DETROIT - The world's largest auto parts company wants to slim down.
Delphi Automotive Systems Corp. could soon decide whether to fix, close or sell business units that last year generated revenues of $4 billion to $5 billion. The review is part of an effort to boost the financial performance of the Troy, Mich., giant, which posted sales last year of $29 billion.
'There are a half-dozen businesses that we are looking at,' said Don Runkle, a Delphi executive vice president. He made his comments Monday, March 5, at a Delphi gathering not far from the SAE World Congress.
Delphi's move is the latest in a history of shedding unprofitable business. Chairman J.T. Battenberg III sold, closed or consolidated 61 uncompetitive plants before Delphi's separation from General Motors in 1999. He also cut product lines from 249 to 184 by selling commodity businesses such as lighting. Value of those cuts: $6 billion.
But Delphi's leadership still is not satisfied with the company's financial performance.
Delphi wants its business units to rank No. 1 or 2 in their product segment, generate 5 percent or more profit margin and a 12 percent return on net assets, a measure of the return on net assets employed in the business.
Delphi's automotive generator business is the only underperforming group Runkle would identify. That business last year generated more than $600 million in sales.
Industry analysts said some interior components such as airbags and instrument panel parts are possible candidates for sale, as are safety, thermal and electrical architecture businesses.
Runkle said Delphi would not sell or close all of the units now under review. A strong business without a strategic fit at Delphi can be swapped for an outside business. Still other poor performers can be strengthened by recruiting joint venture partners, he said.
Delphi has received strong interest in those units it plans to sell, he said, but declined to provide details.