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China To Offer ‘Significant Opportunity’ For Tenneco Spin-Off, DRiV

aftermarketNews had the opportunity to speak to Brian Kesseler, co-CEO, Tenneco and future chairman and CEO, DRiV, about plans for the new business, which will include a significant focus on China.

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AMN Editor Amy Antenora has been reporting daily on the automotive aftermarket since 2002. She also is editor of AMN Global and serves as managing editor of Counterman magazine, AMN’s sister publication for the parts distribution segment. Prior to joining Babcox Media, Amy began her career as a newspaper reporter and went on to work in public relations for two state universities. She is a graduate of Kent State University and in 2009 earned the Automotive Aftermarket Professional (AAP) designation from Northwood University’s University of the Aftermarket.

Brian Kesseler, co-CEO, Tenneco and future chairman and CEO, DRiV

DRiV Inc. has been announced as the name of the future publicly traded Aftermarket and Ride Performance company that will launch in the second half of this year, following Tenneco Inc.’s separation into two independent companies. The business will be comprised of the combining of Tenneco’s Aftemarket and Ride Control Business, as well as that of Federal-Mogul Motorparts, and Ohlins Racing, both of which Tenneco acquired last year.

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Once it spins, DRiV will serve as one of the largest global multi-line, multi-brand aftermarket suppliers and one of the largest global original equipment (OE) ride performance and braking suppliers to aftermarket, light vehicle and commercial vehicle customers,

Following the announcement earlier today, aftermarketNews had the opportunity to speak to Brian Kesseler, co-CEO, Tenneco and future chairman and CEO, DRiV, about plans for the new business, which will include a significant focus on China.

China is forecast to be the largest automotive market by 2025. The new spinoff plans to accelerate growth in the Asia Pacific region, stating growth opportunities in both the aftermarket and OE segments. DRiV says it will invest for growth in China through brand-building, distributor development and supply chain footprint.

“All of the majority of the growth in new vehicle production the past 10 years has come from China. Today, the average vehicle age there in the fleet and VIO is about 4.5 years old. By 2025, because of the new vehicle builds going on, that average vehicle fleet age is going to be about 8 years. As you know, as you use age as proxy for use in miles, many of the product lines that we have trip over into those replacement cycles and that’s a tremendous opportunity for us,” said Kesseler.

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“Brand and OE pedigree is very important in the marketplace and we are bringing that pedigree as an OE producer, which we both [Tenneco and Federal-Mogul Motorparts] have other there. Also, the well-recognized brands that we bring from Europe and the Americas will be another differentiator for us. We can scale the investments that both companies were making but now we can make bigger, more targeted investments to set us up there,” he added.

According to Kesseler, e-commerce will play an important role in DRiV’s strategy for growth in China, which, while the market is developing rapidly, is still a very young market when it comes to distribution strategies.

“What you are seeing over there is that the model is going to move faster from an e-commerce perspective, whether its direct from a distributor to the store or allowing the consumer to pick his parts and have them delivered to the store, [it] needs to be disrupted so there’s no friction,” Kesseler said. “That’s what we are watching and learning a lot from. Really, our e-commerce platform is being first developed in China, for China, but we’re also making sure that it’s deployable at the same time in both the established markets.”

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