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Federal-Mogul Braking Business: Double against Slower Auto Sales Growth

Mary From Gasgoo| February 12 , 2018

Federal-Mogul China Braking business, Federal-Mogul China

In 2017, China’s auto production and sales rose 3.2% and 3% respectively from a year ago. The China Association of Automobile Manufacturers predicted that the growth rate will remain around 3%.

In view of the above prediction, certain industry insiders may wonder whether the slower growth will have consequence on the business of auto parts suppliers. Obviously, there is no standard answer for this speculation. We learned that in spite of the slower growth of China auto sales, many suppliers still had outstanding performance in 2017. Federal-Mogul is a case in point. It is said that Federal-Mogul’s sales growth was 4-5 times higher than the overall auto market.

Recently, on Federal-Mogul’s Supplier Day in China, we had talks with Attila Dalkilic, VP of Federal-Mogul’s Braking Purchasing; Greg Vyletel, VP of Federal-Mogul’s Global IAM Engineering; Paolo Carullo, Federal-Mogul’s QEHS Global Director; and Lydia Shen, VP & General Manager of Federal-Mogul Braking Asia, about Federal-Mogul’s business in Asia and its expectations for suppliers.

Federal-Mogul Braking Growth Rate Exceeds the Average Growth of China Auto Sales

Founded in 1899, Federal-Mogul Corporation is an American developer, manufacturer and supplier of products for automotive, commercial, aerospace, marine and rail industries etc. Federal-Mogul operates two independent business divisions, called Federal-Mogul Powertrain and Federal-Mogul Motorparts. Currently, Federal-Mogul Motorparts boasts over 20 famous brands all over the world while braking business plays a key role.

Federal-Mogul China Braking business, Federal-Mogul China

Lydia Shen,  VP & General Manager, Braking Asia

Despite the slower growth, China remains the largest auto market in the world, which means more opportunities for auto parts suppliers. According to Lydia Shen, VP & General Manager of Federal-Mogul Braking Asia, the Asia market is still the main growth region of Federal-Mogul braking business, whose growth rate doubled the market rate. 

Federal-Mogul achieved a two-fold increase of its OE braking sales in the Asia market from 2012 to 2017. With the further production expansion, the sales are expected to be doubled again in 2022 on the basis of 2017 performance. Attila Dalkilic, VP of Federal-Mogul’s Braking Purchasing, said that benefit from the global and local strategy Federal-Mogul made several years ago, the growth rate of Federal-Mogul braking business was 4 to 5 times higher than market growth. Considering the prediction of China auto market’s slow growth, in terms of quality and service, Federal-Mogul has a strong position and brand. We have great opportunities in Asia, especially in China. We are very confident we will exceed the market growth rate.”

Two Invaluable Assets: High-quality Products and Excellent Service

With technology advancement and more entrants, the competition in vehicle manufacturing becomes increasingly intense so that automakers hope to provide exquisite products ahead of other competitors. Currently, models’ development cycle gets shorter than the past, which posts greater demand for auto parts.

Federal-Mogul China Braking business, Federal-Mogul China

Attila Dalkilic, VP Braking Purchasing

According to Attila Dalkilic, quality is the priority and not be compromised for any reason. As to the balance between product quality and material price, Mr. Dalkilic said that Federal-Mogul will pool the company’s resources and leverage the regional advantages to make global deployment and maximize the synergy.

Both Ms. Shen and Mr. Vyletel emphasized that high-quality products and excellent service are two main factors of Federal-Mogul’s leading position in the market. Mr. Vyletel pointed out that since different automakers have different vehicle strategy, Federal-Mogul will tailor the products accordingly to meet automakers’ requirement in new energy vehicles, SUV and autonomous vehicles. Ms. Shen added that based on clarifying their partners’ demand, Federal-Mogul tries to provide products and service that exceed their partners’ expectation. That is the solid foundation for the company’s sustainable development.

As a global leading supplier, Federal-Mogul provides parts for many global famous automakers. It also entered into partnership with many Chinese automakers in recent years. For the purpose of fully understanding automakers’ requirements for braking products, Federal-Mogul started to hold technical seminars in automakers’ sites last year and also hosted partner conference. According to Ms. Shen, the events were so effective in enhancing the relationship with partners that Federal-Mogul will hold similar activities in future.

What’s more, Federal-Mogul will also adjust its R&D speed to keep pace with automakers to ensure the timely delivery of high-quality products.

Multi Sales Channels - Aiming for More Automotive Aftermarket Shares

With more and more vehicles on the road, the scale of automotive aftermarket has been expanding and thus many companies aim to gain more shares in this market. Federal-Mogul has its own plan in this segment while “multi sales channels” is the key word in the strategy.

Federal-Mogul China Braking business, Federal-Mogul China

Greg Vyletel, VP Global IAM Engineering

China is probably the most complex market around the world, according Mr. Vyletel. In the United States, suppliers deliver products to certain dealers, who will be responsible for the distribution. Things are different in China, where e-commerce business is more advanced. There are many diversified channels in China as well as traditional sales channels.

Federal-Mogul worked with local channel providers to cater for Chinese customers’ demands. They would like to give full play to the advantages on both sides and promote the business. T-mall and JD.com, two e-commerce giants in China, became Federal-Mogul’s partners several years ago. In October 2017, Federal-Mogul launched strategic cooperation with local B2C platform, Tuhu. Federal-Mogul will cooperate with Tuhu to set up the product and service standards for automotive aftermarket.

As to the product for the aftermarket, Federal-Mogul offers the same product quality as that for OE, to maintain the quality consistency, according to Mr. Vyletel.

Local Suppliers Enter into Global Supplier System

Supplier system is significantly important to the smooth business development and the timely delivery of high-quality products. Federal-Mogul Supplier Day, held in Hangzhou, was the first supplier conference worldwide and to congratulate top suppliers and express gratitude to them.

Federal-Mogul China Braking business, Federal-Mogul China

Paolo Carullo, QEHS Global Director, Braking

Paolo Carullo, Federal-Mogul’s QEHS Global director, revealed that Federal-Mogul has its own specific supplier management system and is willing to help with suppliers’ program to achieve win-win cooperation. To get better efficiency, Federal-Mogul will assess which suppliers can cope with certain programs and involve them at a very early stage of the process, according to Mr. Dalkilic.

In the past 10 or 15 years, local suppliers in China have made great progress in product quality and thus got many business opportunities. Mr. Carullo told us that some products from local suppliers have even been applied into the products in Europe and the United States.

However, there is still likelihood of potential negative effect brought by poor managed suppliers. As to the measure to avoid the risk, Mr. Dalkilic made it clear that one of the selecting criteria is Federal-Mogul’s code of conduct, which stipulates the requirements in environment protection, quality and price, etc.

Just as Federal-Mogul’s code of conduct described, suppliers are expected to demonstrate a commitment to reliable, high-quality supply relationship and join Federal-Mogul’s in efforts to set the standard for sustainability and ethical business practices.

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