Big auto suppliers hurt by cars’ slide, lower output

Visteon’s Sachin Lawande says consumers’ move to light trucks hurt his company in the third quarter.

Lower-than-expected production at auto plants in all major global markets — especially China and Europe — dinged some big suppliers’ third- quarter results and outlooks.

An unplanned volume downturn in China, new international tariffs and even severe flooding in Japan led to lower vehicle output. And some suppliers felt the pinch of a sudden acceleration in the consumer shift from cars to light trucks.

“There’s a lot of haves and have-nots in the supplier industry,” Michael Robinet, managing director of IHS Markit’s automotive advisory service, told Automotive News, reflecting on last week’s earnings reports. “The volume is holding up, but the issue is OEM mix — especially with Ford and GM as they continue to ramp down on passenger car.”

Visteon Corp., which provides instrument clusters, audio and other electronics, said its car-truck mix was a negative factor in the third quarter. Visteon revenue fell 11 percent to $681 million in the third quarter, and its net income fell 51 percent to $21 million.

“The mix continues to shift away from sedans and toward trucks and SUVs, which also impacted Visteon negatively,” CEO Sachin Lawande said in a conference call.

Detroit 3 car output

Ford Motor Co., Visteon’s largest customer, reduced its North American car output in the third quarter 33 percent from a year ago, to fewer than 100,000 vehicles, according to the Automotive News Data Center. FCA’s car production declined 22 percent, and GM’s dropped 16 percent.



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Without providing a breakdown in its car-truck mix, Visteon said total North American production for its biggest customers was down 2 percent.

Other suppliers said they also expect declining customer volumes.

Aptiv reported $3.5 billion in revenue for the quarter, an increase of 11 percent from a year ago. But its net income fell 44 percent — attributed largely to commodity prices and exchange rates — and Aptiv trimmed its full-year revenue forecast in light of lower auto production in major global markets.

Lear Corp.’s revenue for the third quarter fell 2 percent to $4.9 billion and its net income fell 15 percent to $253 million. The company said its electronics business is winning a disproportionate share of new business. But its seating business still accounted for 75 percent of revenue in the third quarter, and Lear trimmed its sales forecast for all of 2018.

Kamsickas: Dana has truck focus.

‘All about the platform’

In contrast to Visteon, some suppliers with a bigger mix of light trucks welcomed the consumer shift to trucks. Dana Inc. reported an 8 percent rise in third-quarter sales, to $1.98 billion, and a 38 percent increase in net income to $95 million, compared with a year ago.

“We’re focused largely on the truck segment and we continue to think that trucks will be stable next year,” Dana CEO James Kamsickas told analysts in a conference call last week.

Supplier results can vary platform by platform, even for the same automaker, said Ray Telang, U.S. automotive leader for PwC.

“It’s all about the platform,” he told Automotive News. “Seventeen million units-plus is a great headline, but it’s all about the mix within that matters, if you’re a fortunate enough supplier to be on the right platforms.” Telang stressed he was not commenting on any company in particular.

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