aftermarketNews Information

The company continues to market starters and heavy-duty alternators for original equipment and aftermarket customers under the Delco Remy brand name. The company added the Remy trademark to its brand portfolio for a variety of automotive products in addition to using Remy International, Inc. as the new corporate name. W e sell our products worldwide primarily under "Delco Remy" (first used in 1918) and Remy brand names, the "World Wide Automotive" brand name (first used in 1986), and our customers' widely recognized private label brand names. What are the advantages to being both a manufacturer and a remanufacturer as opposed to one or the other? Do you foresee a strong future for remanufacturing? More important for us are the advantages of being both an OEM and aftermarket supplier. We are able to afford more extensive engineering and application expertise to support our entire business with our OE backbone. We share the complete value chain of product knowledge, detailed specifications, tooling and application history, a truly unique Remy advantage. For our Heavy Duty (Delco Remy) and Light Duty (Remy) product lines, releasing our newest OEM products into the aftermarket almost simultaneous with the OEM release is a key advantage, especially with our commercial customers. Giving our customers the improved features of increased output, high temperature resistance, reduced SKUs and longer service life really separates our OEM-driven aftermarket designs from the non-OEM suppliers . Being able to offer the aftermarket both OEM new and reman, built to similar specifications, gives our customers the wonderful choice of both a great quality product and an attractive price point without asking the customer to sacrifice reliability. New unit sales have been growing but we do not believe it will ever replace the reman position in our category. The price advantage for remanufactured units coupled with the "green benefits" of recycling will continue to drive demand. This continues in North America despite the absence of any EU ELV (end-of-life) regulations. APRA suggests remanufactured units require less than 15 percent of the energy and 12 percent of the material required for a new unit. The automotive aftermarket should be very proud of the environmental contribution of its remanufacturers versus other manufacturing sectors. We see a very strong future and continue to invest in our remanufacturing operations worldwide. How's business in the rotating electrical segment today? What are new the technologies or advancements in the starters and alternators market that we should look out for in the future? The market drivers for our category are a mixed bag. The age and breadth of the vehicle population continues to grow with the large sales years after 2001 entering prime time for the aftermarket. The products are becoming more sophisticated which drives higher priced units. Both these trends are driving our continued sales growth which is good news. However, the quality of OE units has dramatically improved which has significantly reduced the number of replacements per life of vehicle. Our data suggests current replacement rates are roughly half the rate experienced just 5 years ago which is very good for the end consumer but not so good for the aftermarket. I have been unsuccessful in getting our OE engineers to back off slightly. The explosion of on-board electronics demands more powerful and sophisticated alternators and new engine designs require improved performance-to-weight ratio in the starters. For light duty applications, the trend is for higher efficiency with multiple performance ranges. The growth in hybrid vehicles will dramatically change the demand for generators and batteries. For Heavy Duty applications, we are seeing tremendous increases in underhood temperatures, vehicle electrical demands and increased starter power required to support the new EPA emission standards for diesel engines. We are likely to see additional demand for these three key requirements as we approach the next emissions change in 2010 & 2011. Tell us about the company's global operations. Are their plans to increase the company's presence in the global marketplace? Remy currently operates 35 manufacturing facilities in 12 countries, including the United States, Mexico, Brazil, Poland, Hungary, South Korea, China and India, to support light duty and heavy duty, OE and aftermarket applications worldwide. This expansion was necessary to support our global customer demand and helped establish a more competitive cost position. Remy sells products primarily in North America, South America, Europe and Asia. We believe Remy is currently well positioned to support our global supply chain. What is your opinion on the growing trend of North American manufacturers moving manufacturing operations overseas to lower cost countries like China and India? The automotive aftermarket is truly a global marketplace and requires us all to operate much differently to survive. Global sourcing is not just a potential option but rather a necessity to compete. Imported products have become commonplace and have effectively depressed sell price, for automotive or retail products. Labor intensive operations in the US have a significant disadvantage vs. low cost countries. I fully understand the strategic need for a low cost sourcing or manufacturing strategy. But I also see the market moving more toward quality and away from making buying decisions solely based on price for relatively sophisticated products. Suppliers that can effectively manage the quality, logistics, packaging and regulatory challenges will be highly valued in our marketplace. The automotive industry is coming down from a tumultuous couple of years, with many companies , yours included , going through financial restructuring of some sort. As the dust begins to settle, what in our opinion will be the major issues the industry will grapple with in the next few years? We certainly live in interesting times. There may be more consolidation and financial restructuring on the supply side of our business, but should be a reduced rate. There may be more consolidation on the demand side of our business, especially the competing and overlapping distribution channels for the aftermarket. The battle between OE form, fit and function vs.