Thursday 2023-09-21

The following interview is part of a series of intranet articles and videos. The interviews for HELLA as a whole as well as for the Business Groups Lighting and Electronics have already been published. The series concludes with an article on Sustainability.

Stefan van Dalen, you have been Managing Director Lifecycle Solutions since 1 April 2023 and have thus been jointly responsible for the strategy process in this new role for the first time. How did you experience this change of perspective?

Stefan van Dalen: Extremely instructive and interesting. Both in terms of the internal perspective within the Business Group and for HELLA in total. For two of the three sub-areas of Lifecycle Solutions, the Independent Aftermarket and the Workshop Business, I have been involved in the process from the very beginning. With Special Original Equipment, I jumped on the train halfway through, so to speak. The process helped me a lot to understand and assess the business and its different manifestations. And that doesn't just apply to Lifecyle Solutions. It was also the first strategy process for me in which I was also able to help shape HELLA's overarching strategy. That was an exciting experience.

Mario Winkelhaus, you are head of strategy for Lifecycle Solutions. What is particularly important in the strategic planning of this business group?

Mario Winkelhaus: We work in a different environment than our colleagues in the automotive business. In the automotive sector, there is a relatively well-defined customer base, good data and quite high visibility in terms of market volumes. That is different with us. We also deal with questions such as how often accidents occur, which parts are defective and how many times, how often vehicles have to go to the workshop. Only in the commercial vehicle business are there framework agreements similar to those for OE customers. But here, too, we have thirteen different customer groups and thus different market conditions in each case. All in all, the Lifecycle Solutions business is therefore much more fragmented.

What does this mean in concrete terms for strategic planning?

Mario Winkelhaus: We have basically followed the strategy process, but have adapted it for our purposes by adjusting certain parameters. For us in the aftermarket, end customers decide every day anew whether they buy from us or from one of our market competitors. Unlike in the automotive business, we cannot therefore orient ourselves to manufacturers' long-term volume plans. Instead, the composition of the global vehicle fleet is an essential basis for our strategic planning.

Let's move on to the content. How can the key points of the strategy process for Lifecycle Solutions be summarised?

Stefan van Dalen: We have confirmed our growth ambitions. This is particularly important because the aftermarket is generally somewhat more stable than the automotive business, and the market does not really allow for high growth rates. In the commercial vehicle sector, we see that investment behaviour is flattening out somewhat in individual customer segments. Much of this is also related to catch-up effects after Corona. These are now expiring and the markets are normalising in parts. The fact that we have confirmed our growth targets under these conditions speaks for the good approach of the Business Group.

What adjustments do you make on the basis of the strategic plan, where do you have to readjust?

Mario Winkelhaus: Stefan just said it - our strategy basically fits. So the main thing is to set new accents in a targeted way within this framework. We want to take advantage of the major automotive market trends for ourselves as well. For us, too, it's about electrification, automated driving, digitalization. And we want to enter new markets and address new customer groups in a targeted manner.

Stefan van Dalen: In the spare parts and workshop business, our target group is a global fleet that is usually at least five years old. Trends therefore arrive with a slight time lag. But they arrive. So we can adjust to them at an early stage. Take electromobility, for example: What products will be needed in the spare parts trade in the future? How do workshops need to prepare for this? For example, we offer a new State of Health Check for high-voltage batteries. This allows us to assess the condition of an electric car's battery. This is very relevant for the used car trade. The battery is considered the heart of the electric car. And buyers rightly want to know what condition the vehicle is in.

A big trend in the automotive sector is digitalization. What role does this trend play for you?

Stefan van Dalen: That is eminently important for us, especially in the workshop sector. The process chain for maintenance and repair always starts with diagnosis. We are good at that, but that alone will not be enough in the future. We need to transfer our diagnostic expertise into new, data-based business models. For example, it is a question of remotely recording the condition of the vehicle, controlling maintenance and repair processes in advance and thus making them more efficient. This is also highly interesting for new customer groups, such as fleet operators or insurance companies.

Keyword new customers: You had already mentioned that you also wanted to address new markets. What does that mean in concrete terms?

Mario Winkelhaus: We pursue this goal both in the spare parts business and in the commercial vehicle segment. In the Independent Aftermarket, strategic planning has shown that - globally speaking - we are still a small fish in a big pond. Means: Outside Europe, we still have potential. To achieve this, we want to increase our proximity to customers, expand our product portfolio in a targeted manner and expand into new markets. Central and South America are particularly interesting for us, but also the Maghreb countries. We also want to significantly increase our sales in the USA. In the commercial vehicle sector, the truck business in particular is a future field that we want to tackle.

Why is the truck business so relevant from a strategic point of view?

Stefan van Dalen: We have a good market position in the off-highway sector, especially in agricultural and construction machinery. However, we see a certain reluctance in the market going forward. In this respect, there is a gap that we also want to fill with new business in the truck segment. Within the global commercial vehicle market, this field is by far the largest customer group, so there is still some room for us. The number of units is correspondingly high, especially since trucks typically have much longer cycles than cars until the model change. This makes the business economically interesting for us. And there is new legislation in the EU that means that the driver's cab has to be completely redesigned, including the lighting. This is a door opener for us.

What is the most important strategic challenge for Lifecycle Solutions going forward?

Mario Winkelhaus: From a strategic point of view, I would say - we have to keep the innovation level high. Topics such as sustainability, electrification and automated driving are coming at us at great speed. We have to have the appropriate products on offer. Because at the same time, market pressure is increasing, especially on standard products. We must therefore secure our competitive position primarily with technological strength. For example, we have numerous innovative products in the electronics sector that we successfully place with our SOE customers.

Stefan van Dalen: We have Lifecycle in our name, which brings with it a corresponding expectation. We need to develop an overarching strategy for Lifecycle Solutions, become a coherent business group. We have to move even more in the direction of sustainability, develop business models to which all sub-sectors of Lifecycle Solutions contribute. This is a homework assignment that the strategy process has given us and that we will complete.

Thank you very much for the interview.