6th China Remanufacturing Summit
Remanufacturing Global Outlook
Joe Kripli – APRA President & Vice
President of Remanufacturing for
Instrument Sales and Service, Inc.
Automotive Parts
Remanufacturers Association
Founded 1949
120K square feet of
Remanufacturing,
Manufacturing and Logistics
100+ employees serving our
customers
5,600 active customers
APRA
• Founded in 1941. The scarcity of automotive & truck
parts during World War II helped the industry grow.
• Today APRA consists of over 1,000 companies
worldwide.
• We are the only association that represents the world
wide remanufacturing industry.
• Our Website is:
www.apra.org
Automotive Parts
Remanufacturers Association
What is Remanufacturing?
• Remanufacturing is the process used to
restore a component or part into “good as
new” condition – to meet or exceed OE
performance standards – through
disassembly, cleaning, reassembly and
testing to ensure a product of the highest
quality level.
Automotive Parts
Remanufacturers Association
Rigorous Remanufacturing Process
Powered by
Six Sigma Lean
Processes
Certified ISO
TS 16949:2009
Automotive Parts
Remanufacturers Association
Compare the Parts
USED
PARTS
REPAIRED
PARTS
NEW
PARTS
REMANUFACTURED
PARTS
Complete disassembly
and reassembly
NO
NO
Not Applicable
YES
All components either
new, remanufactured
or qualified
NO
NO
YES
YES
High availability
NO
Not Applicable
YES
YES
100% final test
NO
Partly True
YES
YES
No safety risks
NO
Partly True
YES
YES
YES
YES
NO
YES
Environmental friendly
Automotive Parts
Remanufacturers Association
IT IS ALL ABOUT THE CORE
Core
Transportation
Customer
Distribution
Center
REMAN
product
Remanufacturing
Sorting
process
Goods flow
Automotive Parts
Remanufacturers Association
Sorting
and
Scraping
Plant
Global Reverse Logistics
Automotive Parts
Remanufacturers Association
New Frost & Sullivan
Remanufacturing Marketing Study
Automotive Parts
Remanufacturers Association
Top Five Predictions for Remanufacturing
Market demand for light duty applications alone is expected to grow to $50 B by 2022 at 6.6% CAGR
1
United States to continue to dominate the global remanufactured aftermarket
2
Asia-Pacific region is forecast to grow faster than other parts of the world
3
China, Brazil will be most attractive countries for remanufacturing demand
4
Mexico, Eastern Europe emerging as low-cost reman hubs for North America, Europe
5
Bosch, BorgWarner, Delphi show the strongest potential in light duty remanufacturing
Notes: IAM = independent aftermarket, U.S = United States
Automotive Parts
Remanufacturers Association
Source: Frost & Sullivan
Regional Attractiveness for Remanufacturing
North America and Western Europe are still the most attractive markets for remanufacturing because of their maturity, while a
continuing preference for rebuilding and the threat of counterfeiting continues to hold the industry back in emerging countries.
Remanufactured Automotive Aftermarket: Regional Attractiveness, Global, 2015-2022
Regional Attractiveness
(Ranked on a scale of 1 to 10 where 10 is highest)
VIO growth
4
3
9
6
Average vehicle age growth
8
7
5
6
Degree of Market Maturity
2
6
10
9
Acceptance of Remanufactured Parts
4
8
9
8
Revenue growth
4
6
9
7
Ease of doing business
10
10
5
3
Presence of global remanufacturers
10
6
2
3
Core availability and logistics
9
7
5
4
Preference for rebuilt or repaired components
8
6
2
2
Impact of Counterfeiting & Grey Market
7
6
2
2
1
TOTAL Ranked Score (100)
Key
High
Low
66
2
65
3
58
4
50
Note: Comparative Ranking on a scale of 1 to 10. Source: Frost & Sullivan Analysis
Automotive Parts
Remanufacturers Association
Light-Duty Reman Market Size (Manufacturer-level)
China and Brazil will account for nearly 15% of global remanufactured components revenue by 2022.
Remanufactured Automotive Aftermarket: Reman Market Size by Region, Global, 2015 and 2022
2015
Global
Market Size
$32B
CAGR
(2015-22)
2022
$50 B
Region
Total AM
CAGR
Reman
CAGR
Global
4.9%
6.6%
NA
2.5%
3.7%
W Eu
2.2%
8.0%
E Eu
2.5%
8.6%
S America
5.1%
12.3%
China
14.7%
15.0%
ROW
4%
6.3%
6.6%
Remanufactured parts
growth to total aftermarket
parts growth ratio will be
highest in Europe and South
America
Remanufactured Automotive Aftermarket: Reman Market Share by Region, Global, 2015 and 2022
2015
Note: CAGR = compound annual growth rate
2022
Note:
NA = North America (US+Canada+Mexico)
SA = South America (Brazil,+Argentina+Others)
ROW = rest of world (Rest of Asia-Pacific+Africa)
Note: The base year is 2015. Source: Frost & Sullivan
12
Remanufactured Automotive Aftermarket: Growth Drivers
Rising vehicle population, continued economic growth, consistent price difference, and improved consumer awareness
are the biggest drivers for the remanufacturing industry.
