs, but in another five years this share will have risen to 30 percent. Independent workshops that have not started dealing with automotive electronics yet will have problems with almost all their repair work in future. Hella Service Partners will not have any problems. Nor will any other independent workshop we work with. We will make sure of that.
We also have to look at the growth area of air-conditioning servicing and repairs. These days, even compact vehicles are being fitted with air-conditioning equipment. This creates an enormous servicing potential that we would like to make all our workshop partners fit to master.
Another factor for long-term success in the vehicle repairs business will be a continuous flow of information from the electronics manufacturer to the workshops themselves. Are you prepared for this?
Martin Herbst: When we made the strategic decision to expand the Hella product range by electronics products, we simultaneously allowed for additional staff for this area. Today we have separate product management for electronic parts and a strong separate service department for Hella Service Partners. Since the number of Hella Service Partners is continually growing, we also have to include wholesalers in the obligation to provide information. It is only together with the large parts logistic centres that we will be able to successfully master the growing business with automotive electronics.
How many electronic parts are now included in the Hella sales range?
Martin Herbst: In the past three years we have added around 5,000 new products to the aftermarket range, more than 1,000 of these in the electrical/electronic systems range alone. The complete Hella range of products for the aftermarket and workshops currently comprises around 15,000 parts.
What are the development plans for the Hella aftermarket business in the next few years? How many Hella Service Partners are there going to be in Europe?
Martin Herbst: Thanks to the electronics and air-conditioning ranges we have experienced significant growth rates in the past few years – in contrast to the general tendency in the parts branch. And we expect this upward trend to continue, maybe even to increase. We aim to extend our Hella Service Partner network across Europe to about 5,000 stations in the mid-term.
Personal details:
Martin Herbst, born in 1955, has been at Hella since 1976. After his Abitur (German equivalent of A-levels) he did four years training in practical business management and also studied Economics at the University of Paderborn. This was followed by several months in Toronto, Canada. His first employment was for almost two years at Hella S.A. in Paris. This was followed by a short spell as the assistant to the then aftermarket director. Subsequently Martin Herbst was entrusted with the strategic and operative further development of the aftermarket business through the purchase and integration of suitable companies. He has been building up product and target group marketing since 1993. He took over the temporary management of the Aftermarket business division in August 2000 and has been the director responsible for the business division Aftermarket and Special OE since 1.6.2001.
