Spare parts, diagnostics, workshop equipment, workshop concepts

Fit for the Future: Innovative Solutions and a Comprehensive Aftermarket Program for a profitable Workshop and Trade Business A presentation by Robert Hanser,
Chairman of the Divisional Board
Automotive Aftermarket Division, Robert Bosch GmbH

at the Automechanika Press Conference
on September 11, 2012

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  • September 11, 2012
  • Spare parts, diagnostics, workshop equipment, workshop concepts
  • Presentations

press release

Ladies and Gentlemen,

when the industry meets every two years here in Frankfurt for Automechanika, the world's leading trade fair for the automotive industry, the focus is not only on the wide range of innovations in vehicle workshops and parts trading, but also always on the financial situation. For us as an exhibitor, the trade fair acts as a yardstick indicating the financial situation in the industry. Two years ago, for example, the overwhelming vibe emanating across the trade fair halls was one of having come through the crisis. As far as the Bosch Automotive Aftermarket division was concerned, I was able to report to you then that for the first time we were expecting sales in excess of the four billion Euro mark for 2010.
This assessment put us in a very strong position. In 2010, the Automotive Aftermarket division achieved sales of 4.1 billion Euros. We topped this achievement the next year, ending fiscal 2011 with sales of 4.3 billion Euros. With a global market volume of 46 billion Euros, Bosch has therefore gained a strong position in the workshop market. Approximately 14,000 associates worldwide were working at our division's 21 locations last year.
This year the weak economic outlook, particularly developments in Southern Europe, is giving us cause for concern. 12% less cars were sold in Europe until April this year. In North America, Japan and India on the other hand, vehicle sales have risen significantly, while in China they have dropped slightly. Due to the slowing global economy during the first five months of the year we take note of additional risks concerning the growth course at Bosch. That is equally true for the Bosch Aftermarket business. Sales in our division are only slightly above last year's figures and have therefore fallen short of our original expectations. Currently we project a turnover of about 4.5 billion Euros in 2012. There is still a considerable degree of uncertainty as a result of the economic weakness. In the markets that are important to us, consumption and the willingness to invest are declining. In the light of this economic situation, which is increasingly also subject to major short-term fluctuations, we need to lay the foundations to improve our ability to adapt.

From a trading house to a complete supplier for workshops and trade
The basic change in strategy that we have introduced over the past few years with the Bosch Automotive Aftermarket division is helping us to do just this. Up until about six years ago, we were purely a trading firm. We sold components that were developed and manufactured at Bosch for original equipment on behalf of the workshop market.
We now develop and manufacture parts specifically for the workshop market, such as spark plugs, wiper blades, filters or brake linings.
This can be illustrated using the example of our Brakes Aftermarket range. We are currently significantly expanding our level of brake lining production, and at the Bosch plant in Juarez, Mexico, we have increased the annual production capacity by twelve million units. At the same time, lining production in China has increased by around four million units. We are also building a new Bosch plant in Nanjing, China, which will produce around 80 million brake linings per year from 2013. This location will also be home to a new development center for aftermarket brake pads, featuring state-of-the-art test benches and testing equipment, and we will also manufacture spark plugs and diagnostic equipment here.

