Automotive News - December 22, 2014 - 13

DECEMBER 22, 2014 * 13
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Faurecia expects tech to fuel growth
CEO sees benefits from megasupplier trend
aurecia SA increased sales in the third
quarter 7 percent to 4.4 billion euros
($5.55 billion) and expects its full-year
revenue to rise as much as 4 percent to
$24.80 billion.
To maintain the momentum, CEO Yann Delabriere, 64, is counting on the French supplier
to provide high-tech products to meet
customer demands anywhere in the
world. Delabriere was interviewed
by Bruce Gain, France correspondent for Automotive News Europe.

What percentage of Faurecia's revenue
does it invest in r&d?
It's currently 5.5 percent.
Some automakers are reducing production
in Europe. Does Faurecia see signs of a
slowdown?
We don't expect the European market
to decrease again. We have a very slow
recovery ahead of us, but we don't expect Europe to regain its previous volume as North America did. We know
that Europe remains 20 percent to 25 percent
below the precrisis [sales] level, and we don't
expect the gap to be closed rapidly. But we
don't expect another dip in Europe either. So
our cost base is OK, and we expect to be able to
leverage it as the recovery takes hold.

&
QA

Q: Will megasuppliers such as Faurecia
soon rule the industry?
A: Yes, this is a trend and it is supported by
two major industry drivers: globalization and
technology. That is what is also driving the
consolidation of the Tier 1 supplier base.
Automakers are willing and ready to
launch their vehicles and platforms
across the globe while offering the same
level of quality and engineering anywhere in the world. We need to offer
the same level of engineering, capacity
and quality everywhere. To do this, you
need to be a large supplier.
There is also a need for
suppliers to provide
more and more technology to the automaker and large suppliers
are capable of investing
massively in technology
to deliver those technologies.

How bad is Russia?
Russia is a small part of our business. It's obviously a pretty shaky environment but our main client is Av-

Meet the boss
Name: Yann Delabriere
Title: CEO, Faurecia SA
Age: 64
Main challenges: Continue to
develop technologies inhouse to boost product
offerings; strengthen the
company's presence
around the world

toVAZ and Renault-Nissan, which I would say
are doing relatively well, especially compared
to other carmakers.
What's Faurecia's outlook for North America?
It's pretty clear that North America has recovered more rapidly than expected to its precrisis level. Our vision is that the macroeconomic environment remains pretty supportive
in North America. We don't expect a downturn
but a stabilization of demand.
What about Asia?
We will maintain a 20 percent-plus growth
rate in Asia for the next five years.
Will Faurecia continue to grow through acquisitions?
We are the largest supplier worldwide in
most segments in which we have a presence. I
would say that we have completed our globalization goals and we don't need to grow further through acquisitions.
When will Faurecia's major investments in
r&d start to pay off?
I would say our investments in product development during the past few years already
are paying off handsomely. We are also targeting technologies that meet our customers'
needs in 2020 and beyond, such as in the area
of plastic composites. We really believe that
plastic composites, for example, will be a major driver of the automotive industry going forward, but it requires new generations of platforms and that cannot happen before 2020
and beyond. c

Suppliers: Automakers' efforts
to cut costs damage relations
John Stanley
autonews@crain.com

elations between automakers and suppliers are deteriorating largely because of intensifying cost-cutting demands, according
to a survey.
Vehicle manufacturers are looking for annual price
reductions of as much as 10 percent, parts makers revealed in the 2014 Global OEM-Supplier Relations
Study conducted by consultant IHS Automotive.
"With few exceptions, even the best performing
carmakers have become more stringent on controlling costs in 2014, signaling a general shift for the automakers toward greater cost focus and more aggressive ways to capitalize on their negotiation leverage
with suppliers," Matteo Fini, the study's lead author,
wrote in the report.
The standard annual price reduction by automakers is about 2 to 3 percent, but IHS says it is not uncommon for them to seek cuts of 5 percent or more.
"Suppliers seem to accept the notion that they have
to find innovative ways to generate savings on a yearover-year basis, however, they find it difficult to accept that they receive little or no support from the
OEMs in doing so. This lack of support often results
in strained relations between the two parties," Fini
wrote.

Toyota, BMW top survey

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Top 5 and bottom 5 automakers in 2014 ranked
by suppliers based on factors including profit
potential, organization and trust
POINTS*

1. Toyota
1. BMW
3. Mercedes
4. JLR
5. Honda
Average
30. Chery
31. Changan
32. Mahindra
33. Tata
34. AvtoVAZ
*On 1,000-point scale

CHANGE FROM 2013

627
627
617
602
595
504
411
405
392
391
379

+5
0
-4
+7
-5
-15
-43
+40
-30
-32
-33

Source: IHS Automotive

tial, organization, trust, pursuit of excellence and
outlook. Based on suppliers' responses, the automakers are assigned scores between 0 and 1,000.
Toyota and BMW tied for first, each with 627
points.
Fini said suppliers indicated that Volkswagen Group
and Renault-Nissan are particularly demanding.

'Nitty-gritty' factors
A number of factors contribute to strained ties between automakers and suppliers, he said.
"Expanded product liability guarantees, attempts
to put more of the financial burden of recalls on suppliers and such 'nitty-gritty' factors as reduced levels
of compensation for raw material cost variations and
reimbursement on tooling are also having a negative
influence on the supplier-OEM relationship," Fini
said in an interview. "In some commodity type areas,
OEMs are becoming much more demanding. They
clearly consider their bigger platforms lead to higher
volumes and this gives them much greater leverage
with suppliers."
The survey asked suppliers to rate automakers
based on 29 criteria in five categories - profit poten-

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JLR, Great Wall gain
There were some winners in this year's survey.
Jaguar Land Rover, with a 16 percent improvement
in 2014, established itself as the "most trustworthy"
automaker. It offers, for example, a more comprehensive protection of its suppliers' intellectual property, according to the survey.
Another winner was Chinese manufacturer Great
Wall Motor Co., which improved 47 points to 518,
putting it just behind VW brand (525) and Hyundai
(524).
Suppliers are less confident than they had been
about their opportunities to expand their business,
expressing particular concern about future opportunities with Hyundai-Kia and VW Group. c

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