In today’s AMN Executive Interview, we sit down with Joe Mejaly, senior vice president of DENSO Products and Services Americas Inc. In our interview, Mejaly talks about everything from the definition of a strong brand to autonomous vehicles, to the ROI of motorsports.
By Amy Antenora
Additional reporting by Andrew Markel, editor of Brake & Front End.
You come to DENSO with an extensive background on the heavy-duty side having served in leadership positions with ArvinMeritor for a number of years and then with AxleTech. How does your experience on the heavy-duty side support you in your new role with DENSO?
I don’t want to oversimplify it, but for me the aftermarket is a couple of really simple dimensions. On the front end, it’s your brand and your product line. I’ve been fortunate to work for companies that have really good brands. It’s a nice start.
From a product line perspective, you have to take into consideration the lifecycle of the vehicle. You’ve got to understand how the consumer buys through that product lifecycle. And your product line has to be prepared for that – whether that’s multiple brands or multiple price points. Remanufacturing is another key for us. Those are important.
Another simple yet critical element is operational support. You need consistency. You don’t want to have people talk about your fill rate. You shouldn’t have to. It should be competitive and we should be always striving to be a low-cost supplier. That’s the simple formula for me. There’s a lot behind that, I know, but that’s really what I strive for and what we strive to accomplish.
You mentioned brand. How do you define the value of a brand today?
That’s a great question because, for us, it’s not just the name on the box. It’s what surrounds the name on the box. It’s the technology in the box; it’s the customer service. It’s the internet portal, the delivery model, the sales people, the technical training, the marketing. That’s what makes up the reputation of the brand. If you don’t have those components, your brand and reputation suffer. We talk a lot internally at DENSO about the fact that the sales person is just the message-deliverer, but the customer, in a way, knows everybody in the company: the person who receives the part, packs the part, puts it on the shelf, sets up the purchase order, the packing slip, stages it, delivers it on time, gets it to the customer, or sets up the cataloging. That’s how you sell a product and everybody is involved.
Your position at DENSO was newly created and encompasses responsibility for both aftermarket sales strategy and the company’s non-automotive segments, specifically robotics, for one. What are you learning or seeing in these non-automotive segments that has applicability within the aftermarket sector and how are you applying that knowledge?
Robotics and MovinCool portable climate control units – these are two areas where there’s just a completely different model and are a testament to DENSO. DENSO is probably the single-largest user of robotics. It really is a testament to the investment.
Years ago, the company figured that if these robots are performing well for our plants, we can commercialize this product. And now they’ve got new designs for single arm robotics. We’ve got business with many of the largest industrial and commercial companies. There really isn’t much of a touch point for the aftermarket per se, though we’re trying to use them more in our remanufacturing business to get more automated.
Heat management – MovinCool – that’s also an intriguing market. We’re trying to get more involved in the IT area, where these units are used to keep the computer system temperatures controlled.
Can you talk about some of the new products you are coming to market with and what the strategy is for DENSO going forward?
Obviously, we’re always looking at the products and the product pipeline is very important for the aftermarket. One of our key products is in the rotating electrical business. We’ve made major investments there. We are adding to our technical capabilities by adding more engineering and moving out into more than just non-DENSO applications.
The new Vehicle MRI product is really a focus point for us.Vehicle MRI is a diagnostic tool. It’s an ECU input Bluetooth system and the service user logs in through a portal and the software goes through all the diagnostic codes in a vehicle – hundreds of them – and then the customer gets a read out on the health of the vehicle and sets up red flags for areas that are reading risky. It probably takes about 5 to 10 minutes, depending on the amount of traffic, for that whole process to take place.
In terms of infrastructure, is this something a shop owner will have in their shop management system or is it a standalone product?
It can be both. There are some customers that have service tools for the service organization and this would be a component of those service tools, or it can be bought individually with a monthly service fee for any service garage in the United States. This applies to all vehicles post-1995.
What do you envision the business model to be? Is the consumer paying for the device, or the shop?
It’s the shop because tests that we’ve conducted in different places in North America confirm that it drives significant growth in a shop’s parts and service work. It easily pays for the monthly fee that is charged for the system.
