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Suppliers need to balance technology and cost, says Gestamp CEO Riberas

SHANGHAI – In the race to increase fuel efficiency and reduce emissions, automotive suppliers need to balance between technology and cost, according to Francisco J. Riberas, president and CEO of Spanish metal components and assemblies maker Gestamp.

Riberas spoke to CBU/CAR on the sidelines of the 12th China Auto Industry Forum 2014 held by China Europe International Business School (CEIBS) in Shanghai on October 25.

“You need to have a balance to reduce emissions by reducing vehicle weight but at the same time, you need to be able to not increase too much cost of the car,” said Riberas.

Riberas believes that in the short run, the best way to mitigate CO2 emissions and improve vehicle safety, two of the most challenging issues facing the global auto industry today, is weight reduction through the use of high-strength steel, which Gestamp has been using to produce hot-forming body whites.

“We are able to reduce the thickness of components and reduce extensively the weight of the car through the use of very high-strength steel, which will dominate the volume segment, while aluminum, magnesium and carbon fiber will mainly serve the high-end segment,” said Riberas.

Gestamp recently opened its eighth plant in China, located in Dongguan, Guangdong Province, which will serve local players such as FAW-Volkswagen’s Foshan Plant and Chang’an-PSA in Shenzhen, as well as the Japanese automakers and GAC.

“As we are producing very large metal components, logistics is a very big part of the cost, so we need to have a location in the South to position ourselves to be close to or in the vicinity of our customers,” said Riberas.

Gestamp currently supplies mostly to JVs, but the company is increasingly working for domestic Chinese players like Great Wall Motor, who are increasing their demands in terms of quality.

With that increase in business, Riberas expects China to become Gestamp’s third largest market worldwide next year, accounting for a tenth of its global revenues. Revenues are expected to reach €700 million, up from about €500 million this year.

“This market is going to keep growing,” said Riberas. “Even though we are not going to see the same rate of growth that we saw in the past, a 7-8 percent growth next year, which is possible, would mean 2 million units. We cannot avoid increasing our position here in China.”

The future of the supplier industry, according to Riberas, will require global suppliers for global carmakers, and suppliers need to have local footprint to deliver products to the same customers all over the world. “There will also be more consolidation of the supplier base and you need to be the best in what you do,” said Riberas.

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