Valeo SA expects to nearly double North American sales from $US2.2 billion to $4 billion by 2007, Thierry Morin, chairman of the French auto parts supplier, said yesterday, according to a report in the Detroit News.
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The newspaper said that two-thirds of Valeo sales are made in Europe and its top four customers are French and German automakers.
There’s a fantastic opportunity for Valeo in North America,” Morin told the Detroit News after meeting executives of Ford, General Motors and Chrysler.
Citing Morin, the newspaper said Valeo expected much of the growth to come from within the company and through partnerships with outside companies to import technology from other industries.
Morin does not anticipate going on a buying spree, although acquisitions in the final months of 2000 boosted Valeo’s global sales by 10% last year, the Detroit News said.
“I love organic growth,” Morin told the Detroit News, adding: “That doesn’t mean we would never consider an acquisition. But you don’t buy technology.”
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The newspaper said that electrical systems and electronics represent nearly half of Valeo’s sales, up from less than 20% when Morin joined the company in 1989.
Morin, citing a consumer study by J.D. Power & Associates, told the Detroit News that consumers are ready to pay for electronic features if the price is right.
According to the Detroit News, Morin said Valeo is well positioned to secure a slice of the North American market because consumers now expect more and better features on even low-end vehicles and the company has experience developing electronics for European vehicle makers.
The newspaper noted that Valeo’s push into North America comes as the company goes after new business globally while reducing costs to improve profits, as a hedge against intensifying pricing pressure from vehicle makers and a possible slowdown in car and truck production if consumer confidence drops amid concerns about the economy and talk of possible war in Iraq.
Valeo has said it expects 2003 vehicle production to fall by as much as 4%, the Detroit News added.
The newspaper said the company has closed 31 of 170 factories worldwide, eliminating 7,500 jobs, and these cuts helped Valeo to a $48 million profit in the second quarter, up from a loss last year.
Third-quarter net profit was $30.1 million, although sales fell 4 percent to $2 billion, the Detroit News said.
The newspaper said that Valeo is also trying to shrink its supply base from 3,200 companies to about 1,200 while cultivating a core group of key suppliers that are global and financially strong, have innovative, high quality products and will work with it to save money.
“We’re preparing Valeo for when the market declines,” Morin told the Detroit News.
