Led Allows for Brand-Specific Vehicle LightingMon, 09/01/2014 - 15:51
Q: How do you see Philips Lighting’s future in Mexico?
DM: Mexico is part of our emerging market strategy and is a particularly important growth area within that strategy. We have more than 4,000 employees and five manufacturing sites focused on lighting in the country. 2014 will mark our 75th anniversary here, and we have a lot of ambitious growth targets in place. The government is investing heavily in new energy efficiency regulations and initiatives, so this is also very good timing for us. We also see a lot of opportunities with major OEMs that are producing locally in Mexico for their global supply, as these have the largest operations. Ultimately, we are an indirect supplier and therefore dependent on our primary customers, but we are seeing a lot of new headlight and taillight manufacturers coming to Mexico due to the boom in OEM investment. They are being pushed to both come to Mexico and keep their costs low, which helps Asia to maintain itself as an attractive production hub. Transferring goods from Asia to NAFTA is expensive, which strengthens Mexico’s hand. We are expecting growth in the traditional technology areas of halogen and xenon bulbs, but LEDs will also see a lot of growth within the next five years.
Q: Bearing in mind that your primary customers are the Tier 1s, how do you stay close to the OEMs?
DM: Our global account managers deal with the OEMs and the set makers. We have our unique products and we need to communicate our technologies and their performance to them. Every individual country has a different approach based on the unique factors at play in that market, which we also have to understand. Our R&D teams are focused on working out the particular needs and competition levels in each market and tailoring our products accordingly. We can then communicate our value proposition to the OEMs.
Q: What is the current focus of your automotive lighting solutions portfolio?
SVA: Different technologies will continue to be used to differentiate models and ranges, but we expect LED to replace halogen on a broader scale. The cost is still very different and this will of course be a factor, but it will eventually come down once the uptake of the technology is more widespread. When LEDs entered the industry, they were used by OEMs as a success marker. LEDs allow OEMs to ensure that their brands can be recognized at night and highlight the automotive industry’s commitment to making use of the latest technology. Each customer has its own personality and our design team has to align our offering with each customer’s vision, and this is where we can prove to be very creative.
DM: One out of every three lighting solutions in cars made today comes from Philips. We have lighting solutions for every part of the car, but our core business is headlamp lighting and LED lighting. We have seen the need to create unique technologies that can provide major benefits to the end user whilst also turning a profit for our business. The premium carmakers now see lighting not only as a safety feature but also as a way to create brand differentiation. The advantage of LEDs is that you can shape and define the car by using lighting. With a light bulb we supply a commodity, but LEDs are much more complicated and the lead-time is therefore much longer, between 16 and 20 weeks.
Q: How are you adjusting your R&D strategy to factor in the growth seen in the local market?
SVA: Our R&D takes place in Germany, but we are linking our product development process there with our technical experts in the US. We do not see the need for R&D in Mexico at the moment, but certainly technical support is important, as is more intra-team involvement. We also need to create technology near to where our clients are doing the same. If a major client opened an R&D center in Mexico, we would certainly have to implement capabilities nearby.
Q: What is your outlook for Philips Lighting’s future in the automotive sector in Mexico?
SVA: Philips Lighting in Mexico has been growing for the last four years, both in terms of market share and manufacturing capacity. We are focusing on bringing more technology to our plants and factories, and assembling high-end technology here. We plan to continue growing in Mexico with good support from our global office. We will have the benefit of having many products available in Mexico that have been locally produced. In the automotive industry, we expect many new plants to bring new sub-assembly opportunities.