Encory - The Spearhead of BMW‘s Core

Management and Remanufacturing activities

APRA European Symposium 2018, April 19th

2 | APRA European Symposium 2018 | 19. April 2018

Automotive OEMs face many challenges in aftersales

Remanufacturing as a key initiative to increase OEM after market exploitation

455€

870€

89%

3 years 7 years

37%

• Regain of market shares in aftersales

• Increasing customer retention and dealer loyalty

• Focus on „As good as new“ quality for reman parts

• Use reman cost savings to increase margin

Millions of customers

Billions of euros

Strategic implications

Retention RateAvg. maintenance cost

3 | APRA European Symposium 2018 | 19. April 2018

Encory has been set up by BMW as a 50:50 joint venture

with ALBA Group in September 2016

Nationality

German: 89%

Other: 11%

Average age of staff: 32,9

30-40: 47%

>50: 2%

40-50: 20%<30: 31%

Locations

Joint venture company

• High degree of entrepreneurial flexibility

• Fast implementation possible

• Separate IT infrastructure

• Defined interfaces with the BMW Group

HQ: Unterschleissheim (Munich)

UPB: Straubing

RLPs: Regensburg, Grevenbroich

RLP: Cabanillas (Madrid)

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

> 70 employees HQ + 200

at ReLife Points

Logistics & Sorting

Logistics & Sorting

Used Parts Sales 1

> 1000 dealers serviced

> 1,5 million parts handled

1 Used Parts are not sourced from dealer returns, but produced from dismantling cars >7years

4 | APRA European Symposium 2018 | 19. April 2018

Our portfolio spreads across three business models

Remanufacturing

Consulting

• Goal: Wider portfolio of

remanufactured parts for dealers

• Result: Reman product offer for

older cars with attractive prices,

contribution to sustainability,

improved use of raw materials

Used Parts

Business

Logistics &

Sorting

Supply with cores1 for remanufacturing

• Goal: Reliable supply of original used

parts to the BMW Group dealerships

• Result: Increase of the customer

retention of older car segments within

the dealerships of the BMW Group

• Goal: Facilitation of return processes

and efficiency enhancements

• Result: Higher rates of core1 yields,

optimized material flow, increased

transparency, decreased error rates

and time savings for BMW dealers

1 A “core” is a defective part, which runs through an industrialized remanufacturing process to become a reman part.

5 | APRA European Symposium 2018 | 19. April 2018

„Remanufacturing“ aims to build a wider portfolio of reman

parts for BMW dealers

1 A “defective part” is returned by the dealers, it is quality inspected following defined criteria, and is ideally classified as

“good core” for remanufacturing.

Remanufactured Diesel turbocharger

Remanufacturer: Turbomotors

Savings in production costs: up to 65%

„Remanufacturing“ stands for:

• Industrialized remanufacturing of

defective parts1 processed up to

the quality standards of new parts

• Significant energy and cost

savings in the production

process compared to the

production of new parts

• Potential to reduce acquisition

prices and warranty-related costs

Results and advantages:

Analysis of the competitors and of

the portfolio

Development of market-driven

product strategies

Definition and extension of the

portfolio of Reman parts

Identification and classification of

potential suppliers to guarantee

the OEM quality level

As a result, BMW Group offers an

extended customer retention

solution

for dealers thanks to a portfolio of

reman parts

End-to-end solution for reman

projects

Reman-Consulting process:

Portfolio analysis

Definition and decision on

the portfolio of exchange

parts

Planning and coordination

of the roll-out

Set-up and implementation

Reman strategy and

concept definition

Competitive analysis &

benchmarking

6 | APRA European Symposium 2018 | 19. April 2018

We are utilizing the OEM product data for our Core

Sorting Tool to identify Good Cores in our ReLife Points

1

Results guarantee maximized good core quota3

Good Core No BMW partBad Core ? clearing

Identification via product data continously

integrated in our software2 Visual inspection & checks

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Combination of measures launched to push the Reman

strategy

Active marketing with focus on new remanufacturing

products concerning sustainability and pricing

Set-up of a competitive market oriented pricing strategy for

exchange parts

Definition of a profitable real Reman portfolio with focus on

cars in segment 2+

Set-up of competitive core charges to ensure the core return

Expansion of the strategic exchange parts portfolio

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Cooperation with suppliers is the key to success

Delivering reman parts in highest

quality (comparable to serial quality)Focus on cooperation with OES

advantages in sourcing, testing &

validation

Regarding Independent

remanufacturers as alternative to

exploit cost saving potential

Encory is the interface between OEM and OES and a guarantor for certified high quality standards

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Encory business models

The Encory business models connect demand and supply

enabling suppliers to grow their OEM Reman business

Remanufacturing

Consulting

•

Logistics &

Sorting

Used Parts

Business

Cooperation with OES and

independent remanufacturers

Continuous expansion of our

supplier network

Development of new business fields

and reaching more customers

Thanks for your attention!

Hanno Großeschmidt

Managing Director

Cell: +49 162 2973532

E-Mail: hanno.grosseschmidt@encory.com

Web: www.encory.com