Magneti Marelli recently announced intentions to relaunch the brand in North America. Where does Magneti Marelli stand in the global automotive market today?

It is a very old brand, very old and strong business. Magneti Marelli, as a company, is 91 years old. Magneti Marelli worked in the OE and in the aftermarket for many decades. Then, in the 60s became part of Fiat Group, and it started growing in the OE and aftermarket for all the carmakers, not only Fiat. Being part of the Fiat Group for 50 years now doesn’t mean not working and striving to deliver to other carmakers. The range of Magneti Marelli customers is very wide and goes from European carmakers to Asian carmakers to U.S. carmakers.

In recent years, the aftermarket business of Magneti Marelli has gone through the different cycles and different steps of Fiat Group. In early 2000, the company was sold to an external, Italian group of entrepreneurs who acquired a majority of the Magneti Marelli aftermarket business. And then, after Mr. Marchionne came to Fiat Group and Automotive was reaffirmed as the core business of the Group, Magneti Marelli Aftermarket Parts & Services was re-acquired in 2007 and I was appointed CEO, both independent aftermarket and OES, including all the carmaker customers, and delivering to their dealers and also the independent dealers. What we also have at Magneti Marelli is a service network with approximately 5,000 repair shops, mainly in Italy, Poland, Spain and Latin America.

When you say “OES Parts” – those would be replacement parts, service parts – not original equipment parts, correct?

We deliver the OES customers with the original parts for after sales. Basically, it’s all the OES business inclusive of parts that Magneti Marelli makes as OE.

In the aftermarket, due to the fact that we need to have a complete, full range and full coverage of the car parc, we also work together with some high-level, top-notch partners – major component makers – and we deliver to the market the Magneti Marelli box with the Magneti Marelli logo but not all the parts are produced by Magneti Marelli. We also have some purchasing from partners and sell under the Magneti Marelli logo.

Is this the only brand you go to market with?

We have two main brands. Magneti Marelli owns a lot of very important brands, but today, the main brands we have are Magneti Marelli and, in Latin America, Cofap in Brazil. This brand is so strong that in Brazilian-Portuguese “cofap” is a synonym for shock absorber. For shock absorbers, in the Latin American market we have more than 60 percent market share in the aftermarket. So, we are very strong under the Cofap brand. Cofap was an independent company until the mid 90s and then Magneti Marelli acquired the company but kept the brand both for the OE, to a certain extent, and for the aftermarket. Today, in Latin America, we have two main brands: Magneti Marelli is electrical, electronic and body parts and Cofap is mainly under car and mechanical parts. We have also filtration in Brazil and Argentina under our brand. In Europe, we have Magneti Marelli, but we are also distributors – depending on the market – for main producers of OE filters. Our partners are Mahle and Mann+Hummel.

What will the relaunch of the Magneti Marelli brand mean for the North American market?

In North America, the Magneti Marelli brand is well-known, especially by people who have been in the market for many years. The image of Magneti Marelli is mainly linked to racing, to innovation and quality. We have been working in racing, in Formula 1, for all Moto GP, we work for Ducati and Yamaha … so we are a global supplier for racing parts and this is for sure a strong point for our brand. In the U.S., we are present just for niche products, like lighting for example. Magneti Marelli Automotive Lighting is one of the top three producers worldwide, but we are not a provider of a full range of products for the aftermarket. Now, working together on the potential synergies in distribution that we have with Chrysler and Mopar, we have decided to enter in a massive way the U.S. aftermarket.

Mopar has been largely absent in the automotive aftermarket in the U.S. for probably 10 years. Do you see, with this change, an effort to get Mopar back into the aftermarket?

I think Mopar has a sound position in the wide aftermarket for Chrysler brands. I think we have all the ingredients to do a good job together and to grow the market and the market share globally, particularly within the dealer channel, because in their case, dealers can have a much broader product range with a more rich value line in terms of part numbers. We see huge potential to grow the value line for Mopar dealers. We see large potential also in the all-makes. As we do also in Europe together with Fiat, delivering dealers with products that are not aimed at replacement parts for Viper, Jeep, Dodge Ram but also for maintaining and repairing cars that are non-Chrysler brand – all makes. We see the potential, as I said, both on the channel of Mopar dealers but also in some cases through them, case by case, by product and by logistics, to the independent aftermarket.

To clarify, are you saying Magneti Marelli will distribute through the Mopar/Chrysler dealership network? And, you are also thinking about independent distribution into the North American market, through channel partners?
    
The first priority, this is clear, is to create a business opportunity for Mopar dealers. The market is huge so we see that the potential is even bigger than that. But all our resources will be prioritized on the potential for the Mopar dealers.

Outside of what you plan to focus on in North America, what other regions will be a key focus for Magneti Marelli in the next few years?

We are very strong in Europe – our backyard –  and we are even stronger in Latin America in terms of image and market share. Globally, outside of the U.S., these are areas that will be of primary growth for us. We are probably one of the top two distributors and spare parts makers in Brazil. And, we are developing now an important project in the Indian market and also the U.S., as we said. These four countries are our priorities.

We sell in China, but only certain products, because it is not our strategy in the next three years to invest too much in Asia, and specifically in the Chinese market due to the fact that we do not see an easy positioning of our brand and our product there – even if in the OE, China is the fastest-growing market that we have. China is very, very important in terms of OE production – both as a manufacturing platform for Magneti Marelli and as a final market – but for the aftermarket it is not our key priority.

They are talking about China doing 16 million this year…

Yes. It is very important for us because we are producing and delivering also for many Chinese carmakers. Magneti Marelli is designing and manufacturing locally in China – not only parts but also systems. That’s our value proposition in the Chinese market. We have been in the Chinese market for many years now – for instrument clusters, for powertrain, for lighting, for exhaust systems.

For the distribution platform in North America – will you utilize the Chrysler distribution system or will you set up your own?

No. We will utilize the Chrysler/Mopar system. This is a key point – we look for synergies – sales synergies but also logistics. Mopar is a strong brand, but also the brand assessment that we have done together with many Chrysler Mopar dealers shows us that there is an important awareness of the Magneti Marelli brand, which makes the brand interesting for them, especially in the all-makes, and in the value line. Logistically, it doesn’t make sense for us to duplicate investments when Mopar has a strong distribution base in the U.S.

And, if you are trying to focus first on their dealers, who better to service their dealers with product than the existing distribution channel …

Also, there are initiatives that Mopar has in terms of business development for the dealers; all these initiatives that the company has already announced to the press that it is already developing and working on are very synergetic with this product range enlargement and distribution enlargement. We are very positive and very optimistic because we have measured that the potential is there to do a very good job.

Do you plan to utilize your motorsports participation as well in R&D in the U.S?

Yes, we are also looking into that. We are also interested in racing in North America. Nothing is decided yet but it would be very interesting to do that.

Any final comments?

We have been working on these opportunities for months now, and I am sure that 2011 will show some important outcomes of the work that we have done so far. I’m also sure that our customers, the Mopar dealers, are very glad to receive a new area in which to develop their business in the U.S. and we are very keen to bring our expertise our skills and our brand to North America. The basics are there to help them do a very good job. We know that Magneti Marelli is a very sound company; it’s a very solid business worldwide and is growing. We have designed a trajectory of development that is clear with what we are doing in the OE business.