Faurecia increased sales in the third quarter by 7 percent to 4.4 billion euros ($5.44 billion) and the company expects its full-year revenue to rise by as much as 4 percent on the 18 billion euros ($22.26 billion) it reported in 2013. To maintain the momentum, CEO Yann Delabriere is counting on the megasupplier to continue expanding its product offerings to provide high-tech solutions to meet customer demands anywhere in the world.
Delabriere recently met with Automotive News Europe Correspondent Bruce Gain. Automotive News Europe is a sister publication of Plastics News.
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.
Q: What percentage of your revenue do you invest in R&D?
A: It's currently 5.5 percent.
Q: Some automakers are reducing production in Europe. Are you seeing signs of a slowdown?
A: 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 pre-crisis [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 okay, and we expect to be able to leverage it as the recovery takes hold.
Q: How bad is Russia?
A: Russia is a small part of our business. It's obviously a pretty shaky environment but our main client is AvtoVAZ and Renault-Nissan, which I would say are doing relatively well, especially compared to other carmakers.
Q: What about North America?
A: It's pretty clear that North America has recovered more rapidly than expected to its pre-crisis 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. We won't see what I would say might be a massive market expansion there, but we don't see signs of decline, either. We see the market remaining stable to slowly growing for some period of time.
Q: What about Asia?
A: We will maintain a 20 percent plus growth rate in Asia for the next five years.
Q: Will you continue to grow through acquisitions?
A: We are the largest supplier worldwide in most segments where we are active. I would say that we have completed our globalization goals and we don't need to grow further through acquisitions. The next steps for us will be to continue to develop our technologies and to progressively add a larger scope of technology and product offerings.
Q: You have made major investments in R&D. When will they start to pay off?
A: Our investments in product development already are paying off handsomely. We are also targeting technologies that meet our customers' needs in 2020 and beyond, such as plastic composites. We really believe that plastic composites 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.
Q: How does Faurecia help carmakers reduce fuel consumption and CO2 emissions?
A: We play a major role and our involvement is twofold. The first key driver is reducing fuel consumption through a reduction in the weight of the car. We believe that replacing steel with plastic composites will generate weight savings in the long term. The other area of focus is energy recovery with exhaust heat recovery systems. They will recover heat in the exhaust system and provide that heat to the cabin or in the engine. That alone can reduce CO2 emissions by 3 to 7 grams per kilometer, which would be 3g/km in a conventional combustion engine car and up to 7g/km for a hybrid car.
Q: When will we see this technology in the cars?
A: It's available today and we will supply this system to our first Asian automaker customers in 2016.
