Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Suppliers
July 14, 2019 04:19 AM

Valeo tightens cost controls to offset Europe, U.S., China slowdown

Peter Sigal
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    MEET THE BOSS

    NAME: Jacques Aschenbroich
    TITLE: Valeo Chairman and CEO
    AGE: 65
    Main challenge: 
    Investing in future technologies such as electrification and driving assistance while preserving profits in an uncertain world.

    Valeo is a global leader in a broad range of component categories: parking and driving assistance sensors and cameras; thermal management, of both the vehicle and passengers; and powertrain, including clutches and high- and low-voltage electrification. CEO Jacques Aschenbroich spoke with Automotive News Europe Correspondent Peter Sigal about how Valeo is navigating a transformative time for the industry.

    You were one of the first to warn, in July 2018, about the effects of the new WLTP certification on the supply chain. How did that affect Valeo?

    We said last year not only that the European market would be affected by WLTP,  but we also warned that we saw something worrisome in China-- even though a lot of our competitors were saying that nothing would happen. In the second half of last year, we saw the negative effect of WLTP and we also saw that the European market was starting to decline. With the Chinese market going dramatically down, and the U.S. market starting to drop, we are in a situation today where all the three major markets are declining.

    What's the reason for this?

    In the short term, it's hard to say what is happening. Market conditions in Shanghai are very different than the U.S. or Europe. In China, it's a combination of weakening GDP growth and a tightening of credit, and in some areas of the registration process. In the longer term, we want to be cautious. What we have lost we don't think we'll recover immediately. We will grow but from a lower base. We need to adapt to the new market conditions by putting pressure on our costs and capital expenditures.

    How are you doing this?

    The automotive industry is in the middle of a huge transformation. Electrification of the powertrain is a fact now, both in mild hybrid and high-voltage hybrids. Something very similar is happening with driving assistance. We need to continue to invest in those areas, develop new products and innovation, and invest in what is our long-term strengths like 48 volt, battery electric vehicles, ultrasonic sensors, cameras and lidar. However, at the same time, the automotive market is slowing. We have already reduced capital expenditures by 100 million euros compared with last year, and by the end of this year we will reduce another 100 million euros. We will also reduce costs by 100 million euros this year. Technology is now driving the industry as a whole. Everything is based on mobility services and reducing CO2 emissions. It's a massive, in-depth change. What is most difficult today is finding the balance between investing in new technology and at the same time achieving profitability to generate cash to pay our dividends -- and to invest.

    Consolidation is a hot topic in the industry. Do mergers between automakers affect your profits as scale grows?

    A lot of consolidation has already taken place and it hasn't affected margins. It's being done to leverage volumes to amortize research and development. Our total development effort is more than 10 percent of our sales, so if we can leverage our technology on a larger scale, I don't think we will be the loser. We will be the winner.

    Speaking of technology, Valeo has been a leader in 48-volt mild hybrid components. How do you see that market developing?

    The only way to reach CO2 emissions targets, besides full-electric vehicles and hybrids, is to optimize the gasoline engine, especially in Europe as diesel sales decline. That [decline] is irreversible; the diesel won't come back. You can do that [reach the target] with mild hybrids, and you can put the motors in several positions -- belt-driven, on the gearbox or on the axles. In the short term, belt driven starter/alternators are the strongest [selling solution], with some sales for the rear axle. The gearbox-located motors will be slower to emerge because it's more intrusive.

    Some see 48 volt as a bridge to high-voltage electrification.

    I don't think it will be a bridge, but if it is it will be a very, very long lasting one. If you project into 2030, the market won't be 100 percent electric. Maybe 30 percent will be plug-in hybrids and pure electric. So 70 to 75 percent of the market will be gasoline driven, which can be optimized through 48 volt.

    How is Valeo involved in high-voltage electrification?
    We have developed a full range of technology through our partnership with Siemens, including electric motors, the inverter, the charger and DC-to-DC converters. We have an important order book that we now need to develop and put into production, which will be at the end of this year.

    Is there a place for hydrogen fuel cells?

    How will electrification be split between battery-electric vehicles and fuel cells? I don't know, and I don't care. Why? Because all the products we have developed can be driven by either battery storage of electricity or production of electricity in a fuel cell in the car. We will see how battery technology improves to solid state, and how fuel cell technology evolves.

    How is the electric vehicle market developing?

    We can see that range is increasing but a lot depends on how fast the infrastructure is being built. The problem is not only overnight charging, but a lack of fast-charging stations for long-distance travel. There will probably be market segmentation, with shorter-range city cars and longer-range cars. At the end of the day the consumer will choose. Starting next year we will have tens of different models available, and the cost will keep going down. I think we are at the early stages of a true revolution in the auto industry, which is very exciting to be part of.

    The issue of tariffs is affecting the supply chain. How are you preparing for them?

    Our philosophy has been that we are "local for local" -- we produce and sell in the same markets. Also, our own supply chain has been optimized in terms of technology and logistics, based on globalization. However, we can see now that the world isn't predictable, so we need to re-think our supply chain again for a more-fragmented world. In the short term there is no other choice but to pass any tariff costs on to our customers -- which they will have to pass to their own customers.

    You have been CEO and chairman of Valeo since 2009, and you were just nominated for another term. However, within the next two years, the two posts will be divided. What is the reason for that?

    I'm 65, so it's my last term. We have indicated that one of my duties -- and the duty of the board of directors -- is to think about what will come next. It's our responsibility to make sure that we have the right management in the decades to come. We have been able to attract some very strong people to our board, such as Gilles Michel [a former PSA executive and CEO of the mineral processor Imerys] and Bruno Bezard [a top public finance official], and this year we have nominated Olivier Piou [ex-CEO of cybersecurity company Gemalto] and Patrick Sayer [former head of equity company Eurazeo] to the board.

    Would you remain chairman or CEO?

    Let's wait and see.

    How have you seen the supplier business change in the past decade?

    Some things that have not changed are that suppliers are investing more and more in technology, but the need to invest for the long term is even more prevalent today. We also have new customers. We have all the electric vehicle startups in China, for example, and we have to choose the ones we think will be the winners in the 21st century. Then in driving assistance, there are companies such as Uber, Waymo, Cruise and Lyft that are entering the automotive industry in a different way, focusing on the technology that makes digital mobility possible.

    AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE

    This story is from Automotive News Europe's latest monthly magazine. To view the new issue, as well as past issues, click here.

     

    RECOMMENDED FOR YOU
    Autoliv's price increases help Q4 core earnings top expectations
    Recommended for You
    Autoliv logo
    Autoliv's price increases help Q4 core earnings top expectations
    STMicro sign
    STMicro expects growth on strong auto demand
    CATL factory, Erfurt, Germany
    CATL's German plant targets six battery cell production lines by the end of 2023
    Capgemini Invent Head on automotive takeaways from CES 2023
    Sponsored Content: Capgemini Invent Head on automotive takeaways from CES 2023
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us