Looking at the future on a car lift
The segment of the automotive market that Jens Schüler and his colleagues work in may be highly specialized, but it is one with which practically all drivers come into contact at one time or another: as a member of automotive supplier Schaeffler’s management board, the 48-year-old executive is responsible for the business of supplying spare parts and repair solutions for garages, aka aftermarket.
Vehicle owners with transmission or clutch problems will more than likely have parts installed in their automobiles that have been produced by the Schaeffler Group based in the Bavarian city of Herzogenaurach, particularly if their cars are older and being repaired by independent garages. The longer the time that cars are being driven, the higher the likelihood of such repairs.
Spare parts market is changing
The market for spare parts is changing just as much as the market for new cars. However, there are significant variations between them. According to the German Federal Motor Transport Authority (KBA), cars in Germany are 10.1 years old on average. The EU average is 12 years. Since 2010, the average age has been increasing “continuously,” according to the KBA. More than one million cars on German roads are even older than 30 years. Consequently, Schüler’s customer base keeps growing – while the current situation in the passenger car market, with significant price increases and a shortage of new cars for sale, is also playing into his hands.
“We see ourselves as a driving force behind finding a solution to the challenge of making the aftermarket fit for electric mobility. In doing so, we focus on our customers’ need for economical and future-proof repair solutions.”Jens Schüler, CEO Automotive Aftermarket at Schaeffler
“There are some factors that will be highly conducive to the spare parts market in the near future,” Jens Schüler says. Although prices for spare parts have also gone up, they have not increased as much as they have for new and used cars. “Our business does well when times are good and even better when times are bad,” says Schüler. The demand for spare parts could only be dampened if drivers were to stop using their cars. But it currently doesn’t look that way in many countries of the world.
less: Compared to cars with IC engines, electric vehicles require fewer spare parts for various reasons, e.g., a smaller number of components, particularly in the area of the powertrain, and lower wear, especially on the brakes. However, experts expect higher wear on the tires due to higher vehicle weight and massive acceleration rates.
Source: Report “At the Crossroads: The European Aftermarket in 2030” by Boston Consulting Group
less accident repairs than today are expected to be performed by garages in 2035. The reason is that accidents will decrease due to advanced driver assistance systems (ADAS).
Source: Association of the German Insurance Industry (GDV)
Supply shortages like those affecting the new car market are now having a lesser impact on garages. “Spare parts are available,” says Schüler. There might be waiting times for electric car components, but demand for those parts is still very low. Most electric cars are not old enough yet for large numbers of them needing to be repaired. Even so, Schaeffler and other spare parts manufacturers are preparing for that.
Electric cars create opportunities. Schüler shows us the box containing his company’s “repair solution” for the electric drive axle of the VW eGolf that was launched on the market in 2017 but is no longer being built. “A spare electric axle costs more than 5,000 euros, whereas our repair solution will be selling for a lot less than 1,000 euros,” the executive says. “Showing garages how to repair electric cars, we aim to demystify the repair process. To support that purpose, we offer repair manuals, and trainers to teach the associated technical skills.”
In doing so, Schüler is following Roland Berger’s propositions practically to the letter. In a recent study of the aftermarket, the consultants find that the opportunity for component manufacturers lies in extending their product range by specific parts for electric cars. “This will then be especially successful if companies manage to use this transitional period to position themselves as a trustworthy, long-term partner to garages,” the consultants write in the paper commissioned by CLEPA, the European Association of Automotive Suppliers. In this way, spare parts manufacturers can also help ensure the survival of a larger number of independent garages, because there are not that many car mechanics currently available who are familiar with high-voltage technology.
Existing cars with IC engines continue to generate sales
However, this business is still a prospective one. Even if car manufacturers have largely become electric car companies by the end of the decade, as they are currently planning to, automotive suppliers like Schaeffler will still be manufacturing IC engine components for a long time. At least as spare parts.
“In 2030, perhaps only 20 percent of new cars sold globally will still be using IC engines. But the picture pertaining to existing cars will be a different one: 74 percent IC engines, 15 percent hybrids and just 11 percent all-electric. We’re currently developing a production concept that will allow us to continue supplying components for these cars,” says Schüler. However, most of these spare parts will come from Asia. “We’re no longer continuing to develop factories for clutch production in Europe, for example, but we’re developing such capacities in Asia.” Schüler does see opportunities in the anticipated shrinking of the IC engine segment because competitors will gradually be withdrawing from it.
Especially for the high-quality components of electric cars with their many valuable raw materials, the reprocessing of spare parts makes sense.
Garage business offers potential for growth
Schaeffler, according to Schüler’s plan, should experience significant growth in the spare parts market in the next few years, generating sales of more than 3 billion euros per year. “We’re also looking at acquisition opportunities in relation to products, market access and services to garages in that regard,” he says. Such takeovers along with organic growth should cross the sales threshold.
A new way of handling spare parts, which is actually an old way, is designed to help with this growth: In the future, Schüler wants to offer garages second-hand and reconditioned car parts again. This is still common practice in the United States where Schüler worked for a long time. “Because the under-hood technology doesn’t change as quickly there as it does in Europe, there are lots of parts in the fleet that can be used as spare parts for more recent cars. In Europe, this basically doesn’t exist any longer because here, new parts have bumped reconditioned components from the market,” says Schüler.
However, he assumes that this business will make a comeback, for two reasons: It can reduce CO2 emissions, plus it could be an answer to the current shortages. “I assume that more than before, we’re going to have to live off the material that is already in the system,” Schüler says. This makes sense especially in the case of the high-quality components containing many valuable raw materials that are used in electric cars.
Repair solution as a clever alternative
In 2022, Schaeffler presented the first repair solution for e-axles. Where vehicle manufacturers are currently providing their customers exclusively with costly replacements, Schaeffler’s Automotive Aftermarket is the first supplier to offer a repair solution for e-axle drives: the E-Axle RepSystem-G. While vehicle repairs using replacements entail the complete exchange of the powertrain, garages using the Schaeffler solution only change the relevant components or parts exhibiting the highest wear. By saving resources and money, and reducing CO2 emissions, the solution supports sustainability while creating additional business potential for independent garages.