Strategies for a profitable growth
The first pillar of our repositioning is the provision of parts for the workshop market from our own production.
The second pillar is our wide range of workshop equipment: from diagnostic and exhaust testers to the comprehensive vehicle system analysis, and from the lift platform to the tire service equipment. We can offer our workshop and trading customers an extensive range of complete workshop technology from one source. The workshop equipment is controlled and increasingly also networked via our high-performance workshop software, Esitronic. This software provides the workshop with not only all the key data, settings and target values for all standard vehicles on the market, but also with circuit diagrams, repair instructions and diagnostic tools.
The third pillar of our strategy is our services for vehicle workshops, with numerous training events, a technical hotline and a direct Online Help service for mechanics. And let's not forget our new Bosch online workshop community, the “Open Innovation Platform”, with tips and solutions provided by professionals, for professionals.
We are doing this to help workshops improve their efficiency. The aim is to simplify and speed up time-consuming tasks such as the recording of vehicle and customer data multiple times. Networking is therefore a high priority for us, and one that we are continuing to promote: from vehicle acceptance and all diagnostic and test systems to handover to the customer. However, linking the diagnostic system in the workshop with the mass of collective knowledge in our company is also an important priority.
Ladies and gentlemen, the Bosch Automotive Aftermarket division has seen us completely reposition ourselves from a trading firm to an independent system supplier for vehicle workshops, and has therefore also enabled us to set the course for profitable growth. With our product portfolio comprising parts, workshop equipment and services, we are meeting the needs of manufacturers and trade partners, vehicle workshops and drivers. High market coverage, profitability and the safety of our products, but also our environmental credentials and frequent product innovations are safeguarding our market supremacy.
Bosch Automotive Aftermarket sees itself as a partner for vehicle workshops. Our objective is to support vehicle workshops, helping them to keep abreast of rapid technical changes by providing them with equipment, expertise and services, thereby safeguarding the future of their businesses. It was with this aim in mind that we are expanding our range of products and services. Parts, bytes and services – this is how we refer to the three pillars of our business. With parts, diagnostic solutions and services, we make workshops fit for the future. We therefore offer a range of opportunities for applying the technical expertise here at Bosch to everyday work – not just in relation to the maintenance and repair of passenger cars, but also of commercial vehicles.

Strengthening global orientation through acquisitions
This change of strategy in the Automotive Aftermarket division is accompanied by a targeted expansion of defined growth areas. To this end, we have spent the last six years securing and expanding our range of products and services by acquiring a total of thirteen companies. One of our more recent acquisitions, for example, is the takeover of the Unipoint Group in Taiwan in December 2011. This group attained sales of 124 million US Dollars in 2010, and employed around 2300 associates. Unipoint is a major producer of starters, alternators, temperature control systems and wiper blades, and manages the Unipoint and NSA brands. As a result of this acquisition, we were able to further strengthen our position as the leading supplier of starters, alternators and wiper blades in the automotive aftermarket and also expand our business in Asia. We are already reaping the rewards of our global orientation. Thanks to our global presence, we can compensate for the economic downturns in Europe thanks to the growth markets in Asia Pacific.
A second and important project is the planned acquisition of SPX Service Solutions. The US-American company produces and sells diagnostic, service and workshop equipment as well as software and achieved a turnover of US$ 920 million in 2011. This would be largest acquisition all along the history of Bosch Automotive Aftermarket. We would thereby strengthen our portfolio of diagnostic solutions – an area, which currently grows twice as fast as the complete aftermarket business. Besides, we thereby expand our presence in North America. The approval of various international government authorities is required for an acquisition of this size and scope. We expect to receive final approval in due course.

Customer-oriented expansion of the aftersales portfolio
We are also continuing to invest in areas with particularly strong potential, or from the customer's point of view, we are expanding our range of products and services that vehicle workshops worldwide need in order to be able to meet their customers' requirements.
Again, let's take an example: For independent workshops in particular, cost-effective offers for customers bringing in older vehicles for maintenance and repairs are extremely important. In the worst-case scenario, the installation of a new spare part can exceed the residual value of the vehicle. We have therefore invested in the reconditioning of used parts early on. Bosch is now the leading supplier of industrially reconditioned vehicle parts, and is therefore represented on all world markets. The Bosch replacement parts program eXchange comprises some 13,000 parts. A reconditioned spare part is around 30 to 40% cheaper for the end customer than a new part, and has the same two-year warranty. Furthermore, this is not only of benefit for the workshop customer, but also good for the environment. By reconditioning vehicle parts, Bosch produced around 25,000 tons less CO2 in 2011 than would have been generated with the production of new parts.
We process the return of used parts quickly and flexibly using the “CoremanNet” returns system. Other repair companies are now also making use of the service provided by this system. In recognition of its contribution to conserving resources as a result of effective used parts management, CoremanNet was included in the “Green Directory” at this year's Automechanika trade fair in Frankfurt, as currently the only product from the “IT & Management” category. As you're no doubt aware, this visitor guide is a listing that includes innovative products and services that make a particular contribution to environmental protection.

