Visteon goes Asia-centric with climate control venture
Leuliette: It’s all about Asia.
DETROIT -- Many U.S. auto suppliers have factories and engineering centers in Asia, but Visteon CEO Tim Leuliette plans to top them all.
He's moving the headquarters of his most profitable division -- reincarnated as a joint venture -- to South Korea as part of his effort to recast Visteon as an Asia-centric company.
Last month Visteon announced plans to sell its climate control division to Halla Climate Control Corp., a joint venture in which Visteon has a 70 percent stake.
It will be the world's second-largest supplier of automotive climate control, behind Denso Corp., and it will be based in Korea.
In an interview last week, Leuliette, 62, explained why he will move the headquarters of the climate control operation to Seoul.
Leuliette, promoted last week from interim to permanent CEO, plans to slash the size of Visteon by shedding low-profit businesses, such as interior trim.
U.S. factories already have been closed, sold, or given back to its former corporate parent, Ford Motor Co. The only survivors of Visteon's once-vast U.S. empire are a Halla climate control factory in Shorter, Ala., and Visteon's technical center in suburban Detroit.
After the interior-trim business is sold, and if the company also sells its electronics unit -- its fate is undecided -- that would leave Visteon with its climate control unit, a big player in a product sector with strong growth prospects. And Leuliette sees much of that profitable growth coming in Asia.
Hyundai Motor Co. happens to be Visteon's biggest customer. Leuliette says the climate control operation likely would be listed on the Seoul stock exchange, and perhaps on the Hong Kong exchange, too.
Most important, the new company will be near China, with its expanding middle class. "Is it going to be a 30-million-unit-a-year market? Hell yes," Leuliette said.
The China market also would allow Visteon to cut costs. The company can engineer products there at far less cost than in North America and Europe.
And Visteon can produce many of those parts in China and other low-cost Asian countries. For example, the company has been shipping Korea-made climate control kits to Russia for final assembly.
Visteon reported global OEM auto parts sales of $8.05 billion last year, which made it No. 22 on Automotive News' list of the top 100 global suppliers.
Leuliette wants to sell Visteon's Chinese interior trim joint venture, Yanfang Visteon Automotive Trim Systems Co., despite strong growth prospects in China. But that's because Visteon wants to leave the interior trim business, which is plagued by thin margins and overcapacity.
But Leuliette says he is patient enough to wait for the right offer.
General Motors and Volkswagen, the two biggest automakers in China, are Yanfeng Visteon's biggest customers. "Yanfeng is growing, and they've got a great order book," Leuliette said. "The longer we own it, the more it's worth."
You can reach David Sedgwick at firstname.lastname@example.org.