Serving the World's Largest Emerging Automobile Market
Home > Conference and Seminar > We have to accelerate our tactics in China

We have to accelerate our tactics in China

TIANJIN – Confronted with rising challenges and increasing competition in China, Lear’s response is not to do anything differently but to accelerate its strategy and tactics already in place, according to Jay Kunkel, president of Lear Asia and member of executive council.

Mr. Kunkel made the comments in an exclusive interview with CBU/CAR on September 9 in Tianjin on the sidelines of the 2017 International Forum (TEDA) on Chinese Automotive Industry Development (IFCAID), where he spoke about Lear’s Innovations in Automotive Seating and E-Systems driving industry transformation.

“Nothing is strikingly new on tactics,” said Mr. Kunkel. “What has changed is we need to bring them forward at a faster rate than we were planning, and we are doing this through investment in localization and also acquisitions.”

In fact, just four months earlier, Lear broke ground for its future Asia headquarters, which includes a new technical center as well as an Innovation Studio for Asia in Shanghai. The new facility is expected to go into operations in about a year. Over the last 18 months, Lear has also acquired Autonet and Arada to beef up its cybersecurity solutions for connectivity, and Mr. Kunkel said the company is continuing to look very closely at opportunities in both partnerships and acquisitions.

One of the trends that he sees happening fast within Lear’s product portfolio is the convergence of seating and electronics into intelligent seats, but cross-industry partnerships are also gaining pace. “You have the tech companies bringing specific automotive related technologies and are working now with internet based companies which provide the platforms, and through that you will see another huge jump in technology within the next 5-10 years,” said Mr. Kunkel. Lear in fact just formed a partnership with Honeywell at this year’s Frankfurt Motor Show to jointly develop automotive cybersecurity software solutions.

He predicted that people won’t recognize the auto industry in 20 years and the changes could be even faster and come earlier. “The most dramatic event this year in the auto industry that people didn’t see coming was the announcements about OEMs and how dramatically they all want to shift to alternative energy vehicles,” said Mr. Kunkel. “Nobody anticipated that 2017 would start to see that level of announcements. Everyone was guessing around 2019 or 2020. That’s forcing a lot of companies to accelerate their strategies. The good thing for my company is we make decisions quickly, we are very nimble and I think that’s going to be critical because the technologies are moving so fast, that the companies who succeed will not only be the ones that are able to adapt but actually be able to get ahead.”

Mr. Kunkel believes that the most significant change in the Chinese market this year that have caught some people in the industry by surprise is the dramatic drop in the rate of growth more significant than what was anticipated. Going from 7-8 percent growth down to 2.5-3 percent growth for the passenger vehicle market is huge for a market of 25 million vehicles and that is driving a lot of issues that companies have to deal with because in the past all boats went up with the tide, according to Mr. Kunkel.

“Now that the water level has come down and the rocks are starting to show. What is already the world’s most competitive market is going to become even significantly more competitive. This presents significant challenges to the automakers, to the suppliers, but also to the government in terms of how to legislate and manage this significant change,” said Mr. Kunkel.

One of the things Mr. Kunkel would like to see from the government as far as policies are concerned is clarity and he predicted that China will see 48V mild hybrid and plug-in hybrids far surpass EVs over the next 10 years. “During that period will we finally see some breakthrough in battery technologies that will make EVs much more practical and cost effective, in terms of range, battery load, and cost effective business model,” said Mr. Kunkel.

Mr. Kunkel believes so far the Chinese OEMs have largely exceeded in the market because they have the right products at the right time, especially as the market shifts toward SUVs. But he stressed that what is really critical now is the decisions being made this year for the next 5-10 years, from both the OEMs, policy makers and suppliers, considering they provide the most of the NEV technologies.

“Creating decisions that are being made now are going to be critical 3-4 years from now,” said Mr. Kunkel. “The companies who get that right will be the ones that will succeed.”

For now, Lear is focused on cybersecurity solutions and other enablers of advanced driver assistance systems as well as the INTU seating concept combining electronics, taking dynamic seating to another level in terms of safety anticipating special situations. Some of these intelligent seats will be in production and introduced in some of the high end luxury cars within the next 18-24 months.

Lear will continue to innovate outside China with the new technical center and Mr. Kunkel predicts that the technologies developed in China absolutely will be significantly applied in the future to other markets.

“It makes sense. If you are a supplier who plays in alternative energy vehicles or connectivity, you have to be designing and developing in China for the China market, some of those will be applied overseas,” said Mr. Kunkel. “I also think some of the tier-1 suppliers will be much more involved with the so-called ‘China Silicon Valley’ companies such as the BATs.”

| | | |

Leave a Reply