Another economic repair service offered by Bosch was also included in the Green Directory – our “Electronic Service” for reconditioning and repairing electronic components such as engine control units, ABS, navigation systems, telematics and much more besides. The number of electronic components used in automotive construction has risen sharply in recent years, and with so many electronic components on the market, vehicle workshops will also encounter faults. The Electronic Service therefore offers a cost-effective alternative to purchasing new parts. We will continue to expand our range of repair options and associated services on an ongoing basis.

Let me inform you as well about a third award: The Bosch Axle Split hybrid drive was honoured with the Automechanika Innovation Award 2012 in the category “OE Products & Services”. This award stands for products and solutions that stand out for their high degree of innovation and their contribution to economic efficiency and environmental protection. Axle Split Strong Hybrid System is the world’s first diesel-hybrid drive and was developed by Bosch in cooperation with PSA. The combination of a combustion engine and an electric rear axle drive reduces fuel consumption by up to 35%. Towards the end of 2011 the series production first started together with the Peugeot 3008 Hybrid4.

Ladies and gentlemen, let me tell you about another topic that forms part of our activities – the support for workshops. They are confronted to real challenges. On the one hand the maintenance intervals are being increasingly extended, and on the other hand, vehicle workshops are facing new challenges on a daily basis as a result of the growing amount of electronics being used in vehicle construction. In order to operate under these general conditions in a shrinking market, each workshop must firstly invest in modern equipment and in expertise and must secondly go on the offensive by providing customer-oriented services. And this is precisely where we come in to support the workshops.

In that sense we cooperate with other market participants. We continuously promote our aftermarket cooperation with Michelin and ZF Services. As premium manufacturers with complementary product ranges, we began to further our global collaboration concerning service trainings, hotline, publicity, the already mentioned returns system “CormanNet” as well as the reward system “Extra”. These activities are complemented by common customer events and the mutual access to the respective partner’s service networks and training centers.

Professional workshop concepts for binding quality standards
Ladies and gentleman, we focus on vehicle workshops that have joined one of our two workshop franchises – Bosch Car Service and AutoCrew. We support our partners who have joined the franchise with up-to-date technical and commercial information and training, effective spare parts logistics and a standardized external image and extensive marketing initiatives and business management courses. Workshops that are part of the Bosch Car Service and AutoCrew franchises are also equipped with state-of-the-art testing equipment as standard, enabling them to make a mark in their local competitive field.

There are now Bosch Service workshops in over 150 countries and our global network includes around 15,000 workshops. We celebrated the opening of the 1000th Bosch Car Service workshop in China last year, and we anticipate that there will be around 1500 workshops in the country by the end of this year. We will also see another sharp increase in the number of workshops in India, bringing the total to around 1600. The 100th Bosch Car Service workshop was opened in Canada, and as of this year, we now have a presence in Brunei, with the first Bosch Service partner in the country. There are currently around 1100 Bosch Service workshops in Germany, where the Bosch workshop franchise was launched more than 90 years ago. The Bosch Service franchise is one of the largest network of workshops in IAM in the world. The AutoCrew partners, who have been with us since 2009, are also set to grow. At present there are over 500 AutoCrew workshops in ten European countries and South Africa.

However, ladies and gentlemen, as the founder of our company Robert Bosch once said: “If you stop improving, you stop being good.” Following on from this tradition, we place particular emphasis on the development of quality in Bosch Partner workshops. Firstly, we will expand areas such as the fleet business or glass repairs within our workshop franchises and prepare our workshop partners for the latest developments in new drive technologies. Secondly, we will continue to make improvements to service quality, as drivers rightly expect 100% quality from Bosch partners.

