Automotive News Europe - July 2019 - 19

AUTOMOTIVE NEWS EUROPE

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

age our technology on a larger scale, I
don't think we will be the loser. We will
be the winner.

aleo 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 highand 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

JULY 2019

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.

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 lever-

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 highvoltage 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. ANE

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Automotive News Europe - July 2019

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