Thursday 2023-09-14

The following interview is part of a series of intranet articles and videos. Interviews have already been published for HELLA as a whole and the Business Group Lighting; articles on Lifecycle Solutions and Sustainability will follow.

Jörg Weisgerber, what was particularly important in this year's strategy process for the Electronics business at HELLA?

Jörg Weisgerber: The focus was clearly on the three major market trends that are decisively shaping the current industry change: electrification, automated driving and the fundamental redesign of electronics architectures in the vehicle. These trends play into our hands, as we have seen again in this year's strategy process. These are not the worst conditions for our further business development.

Johannes Müller, in your role as Head of Strategy at HELLA, you accompanied the electronics process. How does the strategic planning for electronics differ from that of the other business groups?

Johannes Müller: HELLA is well positioned overall, we are benefiting from the industry change. If I had to single out one focus for electronics, it would be that we have to be even more selective and prioritise. We paid special attention to this in the strategy process for electronics.

If you had to summarise the strategy process in a few sentences, what would your interim conclusion be?

Jörg Weisgerber: We are in a promising position and have a good basis with our product portfolio. For example, with radar sensors, with energy and thermal management. This is basically good news. But we must be careful to grow within a healthy framework. We can't and don't want to do everything, we don't want to accept all the projects we are asked for. With some product groups and customer projects, we also have to take more of an opportunistic approach, as we call it.

Which developments on the market or competitor side are currently particularly relevant for electronics?

Johannes Müller: In addition to general market trends, one aspect in particular is especially important: the growth and rise of Chinese car manufacturers. In 2023, BYD sold more cars in China than Volkswagen for the first time, making it the new market leader. Some are already talking about a new era. Whether this is too high a figure remains to be seen. But we should assume that the growth of Chinese OEMs will continue to accelerate, they will continue to gain market share. And not only in China, but probably also in the global markets outside.

Jörg Weisgerber: This was demonstrated not only by the strategy process, but also by the Auto Shanghai in April. The market is changing, especially the local Chinese car manufacturers are moving at an extremely fast pace.

What does this mean for HELLA?

Jörg Weisgerber: Fortunately, we already have a strong business with Chinese Tier X customers in the electronics sector, for example with battery manufacturers such as EVE or Farasis. Nevertheless, one thing is clear: We still have to become much stronger in direct business with Chinese manufacturers. And that can only be done with speed. As a classic, engineering-driven automotive supplier, we are sometimes not fast enough, too focused on technological specifications that are not necessarily relevant for the Chinese manufacturer, and thus we are ultimately too expensive. Chinese manufacturers have completely different requirements. We therefore have to take a close look at which organizational set-up we can find locally in order to be able to serve customers locally with precisely fitting local solutions.

Johannes Müller: We want our Chinese teams to act much more independently than before, we want to define local standards. Always based on our technological edge. We are currently examining exactly what this could look like as part of a pilot project.

The major market trends have already been mentioned repeatedly in this conversation. So let's take a walk through these topics - starting with automated driving.

Jörg Weisgerber: This is probably the biggest growth driver for us in the electronics business. Above all, the medium automation levels, i.e. levels 2 and 3, will continue to gain acceptance across the board. This means: In the future, more radar sensors will be integrated into the vehicle, and they will have a higher technology content, greater resolution and range. We will benefit from this.

What is the strategy for electromobility, the second major market trend?

Jörg Weisgerber: The trend is accelerating. This gives us great opportunities, but we also have to invest more in new areas. We are already strong in the low-voltage business, but we need to move more into thermal management and high-voltage electronics. We have had some very promising acquisition successes here, for example with the Coolant Control Hub or with our first high-voltage converter. These are important door openers for us to take the next step.

Thirdly, you mentioned that the electronics architectures in a vehicle will change fundamentally. What does that mean?

Johannes Müller: Nowadays, a car's electrics and electronics, the E/E architecture, are mostly based on so-called domains. That means: control units are grouped according to their respective functions. The situation is fundamentally different with the so-called zonal architectures: Here, many, possibly even all, functions that are currently still controlled by individual control units will be combined into larger control units based on their location in the vehicle.

What follows from this?

Jörg Weisgerber: A new growth market is emerging in which we already have a good foot in the door with our central control units. Even though zonal modules will gradually replace the current ECUs, we have a good understanding of future E/E architectures with our experience in body electronics. We can build on that. However, there are also a few hurdles.

Which would that be?

Jörg Weisgerber: Customer projects for zonal modules are extremely large-volume, significantly more extensive than what we have known so far in our electronics business. This means high technological complexity, but also very large upfront investments. We have to look very carefully to see whether we can handle these. We therefore want to decide very precisely and selectively which projects we tackle and which we do not. But the trend towards zonal modules is inevitable, this change will happen. In this respect, there will also be good business opportunities for us in this field.

One question in conclusion: What should HELLA's electronics division focus on going forward?

Johannes Müller: The electronics sector has to find a good balance. On the one hand, we have promising growth prospects ahead of us, many products that are in demand by the market. But we have to be selective in the fields we want to play. We are technology leaders, that is part of our DNA. We must therefore remain profitable in order to maintain the financial freedom for further investments.

Jörg Weisgerber: We want to grow, and we have the ability to do so. However, it is important to me that this is done in the right way. The market changes are giving us enormous tailwind. This should bring us joy, not growing pains. That is: We need to empower the organisation for growth. We need to attract good talent. And we need to focus more on our traditional strengths again, on technology and engineering services. This is where we want to be and remain a benchmark. And I am sure that we will manage that.

Thank you very much for the interview.