Chief Executive Officer & Director, Valeo SE
Valeo CEO Perillat on Car Parts Maker Outlook
Christophe Perillat, chief executive officer of French car parts maker Valeo, discusses how the company is taking advantage of electrification and could secure 70 billion euros of new orders from customers. He speaks on "Bloomberg Markets Today."
About Christophe Perillat
Christophe Perillat, CEO of Valeo, discussed the company's performance and strategy in a March 2024 interview. He stated that 2023 was a key year for Valeo's strategic plan, which focuses on electrification, advanced driving assistance, and software. Perillat said the company secured €70 billion in new orders over two years, which he described as twice the company's sales, indicating that its technologies meet market needs. He noted that Valeo achieved its guidance in 2022 and 2023 and provided guidance for 2024 and 2025 showing step-by-step improvement. Perillat commented on the electric vehicle (EV) market, saying that while growth remains "extremely spectacular" with a 30% increase in car numbers, the path to an all-electric future may be "bumpy" but the endpoint is unchanged. He said Valeo is focused on making EVs more affordable through cost optimization and performance improvements. Regarding inflation, Perillat stated that in 2023 Valeo mitigated its impact by negotiating prices with customers and reducing costs, and plans to continue this approach. He declined interest in joining Renault's horse joint venture, but noted Valeo is co-developing an electric motor with Renault. Perillat also said Valeo is not seeing disruption from Red Sea events.
Transcript (10 segments)
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Interviewer0:00
Why are we seeing that more rosy outlook, that better outlook? Is it because your longer term plan is delivering or is it because the operating environment is getting better?
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Christophe Perillat0:07
Well, I think we're making progress. The company is making progress. You know, 2023 is an important year because it's halfway through our strategic plan. And our strategic plan was really about point to point number one, positioning value on the trends, the megatrends of the industry and we made in the last two years extremely clear choices. It's about electrification. It's about advanced driving assistance and it's about software and it's paying off. You know, looking at our release of yesterday, we said that we could secure in 2022 and €23.7 billion of new orders from our customers. This is two times our sales. So that shows that the technologies that we have, the products that we have are exactly what the market needs. And now in terms of profitability, what was extremely important is, you know, to go through a step by step improvement, we could achieve our guidance in 2022. We could achieve all elements of our guidance in 2023. And we disclosed yesterday guidance for 2024 and guidance to 2025, showing step by step improvement. Okay. Okay.
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Interviewer1:24
So that's the improvement that you anticipate and you hope for increase. Good morning. Obviously a lot and you mentioned electrification. Obviously, your sector very much focused on that transition right now. We have seen a bit of a slowdown in the EV space. What's your expectation for how that plays out?
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Christophe Perillat1:38
Well, you know, everybody talks about EVs slowing down. When you look at 2023 numbers, the market has increased 30% when it comes to the number of cars. So the growth is still extremely spectacular. We know the end point. The end point is that the car is going to be electric. We know as well that the road to this end point will be potentially bumpy, but it's not changing the end point. So we are continuing as far as value is concerned, to focus our research, our development in bringing good solutions, good systems for the EV and to make the EV more affordable, which is extremely important. And that's what a company like Valeo is doing on a daily basis, optimizing, reducing the cost, improving the performance so that the EV gets better and gets cheaper.
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Interviewer2:35
Thinking about these low emission powertrains, then we heard from the Renault CEO recently back at the Geneva Auto Show, I think talking about how a supplier could maybe become part of their horse joint venture. That's a joint venture on these kind of powertrains with Geely and with Saudi Aramco. Would you be interested in joining that kind of JV?
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Christophe Perillat2:53
Well, no, I don't think it's on the agenda. But what is on the agenda? What is on the agenda is to work as partners with our customers. And you mentioned Renault, you mentioned that we know actually we have an extremely important project together and Valeo to co-develop, to co-design and to co-produce the future electric motor of EV cars, which will be the best motor ever in the industry, more affordable and more performance. So it's not in the form of a joint venture, but it's in the form of the partnership of co-design and co-production.
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Interviewer3:35
Christophe Perillat in London. Talk to us a little bit about the lower cost piece of the equation you were just talking about in terms of cutting jobs, in terms of cost efficiency, even in terms of facing any sort of risk from the Red Sea and the implications on your supply chain. What does that look like?
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Christophe Perillat3:49
Well, we're not really seeing any disruption from the Red Sea. You know, the ships are taking two weeks more to get from China to Europe. And this is just now in the planning. This is taken into account by our supply chain teams. You know, the supply chain teams have been extremely resilient over the last year. They've been crisis after crisis after crisis. Probably the most severe of them was the electronic shortages, you remember, 2021. So we're not seeing any disruption from the Red Sea events, actually.
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Interviewer4:29
Are you seeing pressure, though, from car manufacturers, for example, to push those costs lower? What does that relationship look like?
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Christophe Perillat4:37
Well, you know, looking into 2023, we could mitigate the impact of inflation. And we did that on the one hand, talking to our customers and trying to find the right prices. And on the other hand, by reducing our cost. So it's always about price and cost. Our results in 2023 that are better than what they were a year ago is showing that we could mitigate the impact of inflation. And going forward, looking forward, we're going to apply exactly the same recipe. We have discussions on prices with our customers because there is still some inflation, especially on labor. But we are as well having some self-help measures, some cost reduction programs in order to mitigate at the end of the day, the impact of inflation.