DETROIT - Valeo SA's conservative business outlook has kept the supplier on target this year. But CEO Thierry Morin is concerned that the global market will remain tough until 2005.
Morin had predicted a flat 2003 at best.
"Five months ago, I was said to be the most pessimistic man in the world," Morin says. "I think today I am becoming realistic, from what I read. And I hope I will not finish the year by having been optimistic. Naturally, if the market is artificially sustained, everything is possible in terms of volume."
Valeo, of Paris, had global automotive parts sales of $8.8 billion last year to original equipment manufacturers, compared with $7.3 billion in 2001. Of that, North American sales were an estimated $2.4 billion last year, up from $1.8 billion in 2001.
Valeo wants to nearly double its sales in North America by about 2007. Morin expects the supplier's technologies, such as its "seeing and being seen" category, to take it there. The category includes lighting, windshield wiper and obstacle detection systems.
Valeo is in talks with three automakers in North America, at least one of which has taken commercial orders for the "seeing and being seen" technologies, Morin says. He declined to name the automakers.
"It's a matter of safety," he says. "In a few years, every car will be equipped with one bending light system, which is where you are turning. Secondly, you will have infrared night vision systems. And third, within your headlamps, you will have those radars, which are allowing the park assistance that will then replace the sensors of today."
The cost of these technologies to consumers, about $1,000, may be hindering Valeo's efforts, but the price will drop to about $200 in a few years as volume increases, Morin says.
"When we were presenting a few years ago our latest technology, which was our xenon lamps, everyone was saying: '$1,000? That's unbelievable!' " he says. "Now there is no way you don't provide that as an option to your car. We have divided by six the cost of xenon lamps in four to five years."
So what does Valeo do when an automaker asks for price cuts today?
Says Morin: "We say we are going to study that, and we try to come back and say 'yes'."