Remanufactured Automotive Aftermarket: Growth Drivers, Global, 2015
Strong growth in global
VIO primarily driven by
Apac region .
High
Apac avg. vehicle age is 3.4
years in 2015 which is
expected to increase to 5
years by 2022
Improving awareness on value
proposition of reman parts
The growing 7+ yearolder vehicle population in
NA and EU will favour
remanufacturing
Consistent price spread of 30 to
35% between new and reman and
supported by a competitive
warranty favors reman
The Federal Vehicle
Repair Cost Savings Act
of 2015 to favor
No trade restrictions within North
reman in the U.S
Impact
America and Schengen zone in
Europe favors core logistics
benefitting reman in NA and EU
Increasing number of global
remanufacturers setting up
facilities in China and Brazil
demonstrates high growth
potential in these countries
Low
Low
Certainty
High
Automotive Parts
Remanufacturers Association
Source: Frost & Sullivan
Global Legislative Landscape and
Ease of Remanufacturing
Movement of cores remains a challenge in countries such as Brazil and China
Region
Trade Laws
Core Logistics
Business Barriers
No trade restrictions
Lower core logistics barriers
Market understands value proposition of
remanufacturers, and so is widely accepted.
Intense competition in market
No legislative barriers within the Euro
Union (Schengen zone)
No core procurement, management,
or logistics issues
Competition is generally intense, but regional
and country specific.
Legislations prohibit export of used
parts or cores
Once remanufactured parts are sold
into Russia, cores are not returned
due to the lack of collection
programs.
Currently, no global remanufacturer has a
remanufacturing base in Russia; no major
plans known
Strict government mandate prohibits
the import of remanufactured parts and
export of cores or used parts.
Core logistics is not a problem, but
there is a need to educate the
aftermarket on proper core
management practices
Legislation discourages global remanufacturers
from setting up factories.
Legislations prohibit import of
remanufactured parts and/or cores into
China; remanufactured parts cannot be
used for warranty replacements
Core logistics awareness remains low
Difficult to do business without a local partner
Legislations prohibit the import of
cores or used parts into Brazil
The aftermarket does not understand
the core procurement process
Global remanufacturers are setting up
operations because the country is migrating
away from repair/rebuild components to
higher-quality remanufactured parts
Automotive Parts
Remanufacturers Association
The cause for Mechatronic Evolution in light
duty truck and passenger car market
Government regulation
– Tighter emission standards
– Increased safety
requirements
– Increased CAFE fuel
economy standards
– Recycling Requirements
Technology Impact
– Increased number of electronic
modules (ECM, BCM, TCM, Safety,
Security, etc.)
– Increased engine performance (direct
Injection, turbocharging, hybrids)
– Driver convenience products increases
(bluetooth, navigation, web-enabled,
video)
– Complicated system integration (CAN
network)
TECHNOLOGY EXPLOSION - Traditional mechanical systems are being
replaced by electronic and mechatronic systems
Automotive Parts
Remanufacturers Association
Technology Impact on the Industry?
• New diagnostic & training requirements at the
repair level
– System integration of multiple electronic products
– CAN-BUS communication
• Flashing/Software update requirements
• Life cycle production concerns
– Past model electronic component shortages
– Life time buy requirements (how do you know how many you need?)
