Visteon Corp., once known for its grab bag of low-margin products, has transformed itself into a major supplier of cockpit electronics.
With the $265 million acquisition of Johnson Controls Inc.'s electronics unit — which makes instrument clusters, infotainment displays and body electronics — Visteon estimates that its electronics operation will generate annual sales of $3 billion.
According to consultant IHS Automotive Inc., Visteon now is the third-largest global supplier of cockpit electronics, behind Denso Corp. and Continental AG. Harman International Industries Inc. and Alpine Electronics Inc. are fourth and fifth.
"It's really becoming a Denso, Continental and Visteon story," Visteon CEO Tim Leuliette said in a Jan. 15 interview. "We have nine of the top 10 automakers in the world [as customers], and we are gaining market share."
The deal comes at a time when suppliers are investing heavily to develop head-up displays, gesture control devices, reconfigurable instrument clusters and voice-activated controls.
The JCI acquisition "gives us capability in areas that we needed," Leuliette told investors at a Jan. 15 presentation sponsored by Deutsche Bank AG. "We didn't have strong expertise in head-up displays. They do."
Companies that can't — or won't — invest in cockpit technology are bailing out. Beda Bolzenius, chief of Johnson Controls' seating division, said his company decided to invest in its core product, seats, rather than electronics.
"It was clear that the electronics [sector] was going to change in a dramatic way," Bolzenius said in a Jan. 15 interview. "We knew we'd have to throw a couple of billion dollars at it to get in the ballpark with suppliers like Denso, Continental and Bosch. It would have been a real serious investment."
In the wake of the acquisition, Visteon is introducing a new generation of instrument clusters and infotainment controls.
At the International Consumer Electronics Show this month in Las Vegas, the company introduced a reconfigurable instrument cluster that reproduces high-resolution 3-D graphics on a 12.3-inch screen.
The instrument cluster, dubbed LightScape, will be produced for a European automaker in 2016.
Visteon also displayed a concept cockpit in which the motorist could control various infotainment functions using hand gestures and eye gaze.
The company designed these systems with the help of engineers recruited from the video game industry.
In the wake of the Johnson Controls deal, Visteon is preparing to sell its interiors operation this year.
That would leave the company with two core products, electronics and climate controls, in which it is an industry leader.
Visteon has a 13 percent share of global climate control sales, trailing only Denso, which has a 23 percent share.
What's next? The company has $1.7 billion in cash. Leuliette says he might use some of that money for more acquisitions.
He said: "We are generating lots of cash, and if there is an opportunity, we would consider it."