You brought up rotating electrical before and A/C compressors. At AAPEX, AASA and MERA made an announcement of a new program with the tagline, “Manufactured Again.” DENSO, as an OE supplier, manufactured it in the first place, so to speak. Talk about DENSO’s take on remanufacturing and what sets your products apart from other remanufactures.
First of all, I think one of the things that we’re bringing over [from my time at] from Meritor is a real focus on remanufacturing. In the past, it was more of a product line. Now it’s going to be a business. We’ve recently brought in a new general manager to run and grow that business for us.
I think one of the things that the DENSO product does well – I’m talking about rotating electrical right now, but we do fuel injectors as well – is that we have a reputation for quality and that is one thing that will not be sacrificed in anything we do. Even in remanufacturing, as we begin to move into more of the all-makes category, that assurance process is still going to follow DENSO’s rigorous quality standards. We are beginning to grow a more extensive light- and heavy-duty product line but we’re probably a year away from talking more specifically about that.
Vehicle MRI is made possible by all of these sensors on a vehicle, as well as the sensors on an ignition system. Do you see any growth in the sensors, wires, coils in the next 10-15 years?
I think sensor technology is significant for us – not just for DENSO but the aftermarket in total. We’ve made some major acquisitions and joint venture partnerships. Toshiba is a joint venture company for us. We acquired an interest in Fujitsu Ten. Our Silicon Valley office is doing a lot of investment in detection systems for vehicle automation. That’s looking a little down the road. But in terms of aftermarket, we’re seeing a lot of EMS proliferation and even more evolution with technology for things like O2 sensors, and now you’re seeing MAP, MAF, absolute pressure, flow sensors … all these different technologies to improve vehicle emissions and we’re going to see huge growth in that segment.
Sensors are evolving as the market drives toward driverless vehicles. When you look into advancing diagnostics, sensors are very important. Where we’d like to get to some day is predictive diagnostics and sensing will be important there also. So, we believe our technology in the area of sensing will be critical for us.
Will this technology be available in the aftermarket to a technician through the traditional channels – the sensor technology – first?
I’m not sure where it’s going to happen first. Obviously, the OEMs would like to have predictive maintenance on their vehicles right off the lot but I do know in a retrofit standpoint it can be very beneficial to the fleet customer. We’ve had some major fleets come through DENSO in Long Beach talking about the need for predictive maintenance and diagnostics and how much that can drive efficiency into their maintenance practices and costs – especially those who are very conscious of logistics, where every minute equates to a dollar.
What is your greatest challenge in the aftermarket in terms of the one key misconception technicians have?
Most of the technicians in our country are great with a wrench in their hand. Give ‘em a wrench and some grease and these guys can tear it apart and put it together again with their eyes closed. Give them electronics and they need tools and training. That’s our challenge, as an industry both in the heavy-duty and light-duty sectors: to train the technician with the optimum tools on all kinds of electronics. A lot of times in the electronic world you get product back with “no problem found.” It’s because we need to do a better job of bringing diagnostic tools to market.
DENSO is one of the leaders when it comes to V2V technology. The company is ahead of the curve in that regard. There are a lot of projections out there as to when a fully autonomous vehicle will be on the road. What’s your perspective on that – do you see it happening within the next five to 10 years?
This is just my perspective – you used the number five to 10, I would answer yes, to some degree. It might not be completely autonomous but it could be semi-autonomous.
Where do you see DENSO’s role in that world?
I think we’re going to be right in the middle. We don’t expect to take a back seat. When it comes to technology this company is all-in. They have a strong understanding that what used to take 10 years for the industry to change to is now taking seven years or five years and down the road it’s going to be less.
Look at our phones, this (holding up a smartphone) is our computer now. People wear it on their wrist and it wasn’t long ago we had those big boxes sitting in our cars that weighed about 10 pounds. We used to have big cameras too, and now this is our camera. How can you not predict speed in almost everything we do? It’s happening at a rapid pace and it’s an interesting time for us in our industry.
Seeing that DENSO has a foot in both worlds – traditional hard parts and new technology – what keeps you up at night? What excites you?
I think, just to speak for our little aftermarket world here, I stay up at night hoping we can keep up with the pace. As a big corporate company trying to be a nimble entrepreneurial aftermarket business, we’re always challenging ourselves to move at a quicker pace. What keeps me up is that we’re not going fast enough.
