Visteon specialises in providing cockpit electronics to automotive manufacturers worldwide. CEO Sachin Lawande outlines the company’s strategic priorities as he sees them and offers views on the industry’s broader development. Dave Leggett recently caught up with him in Detroit.
How is Visteon performing as a business around the world? Where is growth coming from?
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We had a great third quarter. China is moving at a furious pace, both from a sales and tech point of view. We are very fortunate to have great presence in China. We have three joint ventures there and over a billion dollars of revenue. Think about the cockpit and over a billion dollars of revenue – that’s a pretty big size.
In China we are number one in clusters, number one in audio. With all six products in mind, there is a lot of excitement about how we can grow in China, even with the customers that we have. China is doing very well.
Japan is also coming on strong from a tech point of view. They are not in a leading place; the German OEMs are driving the technology, but Japan is catching up very fast. Those two countries are showing a very strong performance for us from a cockpit viewpoint.
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By GlobalDataTwenty customers [OEMs] account for 80% of the automotive market. We have, already, 13 of those 20 as our customers. We have a two-step strategy. One is to broaden our business to our existing customers, but also we want to go after the seven that are not yet customers of ours.
We are restructuring ourselves to focus and execute on our business strategy, which is very simple. There are three main elements. Firstly, focus on the core, the six products that we have. Secondly, we need to focus on key new emerging technologies and do that selectively: areas such as advanced safety (including V2X) domain integration/’Smartcore’ and cyber security. The third is to really focus on driving our business metrics. We want to be a 12% EBIT company and we are restructuring and reorganising to be more effective as a business. We need scale – scale is very important- and we need to become more profitable which also means we have more resource to invest.
I want people to think of us as a global technology leader; we have five cultural principles for all of us inside the company to work on: technology leadership; customer orientation; cost leadership; a global mindset; and speed to market. That is the DNA we want to establish for this organisation. In six months I think we are well on the way. We had a great third quarter.
You showed a concept – Smartcore – at the CES show in Las Vegas last month that promises greater integration of cockpit electronics. Why is integration important?
A key part of Visteon’s strategy is to address the proliferation of electronic control units (ECUs) in vehicles by integration to one comprehensive cockpit ‘domain controller’.
Costs are going up at a level that OEMs are not able to absorb. Electronics content on vehicles is rising. The semi-conductor content on an average car is around $300 and that is going up 10% every year. The OEMs can’t pass that on to the customer. For every new function, there is a new ECU for that. There can be anything between 20 and 100 ECUs per car and every cycle results in a few more. Our response is to integrate. It is not easy, but we are pushing this envelope. We will supply an industry-first, automotive grade cockpit domain controller to a European automaker on a global vehicle program in 2018.
You have said that Visteon is focused on being the industry leader in cockpit electronics. What are the main benefits in having one comprehensive cockpit ECU system?
One clear benefit is cost. Secondly, you can create a very homogeneous environment. Today, multiple suppliers mean that you can get a disconnected customer experience. Thirdly, and very importantly, one box that you can lock down means that you have a better chance of improving cyber security. Multiple ECUs with interfaces to other devices create the potential for intruders in each area. Having just one box is a big step forward in this respect. So our solution meets three very important industry concerns.
Cyber security is emerging as a big issue?
Yes, we had an exhibition booth at CES and a big theme there was cyber security. You could not walk two steps without running into that discussion with people. It is certainly an area of growing concern in the industry.
We have seen some big M&A deals in the supplier industry lately, alongside strategies to consolidate or specialise operations. Do you see Visteon being part of the trend?
The fact of the matter is there are not too many great targets to acquire. Many of our competitors are parts of large conglomerates and it’s messy to do those types of deals. But we are looking to do very small bolt-on acquisitions that could bring very specific technological competence to the company. As I say, we want to be known first and foremost as a technology leader. We have a lot of the technology but we don’t have everything we need, so we will selectively invest and acquire capabilities.
Do you think we will see autonomous cars on the market by 2020?
There are a lot of challenges that we still have to resolve for full autonomy. We will see semi-autonomous first. By 2020 we will not have fully autonomous cars in significant operation but we will see something that will give us a good impression of where the technology is heading and what the final vision will look like. Autonomous capability is on a spectrum and being continually developed and improved. We will see semi-autonomous driving with a high level of confidence before it becomes fully autonomous. I think we will have to wait longer for fully autonomous cars. The technology is just not there for full autonomy in the market by 2020. How long will we have to wait? That’s anyone’s guess, it is very hard to forecast.
I will point out one thing though. In this industry it usually takes fifteen years for any new technology to come into the industry and reach mass deployment – say to 90% of new cars produced. And it takes fifteen years after that for the technology to be fully deployed in the field. So it’s a thirty years or so cycle. If we accept that the cycle has been compressed now, say to twenty years, that’s still not five years. It will take time.
There is a lot of talk, or more accurately, speculation, about the possible effects of Apple and Google entering the automotive space in some way. What’s your feeling about that?
They are very secretive about their plans. I think there is a lesson in what happened with Tesla when it got into this space. Tesla was actually the best thing that could happen to us [the auto industry]. Why? Because they produced concepts that prior to that were not accepted by the carmakers who claimed they were too expensive and unaffordable. But Tesla came along and did what they said they would do and it was the best thing that could happen to our industry. Did Tesla destroy everybody else? No. Tesla is just shipping around 50,000 cars a year. What they did – and I expect Google and Apple to do something similar – is create an awareness, create a need and that’s a good thing for us and the whole industry.
If we don’t evolve as an industry, something really bad is going to happen to us. As long as somebody like Tesla or Google or Apple are just poking at us, but still keeping us alive, that’s a good thing. They can make us open our eyes. What we don’t want is somebody to come in and destroy us [the established auto industry]. As an industry we have done really well to provide mobility to millions of people all over the world. It is one thing to do that and it’s another to sell 50,000 units at a profit.
So, these new entrants can be a good thing for us, help us to get our act together and I see lots of signs of that happening. As an industry, we are moving in the right direction and facing up to the challenges ahead.
Sachin Lawande – biog
Sachin Lawande has been president and CEO of Visteon since June 29, 2015. He also serves on Visteon’s board of directors.
Lawande is considered one of the foremost technology and business thought leaders in the automotive OEM electronics supplier industry. Throughout his career, he has championed the need for automotive suppliers of cockpit electronics to evolve to meet the demands of the connected car era.
Most recently, Lawande served as president of the Infotainment Division of Harman International Industries since 2013 and as executive vice president since 2009. In his role as president of the Infotainment Division – the largest division of Harman with nearly $3 billion in annual sales – Lawande achieved double-digit sales and income growth while serving 11 of the top 15 vehicle manufacturers and leading more than 7,500 employees worldwide. Prior to that, Lawande served in various leadership roles at Harman including executive vice president (EVP) and president of the Lifestyle Division, EVP and co-president of the Automotive Division, EVP and chief technology officer and chief software architect. In these roles, Lawande was responsible for guiding software strategy, development partnerships, and key customer relationships.
Prior to joining Harman, Lawande held senior roles at QNX Software Systems and 3Com Corporation. Before joining QNX, he was responsible for the development of networking and consumer electronics systems at corporate giants such as AT&T Bell Labs, U.S. Robotics, and 3Com.
Lawande has a wealth of experience in developing embedded systems and software and holds four patents in communications software. He has a bachelor’s degree in electronics and telecommunications from Bombay University in India, and a master’s degree in electrical engineering from Southern Illinois University at Edwardsville.
