Analysis Report: Lighting (U.S./E.U. Markets)

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Automobile lights are an important component in terms of the legal safety requirements for driving on public roads as well as their role in the aesthetics of the vehicle. In the early era of automobiles, most lights were of the filament bulb type, but as the technology of vehicles improved various other types of lights have emerged such as halogen lamps, high-intensity discharge (HID) bulbs, and gas-discharge lamps. Most recently light emitting diode (LED) lamps are becoming the norm, due to their proliferation in household applications and their associated benefits in terms of saving energy, lifespan, white light color, and rapid response.

The most representative lighting system in automobiles is surely the headlights, which serve to emit light so that the driver can see road ahead, as well as to make other drivers and pedestrians aware of the presence of the vehicle. Many technologies have recently appeared that contribute to the functionality of vehicle headlights. One of these developments is the Adaptive Front-Lighting System (AFS). The system shifts the headlights in the direction a vehicle is being steered, making sure that there is sufficient light to see the road ahead of the vehicle. This system was initially installed only on luxury vehicles, but its adoption has recently been expanded to most passenger vehicles.

This report deals with three categories of automobile lighting devices: headlights, AFS, and rear lamps/rear combination lamps. High mounted stop lamp, reflectors, number plate lamps, and interior lamps are not detailed.

There are four Western supplier groups supplying automakers in the U.S. and European markets with all three of the lighting products detailed in Section II of this report. Among them, the top three are: Magneti Marelli/Automotive Lighting, HELLA and Valeo (including Japanese subsidiary Ichikoh Industries). American Varroc Lighting, Austrian Zizala Lichsysteme, Japanese Koito Manufacturing, and Korean Hyundai Mobis all perform only the supplementary supply of headlights and rear lamps. Magneti Marelli supplies almost all U.S. and European automakers. HELLA is maintaining business with European automakers, excepting Fiat, but is struggling in the U.S. due to intense competition. Valeo expects synergies to increase with its acquisition of Ichikoh Manufacturing, and currently has a solid position with the French OEMs, but there are challenges associated with its business with Fiat and Daimler. Koito Manufacturing is currently fighting to secure contracts with U.S. automakers.

The following section lays out the characteristics, trends, and supply status of the major U.S. and European lighting suppliers in more detail.

1) Business and Facilities

Magneti Marelli S.p.A. (Automotive Lighting)

• A major supplier of automotive systems and components, and a subsidiary of the Fiat-Chrysler Autmobiles (FCA) group.
• FCA has agreed to sell Magneti Marelli S.p.A., a major supplier of auto components and systems, to FCA to CK Holdings Co., Ltd. (managed by the global investment firm KKR & Co., Inc.), the parent company of Calsonic Kansei Corporation, a major Japanese automotive components supplier.
• Supplies a wide range of automakers in Europe, the U.S., South America, and Asia, but sales to its parent FCA comprise about 31% of total (in December 2016).
• Operations are divided into eight divisions, including automotive lighting, powertrains, electronic systems, suspension systems, and exhaust systems.
• Automotive Lighting was established as a 50:50 joint venture between Magneti Marelli and Robert Bosch in 1999. With Magneti Marelli’s 2003 acquisition of the major rear lamp supplier Seima, Automotive Lighting was made a wholly-owned subsidiary.
• The company mainly produces in Italy, Germany, France, and other Western European countries, and more recently has started operations in the Czech Republic and Turkey. It has a close relationship with European OEMs, and has also obtained orders from GM in the U.S. It is continuing to invest in emerging markets such as China, Brazil, and Russia.
  • China:
    In June 2017, the company established its joint venture in China, Changchun Magneti Marelli Automotive Lighting System Co., Ltd., for the manufacturing and sales of automotive lighting. The joint venture partner is Changchun Fudi Equipment Technology Development, and its plans to establish the JV were announced in December 2015.
    • The total size of the subsidiary’s plant is 30,000 square meters, 17,000 of which are occupied by production lines for LED headlights and rear lamps.
    • Most components will be supplied to FAW-VW and BMW, with some product going to other OEMs. The planned annual production levels for 2019 are 1 million LED headlight units and 500,000 LED rear lamps.
    • 100 employees are currently working at the plant, but that number is expected to rise to 800 by 2019.
  • U.S.:
    In January 2017, the company announced its plans to invest USD 35 million in its existing plant in Oakland, Michigan to upgrade production equipment for headlights.
    • The new operations will create 360 new jobs over the next five years.
    • Magneti Marelli received a USD 2 million subsidy from the Michigan Business Development Program for the project.
  • Italy:
    In December 2016, the company announced plans to upgrade its existing Automotive Lighting facility in Tolmezzo, Italy. This entailed adding a new 5,000 square meter production area for LED rear lamps to the facility. New production lines for electronic circuits and a design center for rear illumination electronics were also announced.

HELLA

• A longstanding German supplier in the automotive lighting industry involved in the development and manufacturing of lighting and electronic products and system. The company was registered on the Frankfurt and Luxembourg stock exchanges in November 2014.
• Sales of its automotive lighting equipment business account for 42% of its total company-wide sales (FY 2017), reflecting a global market share of about 12%.
• The company expanded production to overseas locations relatively early, and has manufacturing sites in Europe, the Americas, and Asia Pacific. The company is also actively expanding in the front end module segment, and has established a joint venture called Hella Behr Plastic Omnium (HBPO) with Behr and Compagnie Plastic Omnium (France) for cooling components.
• In November 2018, HELLA announced a strategic partnership with Faurecia for the development of in-vehicle lighting solutions. The two companies will jointly develop products in the areas of lighting and dynamic lighting systems, aiming to establish a cockpit environment more optimally tailored to driver preferences.
• In October 2018, the company announced that it is proceeding with its "Smart Headlamp Technology" project with the aim of developing an intelligent headlamp that can detect potential changes in performance at an early stage (condition monitoring), but is also capable of compensating for them (self-healing). New monitoring and control processes will be used to ensure optimum performance of high-resolution headlamps, and the company is researching a complex 3-stage development process to reduce development times and cost.

Valeo

• A large French automotive supplier made up of four business divisions. Lighting products are handled by the Visibility Systems division.
• Lighting component sales contribute to approximately 28% of the total company sales revenue.
• The company primarily supplies French and German automakers. Its subsidiary Ichikoh Industries handles most of its business in Japan and South-East Asia.
• In November 2016, the company floated an IPO to raise new equity capital with the goal of acquiring Ichikoh Industries. The process was completed in January 2017, giving Valeo a 55.08% stake in the new subsidiary.

Varroc Lighting Systems

• The Varroc Group acquired the lighting business of American Visteon in 2012, and has since been considered a systems supplier.
• Supplies GM, Ford, Daimler, VW, Peugeot, Opel, Land Rover, and other automakers from its manufacturing sites in India, Mexico, Czech Republic, and China.

Production Plant / R&D Facility

Note: Only lighting and lighting related facilities shown.

2) Chart of Ownership/Investment

H： Headlight、A： AFS、R： Rear lights

Head Lamp

Head Lamp (AFS)

Rear Lamp

Sourced from publicly available information, etc.

Lighting Sales

Total Company Sales

Sourced from publicly available information, etc.

Note) Joint Venture/Partner ( ) indicates investment subsidiary.

<Automobile industry portal MarkLines>