The auto parts aftermarket is thriving on Europe’s ageing fleet, and the EV transition might only make it stronger.
A mechanic with a Volkswagen on the lift cannot wait three weeks for a brake disc. That simple truth has made Armtek, a distributor founded by brothers Vadim and Oleg Grinkevich in the mid-1990s, into one of Eastern Europe’s largest auto parts suppliers. The company’s distribution network stretches some 10,000 kilometres from warehouses near Warsaw to outlets deep in Central Asia, shipping more than 500,000 parts from stock and offering access to 60 million more.
Armtek’s growth says something broader about the region it serves. Cars on European roads are getting old. The average passenger car in the EU is now 12.3 years old, according to ACEA, the European carmakers’ association, up from 10.9 a decade ago. Used cars flow steadily from west to east, where they tend to live longer thanks to cheaper labour and a culture of keeping things running.
“When we started, the supply chain across Eastern Europe was fragmented and unreliable,” says Vadim Grinkevich. “Workshops struggled to source quality components quickly. We knew that if we could build a network that was fast, reliable and offered genuine quality assurance, there would be huge demand.” That instinct proved sound. The brothers invested heavily in warehousing and logistics automation, as well as a talented team, early on, building the kind of infrastructure that Western competitors already had but that barely existed further east.
A changing industry
The industry they inhabit is changing fast. Modern cars roll off production lines packed with embedded software and sensors. What breaks, how it breaks and what is needed to fix it are all in flux. “Our catalogues are evolving rapidly, and the technical knowledge required to serve our customers is increasing all the time,” notes Oleg Grinkevich. Supply chains have not fully recovered from the pandemic, either. Lead times from manufacturers remain longer than in 2019, shipping costs have risen sharply, and sourcing from multiple geographies introduces currency risk and regulatory variation that compounds for a firm operating across several countries.
Then there is talent. The skills the aftermarket needs, such as data literacy, logistics technology, and digital platform management, are precisely those coveted by the tech industry. “Attracting that talent to the aftermarket sector, rather than losing it to tech, is a real and growing concern,” says Vadim, who adds, however, that, “There is also something deeply satisfying about this work that technology companies cannot offer in the same way. When we get a part to a workshop on time, a family gets their car back. An ambulance goes back into service. A delivery driver gets back on the road. The work is tangible in a way that writing code for an app simply is not.”
Vadim adds that Europe’s aftermarket auto parts aftermarket employs over four million people across the continent. “It is an enormous industry, but one that is being reinvented in real time,” he says. Ageing fleets are the industry’s friend: older cars need more replacement parts. The right-to-repair movement is a tailwind, too. EU legislation increasingly supports the right of independent workshops to access the technical information and components they need, making an efficient distribution network increasingly valuable.
And the electric-vehicle transition? The supposed extinction event for parts distributors turns out to be nothing of the sort. True, an EV has no exhaust system, no timing belt, no clutch. Some estimates suggest they require around 30 per cent less routine maintenance. But vehicles still need brakes, suspension, tyres, steering components and body parts regardless of what propels them. The product mix shifts; the market does not vanish.
“The transition period is actually the most complex moment for distributors, because we need to serve three markets simultaneously: combustion engine vehicles that will remain on roads for decades, hybrids, and fully electric,” says Oleg. “That requires a broader catalogue and more technical knowledge, not less.” Battery management systems, thermal components, charging infrastructure parts and electric motor elements all represent new product categories. First movers, as they always do, will have an edge.
Artificial intelligence, meanwhile, promises to reshape ordering, pricing and inventory management in ways that go well beyond driverless-car headlines. “A mechanic who today must hunt for an exact OEM reference number could instead type ‘grinding noise front left, 2019 Camry’ into an AI-powered search and get the correct component back, cross-referenced for compatibility, with related items suggested alongside it,” says Vadim. “That alone will dramatically reduce order errors and returns, which cost our industry billions each year.”
Dynamic pricing is another frontier. The aftermarket has long operated on periodically updated price lists. AI can monitor raw material costs, shipping rates, competitor pricing and regional demand in real time. In a thin-margin distribution business, even a two to three per cent improvement in pricing accuracy matters a great deal. In terms of the bigger picture, AI can model fleet age distributions and EV adoption curves by region to predict exactly when to scale down inventory of specific combustion-engine components and scale up EV parts. “Getting that timing wrong in either direction is extremely costly,” Vadim adds.
The brothers are bullish on Europe’s ability to compete globally, too. The continent will not win on cost, as it cannot match Chinese manufacturing scale or Southeast Asian labour rates, and lacks America’s venture-capital firepower. But European automotive brands still command a global premium built on decades of engineering quality, and European certification standards for parts rank among the world’s most rigorous. “When a workshop in Minsk or Warsaw installs a part, their customer wants to know it meets proper standards,” says Oleg. “That rigour is a competitive advantage, not a burden.” He reckons the EU’s regulatory approach to AI, while sometimes criticised as heavy-handed, may also prove useful: trusted, governed AI systems are what businesses and consumers will ultimately demand.
Resilience from experience
Operating in Eastern Europe brings its own particular strains. Geopolitical upheaval has disrupted supply chains, complicated cross-border trade and created enormous uncertainty. Currency fluctuations, sanctions regimes and shifting trade routes are not theoretical risks for Armtek—they are daily realities. “The last few years have been among the most difficult in our company’s history,” Oleg concedes. “But our experience of operating in volatile, complex environments has made us more resilient. When you’ve had to rebuild supply chains under pressure, you develop capabilities that serve you well in calmer times too.”
Looking a decade ahead, the Grinkevich brothers foresee a world in which the car itself becomes the customer. Vehicles will communicate with each other and with surrounding infrastructure, such as traffic lights, road sensors, the workshop that services them, scheduling maintenance based on real-time component data, ordering parts automatically and routing to the nearest garage with availability. “The distributor that can plug into that ecosystem, receiving orders from machines rather than people, will have an extraordinary advantage,” says Vadim.
Subscription-based mobility will grow alongside it. Fleet operators running car-as-a-service businesses in cities will demand rapid delivery and consistent quality at scale, playing to the strengths of a large, well-oiled distributor. However much technology advances, and changes, the physical world, as Oleg puts it, does not disappear. “Tyres still wear. Suspensions still absorb potholes. Brakes still stop cars. Somebody has to supply those parts reliably, affordably and fast.” The brothers will be optimistic that that somebody is Armtek.
For an industry routinely dismissed as a relic of the combustion age, that sounds less like a eulogy and more like a pitch.
Photo: Dreamstime.