Adapting to the crisis, ready for revival
In an interview with a leading French aftermarket publication, CEO Gael Escribe described how Nexus is adapting to be ready and ‘firing on all cylinders’ for when the automotive industry hits the road to recovery from the COVID-19 crisis. Here, we provide a summary of the key points.
What action has NEXUS taken in response to the current situation?
At Nexus, we always maintain a positive attitude. We are conscious of what is happening and what will be the consequences of this social and economic crisis, but we don’t want to get discouraged. This moment is giving us the opportunity to think again, to look at new business models especially regarding parts distribution, and also to re-focus on some of the projects we already have in place and which are not moving quickly enough for us. Our objective is to further strengthen the management of these projects and refine them.
And what about the future?
Preparing for tomorrow, means that we have to react to the present. We have put a strong cost reduction programme in place, reducing incumbent charges on us by 30% in just a few days. Also, there’s no tomorrow without a proper action today, that’s why we have created N! United, a solidarity initiative that the N! Community and the wider aftermarket can get behind, to donate surgical masks to hospitals in the most affected countries.
What impacts do you see on the various markets?
We are especially concerned by the actions of North American automotive manufacturers who have taken drastic measures, such as salary reductions of 25%. Their actions could affect the recovery in Europe, by impacting on the equipment suppliers who service the America market, resulting in a huge number of layoffs.
What is your view of the global market?
Looking at the current figures, the actions by global manufacturers and various studies and reports, we believe that over the year the market will be impacted by a loss of 30% worldwide. This will generate tensions among the OE and aftermarket manufacturers. We can expect to see the automotive industry particularly disturbed by the crisis, much more than the aftermarket industry.
Will you renegotiate conditions with your members and suppliers during this period?
No, we are not thinking to renegotiate our conditions, but certainly we have to rethink our relationships. A criticism that suppliers make of distributors is their readiness to renegotiate conditions without necessarily accompanying them with a firm guarantee of ‘volume’ returns. So, this is for example, the right moment for us to think about strengthening the compliance with all of our members and supporting our suppliers with reinforced commitments.
It is part of our thinking on a global level. Our suppliers will have to rely on us, as they will be upstream of the recovery, since mobility will inevitably restart more quickly than the original equipment industry.
Better collaboration between equipment manufacturers and distributors is not only imaginable on a global or national level. Regional and departmental distributors should also perhaps ask themselves if it is not time to rationalize their stocks and their sourcing to resist pressing requests from suppliers in a hurry.
Thinking outside the box
Finally, Nexus is also rethinking the annual rebate. We are recommending quarterly rebates for our members on the part of equipment manufacturers.
This is about imagining a new approach that is useful to all. The equipment supplier does not have to ‘take out’ substantial sums once a year and the distributors benefit from a more regular financial ‘oxygen balloon’. Quarterly meetings also allow more frequent reminders of the commitments made.
In summary, ahead of a scary potential collapse in sales/demands, the aftermarket world will survive if it adopts new approaches. We are ready for any creative solution. I think being open and thinking outside of the box will help to find new ways to exit the crisis in the best way possible.