Can you tell us a bit about your involvement with motorsports and the ROI for DENSO?
We recently announced our partnership with NHRA for the second year in a row. It’s been tremendous for us. It hits our sweet spot. It doesn’t have the financial elements of NASCAR but it’s been terrific for us. We had terrific success on the circuit with our spark plugs and the use of them on the vehicles. We were the title sponsor in the April Las Vegas event.
We also launched the successful “DENSO 2 Win” NHRA sweepstakes, with payoff at the Winternational finals. We’ll have the winner in Pomona attending the race and we had a real car enthusiast win this year, which is always nice.
Are you on specific cars?
We have the contingency program in the Sportsman class but we don’t sponsor specific teams. We sponsor the race itself with midway presence as well as [the] contingency programs. I will say we like the contingency program a lot. We’ve been extremely successful in our first year. With a lot of the vehicles switching over to EFI this year, our plugs and their long-lasting exotic materials are in tune to EFI and have just been a big, big win and have dominated all season long.
DENSO is a brand that not everybody’s heard of so we have this wonderful opportunity to do brand-building from the ground up. We want to be authentic. We want to be real. We want to make sure that people understand our quality attributes from the ground up so social media is important for us. Grassroots racing is an important tool for us. The guy who throws away the box is an important ambassador for us. That will be how we will work to build our brand going forward.
Will you be able to dovetail with some of your distributors?
We’re doing that already. Some of the distributors like Federated, Pronto and Parts Plus have been involved on their own, using manufacturers as support groups to help finance it and also building branding, so yes, we’re going to continue doing that because it just makes those relationships with those groups and the members stronger. If we can support it on our own on the back-end it just really helps that pull-through. We’re seeing more and more organizations getting involved, especially with NHRA, because they’re seeing the benefit of it – it’s affordable, the ROI is very good, you can tell them when it’s going to be aired, which is helpful from an advertising standpoint. But, the amount of visibility and viewership is up double, triple digits almost, so it’s been a good move for us.
In addition, NHRA does a lot to reach out to technicians and younger drivers in the junior dragster program so they’re getting the current technicians, the current enthusiasts and they’re doing a brilliant job of reaching out to the next generation. We want to make sure we continue with that momentum.
We talked about the fact that vehicle repair is becoming so highly technical and some of the current demographic of technicians isn’t necessarily prepared. Is DENSO doing anything to education that next generation of technician and current techs on these new technologies?
Yes, we really focus a lot on our training side and being able to bring technical tools to help with the diagnostics. We have our own training area but we have outside companies that we contract with to help put our tools together for us. One of the things we recently announced is an enhanced internet-based system so we hope to be bringing many more of our tools to the internet so they are accessible to the market. We all have to share in that obligation so it’s a key point for us.
The majority of our training is classroom-based. Our thermal class right now is doing really well. People really like the way the material is conducted and put together. That’s the unique angle we’re trying to do. We’re not trying to read off the OE repair manual to a group of students in a class; it’s the philosophy of the training that we bring – how do you eliminate half of the failures in the first sentence and how do you really get down to root cause and how do you fix it?
One of the greatest analogies I can think of is this: if you know you’ve got a check engine light or a cylinder misfire, if you know fuel is going to it, you can automatically eliminate fuel pump and everything coming in. You don’t have to go through all those OE checks and you can really drill down to the root cause.
This type of training approach saves the technician time, which in a flat-rate environment we know means money. As a result, now that they see a value in our training and our parts, they tend to refer us more and utilize us. It’s creating differentiating value, not just with the products buy also with our approach to technician training and curriculum. We hope to take this philosophy we have in the classroom and expand it to the new mediums.
You’ve been in this role about a year now. Now that you’ve got your sea legs so to speak, what are your goals for the coming year for the business?
Actually, I’m getting to know DENSO. Sometimes we are cursed to be an OE supplier and we’re blessed to be an OE supplier. You’ve got to know how to manage both of those areas and for us the goal is to be recognized not only as an OE supplier, but as a really good aftermarket partner. We were able to do that at Meritor, I think very well and I think doing that here at DENSO would be very beneficial for us. That’s really my goal for us to be considered a good aftermarket company, not just a good OE supplier.
That’s what gets us up in the morning. That’s what gets us excited. I don’t think any company should ever really be satisfied.