CHICAGO—Although Exide Corp. no longer makes batteries for Sears, Roebuck and Co., a deal recently signed with Pep Boys—Manny, Moe and Jack, the aftermarket parts and service chain, should help the world's largest battery supplier edge back toward fiscal health. Robert Lutz, former vice chairman of Chrysler Corp. and leader of Exide since Dec. 1, said Exide parted company with Sears—which markets the well-known DieHard battery—because Exide was not making any money on the 4.5 million batteries it sold annually to the mass merchandiser.
"We got out of Sears because the prices were so low we were losing money on every battery," said Mr. Lutz, who vowed when he took over the troubled company that he would not seek growth at the expense of profits.
"We got 1.4 million Pep Boys batteries at a normal profit; that compensates for the 4.5 million Sears batteries that we gave up," he said. "We are in the process of negotiating with other significant players in the aftermarket."
Mr. Lutz, who was instrumental in orchestrating Chrysler's turnaround in the early 1990s, made his comments to 450 attendees of the fourth annual Global Automotive Aftermarket Symposium, held May 25-26 in Chicago.
The day-and-a-half educational conference provided a forum for industry leaders to discuss how current trends will affect the automotive aftermarket.
It was attended mostly by aftermarket retailers, distributors and manufacturers.
Exide sells about 25 million batteries in the U.S. and 26 million to 27 million batteries in Europe annually. In the U.S., 75 percent of Exide's business is aftermarket; 25 percent is with original equipment manufacturers. In Europe, the mix is 50-50.
Mr. Lutz said Exide's goal is not to be the low-price supplier of batteries but to focus on total value in terms of product features, quality and warranty.
"The company is big enough," he said. "Now we have to work on our costs and sell our batteries based on the overall value we bring to the customer and make some money on what we sell. After all, we can't survive if we don't make any money at all."
Also speaking at the event was David Peace, director of global aftermarket operations at Visteon Automotive Systems, the parts subsidiary of Ford Motor Co.
Mr. Peace said Visteon's goal is to increase its non-Ford business to 20 percent by 2002.
In the aftermarket division, the goal is to achieve $1 billion in revenues by the end of this year and $3 billion by 2004.
"We're on track to meet and probably beat that objective this year; that's over a 50 percent increase from last year," Mr. Peace said.
Michael Hochschwender, CEO of Smithers Scientific Services Inc., an Akron-based company that evaluates products for several industries, told attendees that a new round of global consolidation in the tire industry has begun.
In the mid- to late 1980s, five of the 10 leading tire companies were acquired by competitors.
In February, Mr. Hochschwender said, more consolidation began to take place.
Goodyear formed an alliance with Japan's Sumitomo Rubber Industries Ltd. A week later, Cooper Tire & Rubber Co. of Findlay, Ohio, struck a deal with Italy's Pirelli S.p.A. to take over sales and distribution of Pirelli-brand tires in North America and combine the two companies' materials purchasing power.
He said other tire companies to watch are South Korea's Kumho Tire Co. and Hankook Tire Co. and Japan's Yokohama Rubber Co.
"This year could be a landmark for tire industry consolidation," Mr. Hochschwender said.
The Chicago symposium was presented by the Motor & Equipment Manufacturers Association, Automotive Parts & Accessories Association, Automotive Service Industry Association, Specialty Equipment Market Association, Automotive Warehouse Distributors Association and the Tire Association of North America.
Proceeds from the event went to fund $1,000 scholarships for 100 vocational and undergraduate students pursuing careers in the automotive aftermarket.