Yanfeng aims to double sales at safety systems arm

Yanfeng, which is the world’s largest interiors supplier, plans to increase its focus on automotive safety, with an emphasis on boosting business in Europe and North America.

The China-based supplier, which had global sales of $12.18 billion in 2020, gets 70 percent of its revenue from its home market, while Europe accounts for 13 percent and North America for 17 percent, according to the Automotive News Europe ranking of the world’s largest partsmakers.

The goal for Yanfeng Safety Systems, which started out as a joint venture with Key Safety Systems in 2004 and became a wholly owned unit of the company four years ago, is to boost global sales to about $1 billion by 2025, up from $400 to $500 million now, said Michael Hague, who is vice president and general manager of the unit’s European and North America business.

To do that, Hague plans to leverage the close relations that Yanfeng’s interiors, seating and electronics arms have developed, particularly with some of Europe’s most powerful players, which might be looking to purchase an entire system rather than a single component.

"In the case of some of the premium German automakers, there is value from their perspective to have one supplier versus two suppliers or to have a supplier that is very familiar with working upstream with the [automaker’s] design studio," said Hague in his first interview since starting with Yanfeng in February 2020.

"If we complement that with seating, with electronics, imagine bringing all those together upstream," he said. "We don't see in every automaker, but certainly two or three have a great deal of interest."

He declined to name those automakers, but added that Yanfeng aims to have entire systems account for 70 percent of its sales by 2030, with core individual components representing the remaining 30 percent.

Until 2025, he expects those numbers to be reversed, with systems accounting for 30 percent and individual component for the rest.

When asked whether he believed other supplier such as Faurecia, Lear, Autoliv and ZF Friedrichshafen were pursuing the same goal, Hague said: "I wouldn't underestimate any of our competitors. They are seeing the same megatrends and they are adjusting accordingly. But what I think separates Yanfeng is the broadness of the product offering. And connecting this with a clear long-term strategy to align this with offering systems is the right way to go."

The rise of automotive startups and mobility providers has increase the list of potential customers, especially since many of the newcomers has shown a willingness to let supplier such as Yanfeng take on a larger role.

Hague, however, doesn’t foresee a time when his division, or Yanfeng as a whole, gets more business with those companies.

"I think some of the smaller startup mobility companies disappear while the ones that survive will consolidate. Maybe they will maintain their brands or they could become an extension of a bigger [automotive] brand," he said. "I think that inevitably will be the way it goes because scale is still a key factor in the automotive business. It is very difficult to be a profitable automaker when you are producing 50,000 vehicles a year."

Those newcomers, however, have put pressure on traditional automakers to adapt and Yanfeng is in a position to help them do that.

"We work with both [startups and long-established automakers] so we can give input on what we see from the fast-moving, agile, higher risk taking companies versus the more traditional automakers," he said. "We can tell them that maybe somewhere in the middle is a better way to do things."