• Core handling changes
– Cannot damage connector or case
– Cannot damage electronic components
– Electro-Static Discharge (ESD) concerns
Automotive Parts
Remanufacturers Association
Effects of ADAS
Automotive Parts
Remanufacturers Association
Global Remanufacturing Footprint
Currently, China and Brazil have only 15% of the global remanufacturer’s plants which is forecast to increase in future
% Share of Global Remanufacturing Locations, 2015
Future expansion in reman footprint
CHINA
Volvo, Mercedes, General
Motors expected to set up
reman plants by
2017-18
BRAZIL
Delphi purchased a reman
facility and will launch
first phase of reman
products in 2016
EASTERN
EUROPE
Remanufacturers
increasingly shifting reman
base from west to east
Europe e.g. Bosch &
Remy operating in
Hungary, Valeo in Poland,
Knorr-Bremse & Meritor
in Czech Rep
MEXICO
Will continue to remain the
preferred production hub
for U.S remanufacturers
37%
24%
6%
24%
9%
Note: Manufacturing locations share based on reman footprint of top 20 global suppliers
Automotive Parts
Remanufacturers Association
Source: Frost & Sullivan
REMANUFACTURING HOTSPOTS
Next 9 Markets
Eastern Europe
Mexico
Middle East (Egypt)
North Africa
Pakistan
Philippines
South America
Turkey
Vietnam
Future Hotspots For Remanufacturing
Automotive Parts
Remanufacturers Association
Market Attractiveness - China
Increasing opportunities for remanufacturing makes China the most preferred reman destination in future
Reman Market (2016)
More repair centric market and dominated by
regional remanufacturers/ rebuilders
Demand Factors (2016)
Reman Market (2022)
Increase in reman acceptance with entry of
more global remanufacturers
Demand Factors (2022)
• Avg. vehicle age is 3.4 years
• Avg. vehicle age reaching 5 years
• Reman quality not at par with US or EU
• Reman quality will significantly improve with more
global remanufacturers setting up reman base
• Top 3 categories that are remanufactured: engines,
transmissions, starters & alternators
Legislative Factors (2016)
• Strong environmental concerns
Legislative Factors (2022)
• Import of reman parts and/or cores is not permissible
• Usage of reman parts for warranty replacements not
permissible
• Certain provinces only allows JVs with local cos
Global Supplier Presence (2016)
• Currently, Cummins, CAT, Bosch, BorgWarner(Remy),
Delphi, and WABCO Reman are the among the few global
suppliers who have reman presence in China
• Govt. is in process of relaxing import policies
• Setting up reman factories across China will be made
easier by government
Global Supplier Presence (2016)
• It is expected that Volvo and Mercedes-Benz will start
reman operations in the near future
• GM is in process of setting up a reman operation
through JV
Automotive Parts
Remanufacturers Association
Source: Frost & Sullivan
Comparative Benchmarking of Key Remanufacturers
Bosch and BorgWarner (post Remy acquisition) appear to be the most competitive remanufacturers globally because of their strong regional,
application and channel coverage.
Remanufactured Automotive Aftermarket: Comparative Benchmarking of Key Remanufacturers, Global, 2015
CARDONE
Bosch
Delphi
BorgWarner
Valeo
BBB
Industries
Meritor
Cummins
Region
Coverage
NA
NA, EU,
China,
Brazil
NA, EU,
China,
Brazil
NA, EU,
China, Brazil
NA, EU
NA, SA,
ME,
Australia
NA, EU
NA, EU,
China, Brazil
Vehicle App
Coverage
Light /
Medium
Light /
Medium /
Heavy
Light /
Medium /
Heavy
Light /
Medium /
Heavy
Light /
Medium /
Heavy
Light /
Medium /
Heavy
Medium /
Heavy
Medium /
Heavy
No of Reman
locations
2
15
17
10
5
3
4
4
Reman product
line coverage
~40
~ 30
~ 15
~6
~ 12
8
~ 20
5
Core
Management
Practices
Offers
Customized
programs
Offers
Customized
programs
Company or
Customer
owned
programs
Standard for all
customers
Company or
Customer owned
programs
Offers
Customized
programs
Standard
Program
Offers
Customized
programs
Competitive
Advantage
Huge
category
coverage
OE brand
image
OE brand
image
Strong IAM
base
OE brand
image
Huge WD
base
OE brand
image
OE brand
image
Note: NA = North America, SA = South America, EU = Europe, ME = Middle-East
Automotive Parts
Remanufacturers Association
Source: Frost & Sullivan
Key Conclusions and Future Outlook
Remanufactured Automotive Aftermarket Outlook: Key Conclusions and Future Outlook, Global, 2015-2022
Growth
Challenges
• Global manufacturer-level
reman revenue is estimated at
$31.7 billion in 2015.
• The key challenges include
reman of technologically
advanced electronic controls,
the threat of low-cost new
parts and used parts with
competitive warranties
• Europe is the only mature
region expected to offer growth
for remanufacturers (8.1%).
• Trade restrictions on
remanufacturers in China,
Brazil, Russia, and Turkey
pose significant business
barriers
Part Categories
• Turbochargers, electronics,
ECUs, Rack & Pinion
Steering Gears and Steering
Pumps are the parts with the
highest growth potential,
particularly in the US market
New Trends
• Repair / rebuild: Installers in
China are four times more
likely to repair or rebuild a
component than to purchase a
remanufactured replacement
part, but this is changing as
customer awareness grows
• In addition to Mexico and
Eastern Europe, North Africa
could emerge as a production
region
Automotive Parts
Remanufacturers Association
Remanufacturing Value Proposition
LIFE CYCLE SERVICE SOLUTION
Maintain a cost effective supply of service parts
MAINTAIN COMPETITIVE POSITION
Protect against new market entries
WARRANTY COST REDUCTION
OPPORTUNITY
Utilize Reman Product for warranty replacement
IMPROVE END OF LIFE MANAGEMENT
Reduce capital locked up in long term inventory
holding
Before - After
PROTECT THE ENVIRONMENT
Support sustainability with the ultimate ‘recycling’
option - “GREEN”
Automotive Parts
Remanufacturers Association
Thank you.
APRA looks forward to
working with you.
Automotive Parts
Remanufacturers Association