Lars Westerberg, CEO of Swedish safety systems specialist Autoliv, expects global auto production to decline modestly this year. Still, he predicts a healthy increase in China and "very big gains" in Japan and Korea. Westerberg spoke to Automotive News Europe Staff Reporter Edmund Chew.
Q&A: Autoliv may need partners to develop systems
China was up more than 50 percent last year, and we expect a healthy increase this year as well. We believe we are going to continue to see very big gains in Japan and Korea. Of course, our market shares are not so high in that part of the world yet, particularly in Japan.
In particular, they are for export out of Korea, mainly to the United States. It seems that in both Japan and Korea, cars that are built for export are better equipped than those that are designed for local consumption.
It is still growing. For our company, the growth is in rollover and side airbags. Side airbags are growing about 50 percent year on year. That is the most rapid expansion for the time being.
Automotive producers are more interested in new technologies, possibly because they need to have some new things themselves in their cars. We can give them something that they can then talk about to customers. We also see a gradual shift from component purchasing to more systems purchasing. Sometimes total systems, but sometimes also frontal systems or side systems - partial systems. Third, there is more demand to be global because of alliances such as Ford-Mazda, Renault-Nissan and DaimlerChrysler-Mitsubishi.
It is not always easy to coordinate from a management point of view, and sometimes it is difficult for us and our customers to keep the platforms identical. There is a trend toward regionalizing platforms. From an investment point of view, we already have a presence that is relatively strong in Japan and North America, as well as Europe. We have local production of all components, down to gas generators. We don't have electronics in Japan - that would be the only major gap.
It is very strong. Whether it is worse or not, I could not tell you. But we think the demand is almost unreasonable sometimes.
We believe it is because there is a lack of profitability among our customers. The less you make yourself, the more you want your suppliers to help.
We can only design new products, more cost efficient products, and make the products in parts of the world where it is cheaper than where we do it presently. We are trying to do all of that.
We have not seen much the last year or two, but we still believe it is going to come. There is still a fairly large number of restraint suppliers, some of which are fairly strong in one region or another. We believe it is going to continue to consolidate. It should pick up again.
Probably, because there is no company that covers it all - this would involve sensor technology, restraint systems, brake systems and electronic stability program systems. It will also include ergonomics, because of course active safety means avoiding an accident - how to make the driver realize the danger and get him to understand what to do. It will involve a lot of different technologies and I don't think that any one company has it all.
It could, but the so-called competitors could also be partners. We could form a joint venture, or be partners and develop something together. We know our business and they know theirs. You don't always need to own all of it, you can work out how to cooperate. Maybe that is the next step.
I think it will be 2006, 2007 or 2008. We have adaptive cruise controls and stuff like that, but it is small. I think major steps are probably almost five years away, unfortunately.
There should be, and from our point of view we would need a partner. We don't think we could develop everything internally, and that probably goes for the other partners. Maybe they don't want to go into our type of business and we have to cooperate.
If we are talking about capital expenditure, we believe we are over the hump because we have already undertaken our global expansion. We are going to continue to invest some $225 million to $250 million a year in capacity, and possibly even more in technology.
There is a lot more demand - that is correct. We have to be better at coordinating global platform development projects. We are only in the learning phase and so are our customers. I think both of us are trying to learn how we run global projects; a platform that will be produced in North America, Europe and Japan. That will change. As much as possible we are going to try to use the same technologies worldwide. But that is a gradual shift. I do not really see any big steps happening.
We think the trend to more models per platform is a strain on our customers as well. They need more engineers. Sometimes they are not available and sometimes they are costly. That is partly why we believe that there are going to be more systems purchased than components, because then they can delegate the whole responsibility.
I think so. It varies from OEM to OEM, too. Some of them want to buy over the Internet - but then you cannot really have systems sourcing - and some believe that when you have a good dialogue, it's actually more cost efficient to do system sourcing. There are many ways to skin a cat, as they say.
The trend is toward systems and gradually more emphasis on active safety, though it is slower than expected. Maybe because there are no viable suppliers yet, and systems development is going to have to involve more than one supplier. It has to be a cooperation between various suppliers. The cost squeeze on the OEMs is probably postponing the process.
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