To be financially secure, how many new contracts does a supplier have to win in a year?
A component's life cycle is between 2.5 and six years. So to feel safe and grow moderately and consistently, you have to win a quarter of your revenues in new contracts every year. For us that means about 1 billion euros ($1.21 billion) of new contracts a year. In 2005, we booked 960 million euros ($1.16 billion) in new orders. This year we would like to win 1.2 billion euros ($1.45 billion).
Has Europe realized the advantages of using ethanol as a fuel additive to reduce air pollution and dependence on oil?
I wish so. In Brazil, where we supply our flexible-fuel engine management system to Fiat, Ford Motor, Mitsubishi and Volkswagen, we have a 58 percent market share. Brazil is the largest market in the world in the use of ethanol for automotives.
How important is China for Magneti Marelli?
We have four plants in China - in Shanghai, Guangzhou and two in Wuhu - operating in four of our sectors: powertrain, electronic systems, lighting and exhaust systems.
We mainly produce in China to supply our clients there, both Chinese automakers and foreign automakers' joint ventures with Chinese companies.
In three years, I expect that about one-third of the 250 million euros ($302.9 million) of parts made by Marelli in China will be exported.
Sometimes, getting contracts in China helps us to win new business in other countries. We started supplying lighting systems to Suzuki in China, and now we supply them in Japan.
What about the quality of parts in China?
If you build a line that is the same as the one you have in Europe, and you train the local manpower properly, it should be exactly the same. We are proud of the 7 million euro ($848.2 million) greenfield plant we recently opened in Wuhu in the Anhui province, west of Shanghai, for engine components and lighting. In our new plant in Guangzhou, we produce the Audi A6 instrument panel. Its parts are interchangeable with the ones built here in Corbetta for Audi in Germany.
What have you achieved at Magneti Marelli over the past 12 months?
I'm very proud that we won several lighting contracts from German premium carmakers, and we were added to Renault/Nissan's panel of potential suppliers for lighting.
We supplied Fiat Auto with Blue&Me, the first application of Microsoft Windows Automotive. We won the contract to supply the exhaust system for Volkswagen's fuel-efficient version of the Golf, the Golf Blue Motion.
We are becoming a serious player in the suspension business in Poland. Last, but not least, we won seven of the eight driver and constructor titles last year in the motorsport championships we compete in: Formula One with Renault, FIA GT1 with Maserati, the World Rally Championship with Citroen and the MotoGP World Championship with Yamaha.
What would you like to have more of?
Definitely much more business with BMW in addition to our contracts in the lighting sector. I would love to be the first supplier to introduce a headlight using only light-emitting-diode technology this year.
When we develop new features, I want the focus to be on questions such as: Is the customer really going to appreciate it? How much will the customer pay for it? Unfortunately, in the past those issues were not in the foreground at Marelli.
Currently you make a common-rail engine management system for the 1.3-liter Multijet diesel powerplant that Fiat, General Motors and Suzuki use in their vehicles. What's next?
In the near future, a million units of this engine could be sold worldwide annually. At the moment, it is getting close to 750,000 units a year.
We are working on a compact unit that includes a catalytic converter and diesel particulate filter. That is crucial to improve emissions and fuel economy of the vehicles using the engine.
For large engines, we are discussing new contracts with our technical partner, Siemens. These will probably begin in 2008 or 2009, when Euro 5 arrives (the European Union's legislation for cleaner diesel fuels that takes effect in 2010). Normally, carmakers do not change the supplier of such a key component as a common-rail system on models already in production.
What will your technical cooperation with Siemens offer?
We are co-developing a new generation of common-rail diesel injectors and fuel pumps for medium-size passenger cars based on traditional solenoid injectors. These new injectors combine well-established diesel injector technology from Siemens with an advanced solenoid actuation concept developed by Marelli and Fiat Research Center.
The new injectors and fuel pumps are a joint effort, but Marelli and Siemens will continue to develop and build their own engine control units.
So Marelli and Siemens will remain competitors when it comes to supplying complete common-rail systems?
Correct. Marelli will continue to buy from Bosch the solenoid injectors and the fuel pump for the 1.3-liter MultiJet common-rail system. Siemens will continue building its own high-hand common-rail systems, which use piezoelectric injectors.
Will the market share of direct-injection gasoline engines remain minimal?
I do not think so. Forecasters say it will reach 5 to 7 percent of the total market, but my bet is that 15 percent is a most likely share.
We are already supplying direct-injection gasoline systems to the Volkswagen group for the Golf VR6 and for VW's new 1.4-liter turbocharged engine.
Our aim is to grow in this sector, mainly with the German carmakers who seem the most interested in volume applications for this technology.
When will you reach your target of selling 1 million Selespeed automated manual transmissions a year?
We were planning to achieve this by 2007, but a couple of key clients (General Motors and PSA/Peugeot-Citroen) delayed Selespeed's introduction in high-volume segments. So we finished 2005 at almost the same level as 2004. We supply Selespeed to 10 different carmakers, but mainly for high-performance models only.
This year we plan sales of 200,000 units, and we are seeing a growing interest in China. Chery Automobile bought 12,000 Selespeeds last year for its QQ minicar and this year is asking for 30,000 to 40,000 units. Also South and Central America seem now ready for automated manual transmissions.