Visteon sees riches in dashboard wars

The dashboard controls of the redesigned Audi A8 sedan. Cars have become computers on wheels and consumers have grown enamored with their smartphones, so automakers have been forced to open up their infotainment systems to more closely integrate with mobile devices. Photo credit: BLOOMBERG

As Detroit and Silicon Valley jockey for control of the screens inside your car, auto supplier Visteon Corp. is setting itself up to cash in either way.

The former Ford Motor Co. unit focused on car cockpit electronics allows automakers adopting its open-source systems to design digital dashboards however they like -- using their own software or taking from the likes of Alphabet Inc.'s Google. Visteon's agnostic stance could win the company sales from car manufacturers regardless of whether they harbor fears about Silicon Valley getting access to their customers' information.

"The market is divided -- there is the camp that is working with Google, and the camp that is not OK working with Google, and we have to serve both," CEO Sachin Lawande said in an interview in New York this month.

As cars have become computers on wheels and consumers have grown enamored with their smartphones, automakers have been forced to open up their infotainment systems to more closely integrate with mobile devices. Visteon is positioning itself as a tech-savvy middleman in a changing display market that's forecast to almost double to nearly $21 billion by 2022. A record $17.3 billion backlog in customer orders and speculation that Visteon could be the next Harman or Mobileye -- a parts supplier acquired by a tech company with automotive ambitions -- have driven Visteon shares up 43 percent this year.

"The cockpit electronics side of things is gaining, you're having a lot more dollars going into the new models than you did before," said Kip Wright, a partner at Kirr Marbach & Co. in Columbus, Indiana, which manages $650 million, including Visteon shares. "It wouldn't surprise me as we move down the road if Visteon ends up being a part of a Google or a part of an Apple."

Electronics focus

Van Buren Township, Mich.-based Visteon bought then-Johnson Controls Inc.'s electronics unit in 2014, which became the building blocks for an infotainment platform to take on more dominant players like Delphi Automotive and Harman International Industries Inc., a rival bought by Samsung Electronics Co. for $8 billion last year.

Since leaving Harman in 2015, Lawande has sought to speed up Visteon's transformation from a maker of analog dashboard components to a software-driven integrator of the connected car. Visteon introduced at the Consumer Electronics Show in Las Vegas earlier this year its Phoenix infotainment platform, which lets automakers turn the car's dashboard screen into an open ecosystem for app developers, while still allowing them to tailor the look and feel to match their brand. Visteon hasn't announced a contract win for Phoenix, but was actively engaging with customers as of its quarterly earnings released last month.

Android expansion

Lawande originally based Phoenix on the standardized language of the web, HTML5. Now, in a nod to Google, he's creating an Android-compatible version that can knit together the tech giant's automotive operating system with the rest of the cockpit. The CEO has been hiring engineers with experience building Android apps to develop the Google-savvy version.

Visteon also acquired a batch of Android engineers last July when it bought AllGo Systems, an Indian auto supplier that specializes in smartphone connectivity and infotainment systems.

"We are bringing them on board and training them in what we know very well, which is the automotive side of things," Lawande said. "This confluence of Android expertise and auto expertise is exactly what the market needs."

Open door

Visteon's open-door policy comes at a time when some automakers are still fighting to keep Silicon Valley out. Toyota Motor Corp., for example, has resisted offering Apple Inc.'s CarPlay and Google's Android Auto -- systems that connect the car's display with a driver's phone -- and last year agreed to use a car-phone connectivity system championed by Ford instead.

Other brands, including Chevrolet and Ford, have elected to allow drivers to pipe in Apple CarPlay and Android Auto without giving the tech companies entree to drivers' personal information or vehicle diagnostics.

Google continues to plow forward with car-related advancements. In May, it revealed an Android version of touchscreen car consoles and infotainment systems that can host popular applications, like Google Maps and Spotify, and also can control car features like seat positioning and temperature -- without going through the driver's phone.

Car audio and navigation systems register more complaints than any other part of the vehicle, according to a J.D. Power quality study published in June. As more customers demand complex embedded platforms, Visteon can connect them to the rest of the car's systems.

"There's an expectation that if a device has a screen, then it should be able to download apps. And people just assume that," Lawande said, noting that tomorrow's consumers will want to be able to download directly onto their dashboards and leave the phones out of it. "There's a lot of frustration with consumers, with their expensive infotainment systems, that don't seem to be able to keep up with them."

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