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  Valeo CEO Jacques Aschenbroich
Q&A with Jacques Aschenbroich
How Valeo's CEO plans to spur growth in China
Automotive News China | 2016/12/16

Valeo CEO Jacques Aschenbroich says self-driving vehicles and carbon dioxide emission reduction will be the two main technologies that fuel Valeo's long-term growth in China.

Still, the French supplier has cultivated all four of its business units -- comfort and driving assistance systems, powertrain components, thermal systems and visibility systems -- in China, its largest market. 

Last month, Aschenbroich, 62, attended the opening of a windshield wiper plant in Changshu in east China's Jiangsu province. 

Afterward, he described his plans for China in an interview with Yang Jian, managing editor of Automotive News China.

How important is China to Valeo?
China has become our largest market in terms of employees, with 17,000 people by the end of last year. It is also our largest country in terms of sales, with 17 billion yuan ($2.5 billion) in sales in 2015. 

How many plants does Valeo have in China?
This wiper plant in Changshu is our 30th plant in China.

How is Valeo doing in China this year?
We have been growing much faster than the market in China. In the third quarter of this year our sales to automakers grew 39 percent year on year, while the market grew only 23 percent.

In China, which technologies will Valeo invest in?
The two areas are clearly CO2 emission reduction and autonomous driving. We will continue to invest in our four business units in China. 

We are lucky enough to have four business groups growing fast worldwide and financially successful. It is more stable to stand like a horse with four legs than like a duck with only two legs. 

We also want to invest more in the aftermarket. The aftermarket represents 13 percent of our worldwide sales. But aftermarket sales [in China] are only about 6 to 7 percent [of total sales]. So we are investing very heavily to grow our aftermarket business in China much faster than our original equipment business. 

What factors are driving Valeo's robust business growth in this market?
The most important is people. Since I joined Valeo seven years ago, my dream has been for Valeo to become Chinese in China. If you want to be successful in a country like China, you need to be Chinese in China. We have more and more extremely competent Chinese executives here in China. They make a difference. 

The second factor is r&d. China now accounts for 20 percent of our global r&d expenses. That is higher than the percentage of our global sales generated in China. 

The third factor is quick product localization. We are still importing some components into China, and I have talked to our executives about further localization so that we can be more efficient in this market.

The fourth is competitiveness. Automotive business worldwide is extremely competitive. We always bring in new products. In the first half of the year, our order intake in China grew more than 20 percent. Forty-five percent of those products were developed less than three years ago. 

The other factor of our success here is the investment we have made in our relationship with domestic Chinese customers. In the third quarter, Chinese automakers represented 30 percent of our sales, but more than 40 percent of our order intake.

Who are Valeo's main customers in China?
Let me put it this way: Worldwide, German automakers represent more than 31 percent of our sales, Asian customers 27 percent, American customers 24 percent, French customers 15 percent. 

Here in China, Chinese customers represent 30 percent of sales, followed by the Germans, the Americans, and the other Asian and French customers. 

China is the world's largest electric vehicle market, and the government is goading automakers to expand production. How will Valeo exploit this market?
The Chinese market has never been a diesel car market like Europe or India. It has always been a gasoline market. Therefore, the only way to reduce CO2 emissions is powertrain electrification. Then we have to wonder what this means, since batteries remain extremely expensive and not very efficient. 

There will be a segmentation of the market [for vehicles with a varying degree of powertrain electrification]. There will be mild hybrids such as vehicles equipped with a stop-start systems or a 48-volt system. 

There will also be some high-end plug-in hybrids -- cars powered by batteries in town and internal combustion engines when driving long distances. There will be some city cars, which are small, low-speed electric cars with a short range. 

We don't know what exactly the market segmentation will be. Nobody knows. But we are preparing to supply different market segments with different products.

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