Q&A with TRW Automotive: John Plant, Chairman and CEO
Continuing just-auto's series of interviews with industry leaders, Matthew Beecham met with John Plant, TRW's chairman and CEO while at this year's IAA and asked for his views on the state of the automotive industry, TRW's most recent financial results and the autonomous car.
What's your view of where the automotive industry is right now? Is this recession very different to what we've seen before?
The business of automotive is pretty much reflective of the rhythms that economies move through. If you go back to the dreadful conditions of the 1930s when GDP fell, demand for cars fell and unemployment was high. So in many senses we've gone through multiple cycles since then. Maybe this one is just part of another cycle, albeit exaggerated from 2008/09.
Where we seem to be today is that China appears to have motored through most of it pretty unscathed and is still growing well. Meanwhile, America has recovered nicely from very fast deceleration to a GDP that is above the 2008/09 time period. The difficult area is Europe where GDP is still lower than it was five years ago with high and very stubborn unemployment. I'm not saying that's different to previous times at all, maybe it's just the conditions, maybe earlier stimuli, maybe austerity driven by government borrowing. I take the attitude that this will pass. Maybe we're at an inflection point in Europe and maybe it'll start to get better because it moves in a cycle.
TRW posted Q2 results ahead of the expectations, boosted by the higher volumes in North America and China. What do you see happening in Europe?
I think the interesting thing for TRW in Q2 was the fact that Europe did not go down, which is the first time in a long time it hasn't gone down now. I'm not willing to say yet it's definitely going to go up [but] I'm hopeful that we may be at the low point and it may get better. But for us I will say it was encouraging to see that Europe did not go down.
Do you think that we will see Chinese automakers moving more forcibly into Europe?
I don't know whether we're going to see significant penetration of any Chinese vehicle manufacturer into Europe anytime soon. I'm sure there may be some low price cars come out into certain European markets but I'm not sure that's going to be a significant thing in the next five years. I think the Chinese vehicle manufacturers have got an enormous job on just capturing their share of the Chinese markets which is growing so rapidly. I am not sure that they need to be exporting to Europe at this point in time or indeed that they are ready to export significantly into Europe.
There is much talk at this IAA year's show about the autonomous car. In what ways can TRW support this vehicle?
We clearly see that the building blocks to put into place the things that for semi-autonomated or more automated driving. Many of those blocks are certainly taking us a long way to that sufficient condition whereby we could theoretically create an autonomous car, whether it's the forward looking cameras, the forward or sideward looking radars, the integration with the steering system, the brake system and the restraint system, and many of those technologies TRW has. I think it's a big step though between having the basic building blocks to do it to having them all totally integrated in a very seamless fashion. And then there needs to be government regulation that allows those autonomous vehicles on the road. There is also the consideration of product liability, particularly in the US. There are many factors to take into account. So I think there's one thing in terms of providing the building blocks, there's another thing to be determined in terms of the real integration of all those blocks, the consumer acceptance and then also regulatory acceptance.
Could you tell us about some of the things that you're highlighting this year and your message?
I think in terms of showcasing and messaging this year, concurrent with the more, I will say controlled vehicle or electronic controlled vehicle, then we are highlighting more our forward looking cameras, our radar based systems, even though we've been doing radars for some years, and basically the integration of those into the electric steering systems and the new potential IBC brake system. So it's that whole next step of integration which allows increased driver assist functionality but more in the lines of meeting regulatory requirements, i.e. NCAP ratings.
Do you see such electronics creeping down the car segments?
None of us are actually sure yet of all these technologies. Do you require camera and radar to achieve [Euro NCAP] five stars? Is it just a camera? We certainly have significant contracts with very many vehicle manufacturers now for our forward looking camera but we still don't know how far this thing is going to go yet.
Clearly we're trying to provide and make those products affordable. So when I think about the very first radars that we supplied, they have probably come down two thirds now in terms of cost and therefore it is allowing more mass market adoption, so trying to make safety affordable. I think we've tried to say it's going to be affordable for all, and it's something that we at TRW have been spending a lot of time at.
What about the emerging markets consumer? Could they afford such technologies yet?
Well there is certainly a massive march to content growth in these emerging markets. They've gone from fitting the most basic of a three point seatbelt to the fitment of pre-tensioners. Now we're seeing the first fitment of load limiting, the fitment of certain airbags but not the full suite of airbags yet. We're seeing maybe a leap in technology in steering going from manual steering all the way through electric, missing out the hydraulic step in-between because of its fuel efficiency and functional capability. So I'd say there's a lot going on in so many ways in the auto industry.
In terms of electric power steering systems and the Chinese market, what's happening there?
The remainder of this interview is available on just-auto's QUBE research service