In the face of rapid evolution of the automotive industry, Sachin Lawande, President and CEO, Visteon Corporation is on a mission to transform the company from being an industrial company to a technology company. Over the last few years, the company has exited many of its traditional business domains to focus on being the largest Tier 1 supplier in the fast-growing cockpit electronics segment. He says the journey is about halfway done, and Visteon will now focus on areas that will make it best in class.
Sachin Lawande has been President and CEO of Visteon since June 29, 2015. Lawande is considered one of the foremost technology and business thought leaders in the automotive OE electronics industry. Since joining Visteon, Lawande has shaped Visteon into the largest Tier 1 supplier focused exclusively on the fast-growing cockpit electronics segment, driving consistent financial performance, introducing next-generation technology, and generating record levels of new business wins with global automakers. Before joining Visteon, Lawande was President of the Infotainment Division of Harman International Industries since 2013, and an Executive Vice President since 2009. He has a bachelor’s degree in Electronics and Telecommunications from Bombay University in India, and a master’s degree in Electrical Engineering from Southern Illinois University at Edwardsville.
ATR _ It’s close to two years since you took charge at Visteon. How have these initial years been?
SACHIN LAWANDE _ 2016 was a very good year for us, and I’m very happy with the progress we’ve made towards our transformation of becoming a technology company. Considering the future challenges and opportunities, it was essential for Visteon to separate itself from the rest. We exited businesses that did not fit into this model, and have made a lot of progress in reshaping ourselves as a technology company.
As a technology company, we want to focus more on product and platforms, and then look at the automotive market as a domain to apply those technologies in to create better solutions. The mindset is also fundamentally different. We’ve been building our engineering, innovation and product management capabilities. We’re not giving up our capabilities, experience and understanding of the automotive industry, but we’ve started to look at our company internally like a software company.
In that regard, 2016 was an important year to get us on the right foundation, and we’ve accomplished what we strived for. Financially, we’ve improved our margins substantially. Our long-term goal for margins was 12 % when I started. At the end of last year, we lifted that to 14 % – ahead of our own expectations. We’ve won significant amount of new business worth $ 5.4 bn. And considering our revenue is about $ 3 bn, that’s a big deal. The new deal is on the back of a $ 4.3 bn deal the year prior to last year, and the expectation this year is to cross $ 6 bn. I often say that winning customer business is the ultimate test of our strategy and reputation. And we’ve done well. Now, we need to take the company to the next level to achieve best in class capabilities in few of the core areas.
We are talking about cutting edge technologies, and Visteon is at a vantage point where being just a traditional builder of products will not work. The full transformation will take time, but we have made good inroads.
As a technology company, your future growth would largely depend on your product development capabilities. What are the core areas you’ve identified for future growth?
Most of our revenues come from five product areas in our current portfolio, the largest being instrument clusters. The overall instrument clusters market will grow at a CAGR of 7 %, and within that all-digital clusters would grow at a CAGR of 30 %. We see a rapid shift towards all-digital clusters from the analogue, digital or hybrid clusters today. We are currently one of the largest suppliers in all-digital clusters but we can’t rest on our laurels. With displays becoming bigger, there’s a desire to use that to differentiate the products through better graphics and 3D effects, especially for features such as collision warning, etc.
Another area that is growing extremely fast is central information displays. Displays are getting bigger with more design elements and graphics built in. As they get bigger, we see curved displays growing in acceptance, and there are specific challenges you need to solve there. The third area is that of head-up displays (HUDs). Although small, this is the fastest growing product segment in terms of CAGR within the cockpit domain.
Audio infotainment accounts for half the total cockpit electronics market and that’s growing at about 7 % CAGR. In fact, while the global automotive industry grows at about 3 % annually, almost all of our product segments are growing at double that rate. Our ambition within that is to grow at a double digit rate.
For all-digital clusters, what is the kind of market adoption you see in India?
In India, the growth would be even higher than the 30 % CAGR we see globally because the base is very low. The numbers nonetheless is still small but growing rapidly. Visteon has the highest volume of 10.25-inch all-digital clusters awarded so far by the industry. That’s a fairly big cluster. For Indian cars, we think we can do a 7- or 8-inch all-digital screen in combination with a HUD. Instead of giving you one big cluster, we can offer a smaller cluster and HUD. These are the kind of innovations that will drive the Indian market for us and that’s where we think we have a unique position.
