Despite the many ups and downs in developing economies over recent years, international automakers and their technology partners like Faurecia continue to invest for the long-term. That’s because emerging markets offer attractive growth for companies that find a way to navigate this rapidly changing and complex landscape.
At Faurecia Clean Mobility, a structured organisation exists to support activities in developing economies from Russia, Latin America to South and North Africa. In 2018 these markets contributed around 8% of the business group’s revenue. Although very dispersed and different in size, these markets share many common characteristics. On the plus side: rising GDP, an increasing middle class, good raw materials supplies and significant growth potential. On the other side are challenges that include unstable geopolitical context, currency fluctuation and economic volatility that strongly impact automotive sales. Our experience to date – double digit profitable growth over the past two years – has shown that a coordinated approach can drive sustainable and profitable business, even in this most complex of operating environments.
Discipline, agility and flexibility are key in handling unpredictability that can contract sales by over 25%, something we experienced in both Russia and South America in 2015. In our Clean Mobility Emerging Markets Division, we keep a strong commercial focus, to anticipate and mitigate against currency variation or rising materials costs. Having local technical expertise close to the customer is a huge advantage for successful program management. For example, engineers at our Tech Center in Limeira can adapt our solutions to the different car architectures of South-America based automakers. Flexible operations are essential to cope with volume variation as demand goes up or down. We design facilities with flexibility in mind – from equipment, assembly lines to staffing – so we can reduce capex costs or adapt them quickly if necessary.
Today, Faurecia Clean Mobility has around 2500 people working in emerging markets, with plants in Argentina, Brazil, South Africa, Morocco and Russia. The complexity of the operating environment has proved an incredible learning platform for local and international managers, giving our talents valuable experience of all the dimensions of Faurecia’s world on a small scale. This includes exacting engineering and production standards, interaction with all critical business functions as well as the challenge of good industrial relations. It also demonstrates the global opportunities within a group of our size: colleagues from South Africa, Brazil and Russia are developing their careers in other global markets, as well bringing their agile thinking to our activities in developed economies.
Beyond their challenges, emerging markets have also seen a marked change in consumer preferences. Five years ago, they were often served by older platforms from mature markets. Now our OEM customers are designing specific products: lower-cost models that however offer safety, comfort or connected features that appeal to local consumers and make them feel part of latest global technology trends. Having shown that we can operate profitably, we are ready to take the next step in growing the potential. That means bringing our international partners the best technologies to support the expansion of their brands, whether for emissions control, green alternatives for new vehicle powertrains (electric, ethanol or natural gas) as well as the cockpit of the future.
Together with our OEM customers we have innovated to introduce solutions for air quality, energy efficiency, acoustic performance and powertrain electrification across the world. We look forward to working creatively to support our automotive partners and authorities in emerging markets in moving towards a more sustainable mobility.