Johannes Roters is the CEO of Yanfeng Automotive Interiors, the vehicle interior giant created by the 2015 70:30 joint-venture between Yanfeng Automotive Trim and Johnson Controls interior business (now Adient). just-auto’s Calum MacRae was provided with an update to the company’s strategy and progress at the 2017 NAIAS in Detroit.
just-auto: In 2015, revenue was estimated at US$8.5 billion with the stated ambition being US$10 billion how is the top line progressing?
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Johannes Roter: It’s progressing in line with our forecast, but changes due to dollar movement. We have a strong order book and are confident we will hit our targets. Yanfeng’s strength is that it is a global business and that means balanced growth geographically.
j-a: Yanfeng has five distinct product groups, do you see the prospects for any of the groupings differently?
JR: We focus on these five product lines for a reason. In the future they’ll all carry more technology as you’ll see from the XiM17 concept. Secondly, we don’t see any of the product segments as having any greater prospects than another, although the overhead console is mainly a US market product.
j-a: When you’re supplying to an OEM is it the case that you could be supplying the IP and somebody else supplies the door panel for example?
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By GlobalDataJR: Yes, it’s common. We don’t always win everything. Our ultimate target is the interior of the car and it’s the reason why we focus on these five products, but it comes down to the OEM’s business case as to whether we win everything.
j-a: Johnson Controls is withdrawing from automotive, how can Yanfeng succeed where Johnson Controls has struggled?
JR: We are truly global, and have equal set-ups in all three of the major regions and the auto industry product is global these days. Second is our focus on five production lines. Finally, the connectivity and self-driving megatrends will put automotive interiors in an entirely different light in the future. The car interior becomes the home, the office and and the car as we see with XiM17.
j-a: Isn’t Level 5 autonomy potentially a threat to Yanfeng’s business? You’re adding more value into the interior, but if Level 5 involves a mobility solution with urban lift-sharing for example doesn’t the interior have to be much more robust?
JR: It’s a perfect opportunity for us. Yes, we need robustness for lift-sharing schemes etc and we’re working on scratch-resistant surfaces, but some people will still want to own the car and then you can move more towards luxury. We will participate in both opportunities. The traditional interior we will leave in the next 10 year and we will move to smart interiors.
j-a: Do you see autonomy as realistic and appealing? Personally, if one’s got to be ready to take the wheel at any moment we might as well drive ourselves…
JR: Absolutely. Older generations see it as a threat. But younger people they will simply just get on with it. It won’t be outside their comfort zone at all because they grow up with this technology and they don’t recall when it was different.
j-a: With autonomous driving what sort of timeline do you see for Level 4 and 5?
JR: It’s difficult to say but we’re already close to a position where we have Level 3 – where people are buying cars with the equipment. Carlos Ghosn in a speech yesterday said that 50-60% of consumers are buying vehicles with these features – it doesn’t mean they are using them. I believe that in 5-10 years you’ll see an autonomous car.
j-a: There’s been a lot of consolidation in the automotive interior business – do you see that continuing?
JR: It was somewhat started by the joint venture between Adient and Yanfeng and creating this global player. There’s a second deal which Grupo Antolin and Magna did and then there’s Faurecia. There’s a need for strong global players, but there’s a still a long list of smaller companies who survive as well but really you need to be able to respond on a global basis and have a certain size. It’s a big opportunity for us.
At this moment Yanfeng are not talking about acquisitions; we have all the technologies we need, but we are looking at partnerships. You’ve seen already we have something with Kostal, so we’re looking at electronics and mechatronic capability. With XiM17 you don’t need – or it’s not possible to have – all the technology that will be involved. So one of our strategies is to find smart partners to enable us to deliver these new product lines.
j-a: WIth the Kostal partnership when can we expect to see something tangible – in production – from this relationship?
JR: I would say that in the next 12-18 months we’ll definitely see something tangible from the partnership related to smart surfaces.
j-a: Final question, what do you think the Trump effect will be on the auto sector?
JR: I can’t say, we follow our customers.
j-a: But from the point of view of potentially not having the ability to take the lower-cost option all the time…
JR: Manufacturing is not only about low-cost labour. We’re focusing a lot on Industry 4.0. I’m convinced that you’ll see a lot more robots in factories in the near future. A robot today has an hourly rate, depending on complexity, of between US$5 and US$7.50 and robots are driving cost down much further and faster than moving east or whatever. The manufacturing technology changes of the next ten years will drive much more efficiency than moving to low-cost countries and will create competitive factories in high-cost countries.
