The merger of NEXUS and Stellantis – what will be the outcome? An interview with Gaël Escribe, CEO of NEXUS.

The recent announcement of a joint venture between NEXUS Automotive International, a global purchasing group of the spare parts industry, and Stellantis, one of the world’s largest car manufacturers, has stunned many in the automotive market. What will this cooperation entail and how does it relate to the development of NEXUS’ own brand, DRIVE+? This, among other things, is what we’ve discussed with Gaël Escribe, CEO of NEXUS Automotive International.

Witold Hańczka: The collaboration between NEXUS and Stellantis is such an unexpected and widely reported news in the industry that I simply could not miss the opportunity to ask you for an interview. Tell me and our readers about the origins of this project.

Gael Escribe: First, let me make a comparison. You probably know the history and events of the 1980s in Berlin. At that time, a great wall separated the west and east worlds. For years, the situation on the automotive market was very similar. There was a division. On one side there were car manufacturers and on the other the spare parts market (aftermarket). The mentality of the parts distributors was always to think of car manufacturers as enemies.  Within our community, we love to say that we have to fight with the manufacturers over various issues like access to repair data, wireless connectivity of vehicles, etc. My thinking today is that this approach is probably wrong. In my opinion, it’s better to cooperate, even with a rival, than to be on two sides of a wall.

We have decided to partner with Stellantis taking into account that the aftermarket is one we all share. Doing so does not mean that we will give up our lobbying activities in Brussels, defending the rights that are due to independent players in the parts and repair market. However, we believe that it’s probably better to work together with vehicle manufacturers than to fight. The discussions started with a view of working together for the benefit of both parties.

It comes as a bit of a surprise to me that a car manufacturer sat down for talks with a purchasing group representing the interests of the independent automotive market.

Car manufacturers are extensively restructuring their networks, and as a result, they are looking to connect with entities such as NEXUS. Leading brands see how Tesla sells its cars and are starting to question whether they really need to have dealerships in every large and medium-sized city. Tesla doesn’t have many dealerships; it sells cars in a different way and its business model is profitable. So surely the car manufacturer executives are looking for a more efficient way to sell cars. But by restructuring the network, the number of service points is also being reduced. Manufacturers are therefore looking for partners because they still need to ensure that their vehicles are repaired and serviced during and after the warranty period. Since they need help, they are keen to discuss potential cooperation.

Will EUROREPAR parts (Stellantis’ own brand) be included in the NEXUS portfolio and will the current NEXUS offer also be available in the Eurorepar Car Service garages?

There is a company within NEXUS called SmartParts, which is responsible for developing our DRIVE+ parts brand. Both us and Stellantis therefore buy parts to offer under our own brand. Therefore, why should we not buy them together? The volumes we create together can guarantee great benefits. Of course, we are still competitors with Stellantis in the parts market. However, competition in one sector does not exclude the possibility of cooperation in another.

Stellantis has made its promises to customers. These include an offer called ‘360 degrees’. It includes parts with the car manufacturer’s logo, parts from independent manufacturers (Bosch, Valeo etc.) as well as parts from the Eurorepar brand. As NEXUS, we are able to support Stellantis to ensure that this offer is always complete. Let’s say that a EUROREPAR garage is changing the clutch in a Peugeot 308. The customer wants to use a part coming from the economy shelf, but such a product is not available in the chain’s offer. In this case, NEXUS sends the appropriate product to the garage and the repair is carried out. The Eurorepar network prefers to source all parts from Stellantis, and if the part is not available from Stellantis, NEXUS distributors are there to deliver the missing part. We will implement this cooperation gradually. At the moment, we are starting with Portugal, then we will develop it in other countries.

As mentioned, Stellantis has its own network of garages, a competitor to your NEXUSAuto chain. Is there a plan for cooperation between the two entities or will they remain separate projects?

We have our operating system in NEXUS, which supports thousands of garages. Our partner also has their own operating systems. The question is, should we only have one in the future? Should we reduce costs in this way? I would say that we have a lot of topics to discuss at the table and quite a few that we are already working on.

Stellantis has its own network of garages (EUROREPAR) and we have NEXUSAuto. They will still be separate projects, but they will work together and you will probably be able to buy car parts from our offer in EUROREPAR garages and the other way around. Stellantis is a big group with contracts that involve commitments. They need to expand their offer, but we can also improve ours with this cooperation – for example, to achieve better market coverage with parts for certain Stellantis brands such as Jeep or Chrysler. This is the beginning of the collaboration for now, we will look into more complex aspects in the future.

At a recent press conference, you talked a lot about the NEXUS private spares brand, DRIVE+. Is its development currently your priority in Europe?

DRIVE+ is our response to the aging vehicle fleet trend across Europe and the world. The current economic situation, as well as the progress of electromobility, is actually encouraging an increase in the average age of vehicles. When cars age, the demand for spare parts takes a different direction.

With a 15-year-old car in the garage, the owner should be able to choose parts with the right value for money. This is where the DRIVE+ offer comes in. These parts are supplied by NEXUS and developed in collaboration with trusted companies. Their specification is slightly lower than OE products, but they still maintain a high level of quality at a high price reduction.

We want to deliver quality products to the consumer. Nowadays, car owners often do not know when they will sell their car, whether they will keep it for the long run or perhaps wait for the new generation of batteries in electric cars and only then switch to another car? We believe that owners of cars older than 10 years are still in a position to invest in their cars, but (for example due to the aforementioned uncertainty of the future) expect cheaper products. In order to provide them with this, you have to lower the specification of the product slightly, but that does not mean that you significantly reduce the quality. Offering good products at a 30% lower price compared to the OES sector is our goal.

Isn’t your brand a problem for some of your partners – parts distributors? After all, many of them have their own brands.

Quite the contrary, when we introduced DRIVE+, we were prompted by our partners’ suggestions! In fact, many of them, including those in Europe, do not have their own parts brands. Many had planned to launch them, but for various reasons – costs as well – they did not do so. Other partners, on the other hand, are used to having several brands from the same price sector and market segment on offer. Last week I spoke to one partner who has 32 own brands on offer. I asked him: ‘do you really need as many as 32?’. He said: Yes, we have no problem with that – you can successfully offer two or more brands in the same market segment.

I think all our partners will benefit from the collective volume that DRIVE+ will be. Any investment we have made in logistics, personnel or marketing will bear fruit. We will see how things develop, but I think this is the start of a very successful adventure and a good example of how we respond to our partners’ needs.

NEXUS brings together more than 2200 companies from 137 countries. The development of the group is very dynamic, especially given that you have been active for only 10 years. What are your plans for the future – continued rapid growth or consolidation and strengthening of your structures?

I think it’s both. It is true that we already operate in almost 140 countries, so inevitably our network will no longer grow as intensively as in the past, unless we think about going to the moon or into space (laughs). However, there are still some countries where our name is less known than we would it like to be – such as Germany and South Korea. We can strengthen our position there and that shall be our goal.

In terms of turnover, we can grow even more than in the last 10 years. We have a huge reservoir of growth for us and our suppliers. We continue to consolidate structures and have a high so-called compliance rate, currently at around 25%. We are now engaged in the development of our own brand, which will further improve this ratio. We have also engaged in strengthening the position of our distributors in specific countries and regions. This too is a large project, requiring a lot of investment. In the future, we also want to attract our partners more effectively to the suppliers we promote within the network. We have a whole ocean of possibilities. If you asked me how I see the value of NEXUS after 10 years, I would say that we are in a position to double it in the coming decade.