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Delphi confident of China growth, seeks to double business by 2020

BEIJING – Delphi expects to almost double its business in China from $2.9 billion in 2015 to $5.5 billion in 2020, according to Majdi Abulaban, president of Delphi Asia Pacific.

Abulaban made the predictions together with Delphi China President Simon Yang at a media roundtable held on April 26 in Beijing on the sidelines of Auto China 2016.

“2015 was an exciting year for Delphi in China,” said Abulaban, who is into his 17th year of working in the country. “We grew 12 percent last year, more than the market growth, and we are excited about our presence here in this market. It is amazing to see how breathtaking the development of the market is.”

Delphi, according to Abulaban, has become a market leader in China and technology powerhouse, and China continues to be an extremely important market for Delphi.

So important that the systems supplier is running its largest global business – electrical and electronics architecture – right in Shanghai with almost $10 billion in annual turnover.

“Our target is to grow business in China from 2016-2020 at three times the industry average growth,” said Yang.

Yang emphasized that the success of Delphi in China over the years is due to its positioning as a systems supplier of safe, green and connected technologies, which will continue to increase as OEMs require more features in these areas. “This is why we believe China still has the largest growth potential of any auto market in the world. It’s not only growth in terms of volume, but also in terms of content and quality of that content,” said Yang.

Delphi’s 12 percent growth in 2015 was more than three times the industry growth of 3.3 percent, and compound annual average growth from 2010 to 2015 was about 13.3 percent, nearly twice the 7.5 percent annual growth for the industry as a whole during the same period, according to Yang.

In 2015, Delphi achieved sales revenues of $15.2 billion, a quarter of which was achieved in Asia, and more than three quarters of that was achieved in China alone. Yang expects Asia to account for 30 percent of global revenues by 2020 and China to continue play a dominant role in Asia.

Delphi will continue also to grow business from Chinese domestic OEMs and Yang predicts business from those companies will account for a third of its revenues in China by 2020. It will also continue to increase localization: 95 percent of the products it sells in China are also produced in China and 80 percent of the materials procurement is done in China, according to Yang.

Delphi is currently in the process of investing heavily to increase the automation rate at its electric/electronics systems plant in Shanghai, from the current 20 percent to 80 percent in the future. The project is one of the key industry 4.0 projects supported by the Shanghai government and is expected to be completed in 2017.

Delphi also announced the launch globally of the 48V mild hybrid technology, which results in a 70 percent improvement in energy saving and 10 percent reduction in CO2 emissions at only 30 percent increase in cost.

“The 48V mild hybrid technology will be a very good solution as China enforces more strict energy saving and emissions reductions goals,” said Yang. “This is a very mature technology and it has great potential in the Chinese market.”

Yang emphasized that Delphi continues to be confident in China because of three primary reasons: China’s economy will continue to grow stably, healthily and more sustainably, the service industry accounts for nearly 50 percent of the GDP and will continue to grow and individual consumption, at ¥2.5 trillion, also continues to grow.

“About 30 percent of the automobiles in the world will be produced in China during the new normal period of 2015-2020,” said Yang.

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