Future auto market needs compact, energy-saving bulbs

Gasgoo.com: Would you please give us a brief introduction of Philips Automotive Lighting?

Dominiek: Philips Automotive Lighting Business Group (BGA) belongs to the Lighting sector in Royal Philips Electronics of the Netherland. Another two sectors Royal Philips Electronics engaged in are Healthcare and Consumer Lifestyle. Philips Automotive lighting conducts business via business lines: Headlight (Xenon, Halogen), Signaling & Interior, Non-car (Two-wheeler, Truck and Bus).
 
We have 6 manufacturing plants located in Germany (Aachen and Plauen), France, Poland, Brazil and China (Songzi, Hubei Province), and 48 sales offices covering all major countries.
 
We are in the leading position in automotive lighting industry in terms of almost all aspects with No.1 market share globally.

Gasgoo.com: How do you evaluate the automotive lighting after-market business opportunities in China, and what are your competitive advantages to catch the opportunities?

Dominiek: In China, we find 60% drivers have less than 4 years driving experience. They have not been educated well to pay attention to the relationship between auto lighting and driving safety. As result, around 75% volume shares are taken by low end products. It is key issue for not only Philips but also other auto lighting players to lead customers from price oriented to be value oriented.

Follow this direction, we define customers' demands to two segments, one is "value care" group such as private car and company car drivers. For this group, we would like to leverage Philips leading technology innovation capabilities to offer upgrading products to match their high end demands. Another segment is "cost care" group such as taxi and truck drivers. For these customers, we would like to introduce "TCO" concept and offer well balanced product with great life time and brightness features at reasonable price.

To serve our customers better, channel development plays a key role. We are deploying a project to transfer our channel advantages in tier 1 market to tier 2 and 3 market. Via that, we hope these customers also can enjoy safe and comfortable driving experience via Philips auto lighting products.

In summary, we are confident to win the market via added value offer to end users.
 
Gasgoo.com: What expectation do you have on China’s market? And what’s your strategy to keep the leading position in China auto market?

Dominiek: China will be the No.1 market soon in the world in terms of vehicle production and sales. We developed strong presence in China market with majority market share, especially we had the majority market share with innovative product like Xenon bulb (over 1 million pcs delivered in 2008) We redeployed sales force to be more close to our customers in China, reinforced our business development with dedicated carmaker approach team and established our Application Lab in Shanghai in March 2008. All these efforts are to build more long term partnership with lamp set makers and car makers. It makes Philips automotive lighting the value-added service provider rather than bulb supplier only.

Gasgoo.com: Right now, global economy is suffering from a financial crisis, especially in the automotive industry. What impact does the crisis have on Philips Automotive Lighting? What measures will you take to sustain your business growth in the economic downturn?

Dominiek: Because we are the No.1 in the market globally, so when the global markets are hit by the crisis, we are also feeling it. And the challenge is huge in a sense that the crisis like we are now seeing is not going to be over in a few months. According to our estimates, it will last until 2012 before cars production can go back to 2007 level.

This is a particular challenge not only because we will face volume substantially slide down during a long period of time but also because the whole supply chain and the whole industry have reacted very fiercely on the reduction of demand, so what we are expecting is like we are in a traffic jam, where everybody put on the brakes and now people are going to start to ride again, which means there's a period of acceleration growth followed by a slowing down, then followed again by an acceleration. That is a big challenge on the logistics of the whole industry.

Another very important trend is that when the market is back, it's going to be completely different. Customers and governments all over the globe become more and more sensitive to energy saving and the impact of automotive industry on the overall environment.

So given the growth of emerging countries globally, we are going to see shift in car production, we are going to see shift towards small cars. We shall see extra challenge from design perspective of headlight and automotive lighting. A lot of emphasis will be put on reducing energy consumption, especially when there's going to see an increase in electrical cars. The demand of products offering and types are also being shifted.
 
Taking one example to explain the impact of the financial crisis has on our business. It means when we do research, we need not only to think of products which is energy saving, and of high quality standards, but also to think about can we reduce the total cost of ownership or gives a complete solution.

This can be realized on redesigning our existing products that are already very successful in the market. For example we already have a mature signaling bulbs products with more than 60 years history, but we are today bringing a new HiPerVision bulb series to the market, which uses the TV CRT(Cathode Ray Tube) sealing technology and Halogen bulb filament technology. The HiPerVision bulb has a lifetime of 8000 hours, and consumes less energy. HiPerVision PSX24W bulb can be used to replace 55W H3 bulb.

It shows that, we are not only focus on new technologies, which we indeed make lots of efforts to, but also rethink products that are already quite mature in the market and by that we offer the possibilities to lamp set suppliers to make a much more condensed design to save costs on the whole lamp set. Car makers, especially those who develop small cars, generally pay great attention to these compact products.