How do you look at the mid- to long-term horizon? What kind of technological interventions do you see emerging?
Our journey is about halfway done. We now need to focus on areas that will make us best in class. And one of those areas is artificial intelligence (AI). We want to develop deep understanding in AI, cloud computing, and sensor-based automation and bring the benefits to all of our products in the future. We see AI benefitting infotainment serve the consumers better in terms of the information it can provide. We’re also working on making our end computing platforms such as clusters ready for AI and cloud computing. In all of this, India will continue to play a critical role as a development centre for many of these technologies.
Talking of connected and autonomous cars, how far have you progressed on developing cyber security capabilities?
The last time we met, I spoke about building our cyber security capabilities and our plans to set-up white hat services. Today, we have one of the better cyber security practices in the Tier 1 space. We’ve transformed our engineering process to conform to the J3061 standard, which is a comprehensive framework looking at technologies inside the device as well as their work processes. We’ve taken a very holistic approach to cyber security. We have entered a stage, where cyber security will become a very necessary component of our lives hereon. It’s an integral part of our thought process and we’ll go as deep as required to develop capabilities.
How is Visteon building capacity in the area of ADAS?
Industry wide work on ADAS started in around 2007-08, but for some reason, Visteon completely sat out of that opportunity. Something interesting, however, is giving us an opportunity to get back into the segment and is coming through the growth in autonomous vehicles.
There’s a fundamental disconnect in terms of the technological capabilities required for ADAS and autonomous driving. ADAS essentially requires computer vision capabilities. You apply computer vision techniques to camera-based data to perform the job of object detection, and the level of accuracy that computer vision technology delivered was sufficient to do that job.
However, when it comes to autonomous driving, it was found that computer vision was not capable of delivering the level of accuracy and reliability required to make self-driving a safe option. The Tesla accident was kind of a watershed moment for the industry, where it finally dawned upon the industry that the ADAS approach is the wrong approach for autonomous driving.
Fortunately, we were not left with the baggage of ADAS and we took advantage of that. We’ve invested heavily on autonomous driving capabilities, and in the Tier 1 space, I believe we have one of the most advanced programmes for autonomous driving. Unlike many other products that have emerged in the automotive industry, autonomous driving has also attracted a lot of tech companies. Competition in the field has significantly increased, but we believe with our knowledge and experience we’ll play an important role in bringing those technologies into the automotive sector. We are looking at launching our first platform at the beginning of the next year. We will be unique and alone in terms of richness and capability of the platform we are working on.
Overall, we’ve strengthened our core, we’ve selectively moved into an adjacency and we’ve at the same time, while investing in new technologies and winning new businesses, improved our margins and our financial profile.
It has always been argued that ADAS is too early for markets like India. Could there be an opportunity there for Visteon to step in?
To begin with, we are anticipating that India is also going to be a market for ADAS, and are building capabilities here to deal with those technologies. There isn’t quite a well-formed understanding of how to apply those technologies in India today. ADAS in the Indian context is going to be much harder to implement than some of the other global markets, but this will be a proving ground for ADAS technologies. With further understanding and capability building, ADAS should be possible to introduce in India.
Considering the number of fatalities we have on Indian roads, a little bit of technology can go a long way in bringing the numbers down. Bringing in technologies that help the country is not just a business imperative for us, but also a social imperative. Cost and affordability too are important factors. There is still some time to go for ADAS to be truly applicable to the Indian market. In our expectations, we’ll see in the next 10 years the level of cost reduction that will make it viable for the market.
What’s the vision you are pursuing for Visteon over the next five years or so?
There are two things I can talk about. I’d really like to transform the cockpit into a computing platform with third party apps. Secondly, I’d like to have the best similar platform for autonomous cars.
So, how do I differentiate between the two? If the compute platform for cockpit is designed for app developers, the autonomous platform has to be designed for AI algorithm developers. But the model is very similar – we do the platform, we provide the tools and SDKs, and we enable the richness and innovation of the community to make it a true success. That allows the ecosystem to collaborate and create solutions for the market.
TEXT & PHOTO: Deepangshu Dev Sarmah