THIERRY MORIN, chairman and CEO of Valeo, sees new products as key to the French supplier's growth. Morin says safety and emissions issues are helping drive the development of such innovations as speed sensors, night vision and bending headlamps that automatically adjust to curves in the road ahead. Morin spoke to Automotive News Europe's Edmund Chew.
Where is Valeo likely to outperform the market this year?
We have 11 businesses and we aim to outperform the market in every area. There are three discriminating factors - cost competitiveness, quality and globalization. In the past two years, we have cut factory numbers from 170 to 136 (to the end of March) and have pushed standardization to improve the return on our assets from 3.3 times to 3.8. Cost competitiveness has been boosted by halving our suppliers to 1,500 better-quality ones. Also, Valeo is more global than many. We have taken a global platform with Volkswagen because we were in a position to deliver the same quality and the same cost everywhere.
Any other factors?
Technology, which we have pushed in every field over the past two years. This year we have presented some outstanding packages such as fixed and dynamic bending lights, the infrared night vision system and the THEMIS system [Thermal Management Intelligent System, or electronically controlled engine cooling] which helps to save fuel and cut emissions. We have also developed the visual park assist system that includes such innovations as parking slot measurement, lane departure warning and blind spot detection.
What is driving these technologies?
Safety and emissions issues. [Innovations in] seeing and being seen include automatic wiper systems with rain sensors, speed sensors, the infrared night vision system, and the bending light system. We've launched the world's first double-xenon lamp on the Volkswagen Phaeton and the world's first bending light on the Porsche Cayenne. Energy consumption of the xenon lamp is a lot less than that of a traditional lamp. Also, headlamps are becoming fashion items where previously they were purely functional.
Are there a lot of value-added features going into air conditioning?
We've created a very sophisticated common heat exchanger for both the radiator and the air conditioning system. It reduces the size of the system and offers better circulation of gas and liquids. It saves a lot on cost, space and weight. We recently presented it to Japanese carmakers and will soon present it in North America. Valeo is also producing a new range of compressors through our joint venture, Zexel Valeo Climate Control, to improve air conditioning function. This will be commercial at the end of 2004.
What about automated clutches?
We are working with carmakers on prototypes and I believe you'll see some vehicles on the streets in 2005 with new gearboxes with dual clutch transmissions that will have six or seven gears and be even more fuel efficient than automatic gearboxes. They'll be simpler to handle because they don't require complex hydraulic systems, they're cheaper and are very comfortable. I believe all small cars, between, say, 800cc and 1.8- to 2.0-liters in Europe, could very well accommodate such a product.
How much are you having to spend on technology?
Valeo spends roughly 6 percent of sales on research and development, which we haven't cut in the last two years. We've saved costs in administration and general expenses, but I have dedicated 6 percent to r&d.
You did the front-end module for the new Renault Megane. How did that go?
It is teaching us how to reduce the cost of the supply chain. First, we assembled it exactly as if we had been the carmaker. Then we worked on innovations with plastics suppliers on the structure of the car, and then we brought them to Renault.
Some suppliers complain they are asked to do more systems development and quite complex integrations, but are still paid on a piece basis. Is this an issue for you and, if so, how are you solving it?
The customer is always looking to reduce his cost base. Valeo does the same with its own suppliers. At the end of the day the best suppliers will remain. I do not believe in complaining. I believe in strong suppliers with strong customers.