We have therefore introduced a comprehensive quality assurance system, which is used to check the quality of service the Bosch workshop partners provide and to improve this quality on an ongoing basis. In order to assess the work carried out at the workshop, a reputable independent service provider carries out audits on the quality standards the workshops must fulfill, as well as regular, unannounced and anonymous workshop tests. These tests have been carried out for a number of years. Half of the workshops are audited one year, the other half the following year, meaning that all Bosch partner workshops are audited anonymously every two years. The figures and results of this process for Germany can be used as an example: In 2011, 485 Bosch Car Service workshops were audited by the independent service provider. The average overall score for all of the workshops tested was 92%, with both technical expertise and service standards assessed as part of the test. In order to meet our target of 100%, we support our partners with technical and commercial training events and workshop-specific coaching.

Cross-linked workshop enables efficient maintenance and repair procedures
In principle, we support all workshops in maintaining the quality of their services using Bosch technology and our expertise as the leading supplier. The range of services we offer are particularly important here, and we are continually expanding the range with new, up-to-date solutions. We are increasingly using the opportunities provided by the Internet, which we believe offers huge potential for the Bosch Group as a whole and also for the Automotive Aftermarket division. Various opportunities for new technical developments and innovative services are emerging here.

For example, we are currently working on using the opportunities provided by online networking in our Esitronic workshop software. We are calling the online development of our workshop software “Esitronic live”. Esitronic live will connect diagnostic systems in the workshop to our data servers, and diagnostic procedures that have been completed successfully will then be available to all Esitronic users in the form of weighted, potential causes of faults. The system continually learns from the experiences of all Esitronic users, thereby improving and speeding up the diagnostic process on an ongoing basis.

Another example of an innovative service is our “Open Innovation Platform” – an online Bosch workshop community. Using this platform, workshop professionals in Germany, Austria and Switzerland are able to discuss current technical issues in topic forums, exchange experiences, propose ideas and discuss issues with our workshop experts.

We have just seen the launch of new online portal “Drivelog,” which was developed by our joint venture company Mobility Media. Using this portal, we are linking up the wishes and requirements of drivers to services from workshops and other service providers. Drivelog enables us to offer all workshops, regardless of whether they are linked to the brand, the opportunity to make contact with existing and potential new customers and to provide information about their services. With a few clicks of the mouse, the workshop can create an attractive company profile on Drivelog and use the portal to look after existing customers and acquire new customers in a targeted manner.

“We keep vehicles moving”
Ladies and gentlemen, I would like to finish by summarizing the task before us using our motto: “We keep vehicles moving.” To accomplish this task, we supply our global workshop and trading partners with a complete range of high-quality products and innovative solutions, and we are continually working to expand this portfolio further on an international level and to adapt it to the rapid technical changes.

You can get a taste of this at our new trade fair stand in Hall 9. For details of other highlights that we have also brought to Frankfurt, I will now hand you over to my colleague Hans-Peter Meyen.
Thank you for listening.

The Bosch Group is a leading global supplier of technology and services. It employs roughly 375,000 associates worldwide (as of December 31, 2015). The company generated sales of 70.6 billion euros in 2015. Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in some 60 countries. Including sales and service partners, Bosch’s global manufacturing and sales network covers some 150 countries. The basis for the company’s future growth is its innovative strength. Bosch employs 55,800 associates in research and development at 118 locations across the globe. The Bosch Group’s strategic objective is to deliver innovations for a connected life. Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm. In short, Bosch creates technology that is “Invented for life.”

The company was set up in Stuttgart in 1886 by Robert Bosch (1861-1942) as “Workshop for Precision Mechanics and Electrical Engineering.” The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the company to plan over the long term and to undertake significant up-front investments in the safeguarding of its future. Ninety-two percent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung GmbH, a charitable foundation. The majority of voting rights are held by Robert Bosch Industrietreuhand KG, an industrial trust. The entrepreneurial ownership functions are carried out by the trust. The remaining shares are held by the Bosch family and by Robert Bosch GmbH.

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RF00173 - September 11, 2012

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