Varroc Lighting Lights Up OEMs’ Brands

Lighting in a vehicle is more than a functional necessity. It has become an essential part of the style statement of the automotive. Lighting provides the ‘wow’ impact and makes every brand a distinct entity. In an exclusive interview to T Murrali of AutoParts Asia, Jeff D Stevenson, President and Todd C Morgan, Senior Vice President, Global Product Development, Varroc Lighting Systems, throw more light on the various aspects of the new technologies and their relevance in the emerging competitive markets. The excerpts:-

Q: What are the current trends in automotive lighting; do you see the return of old designs?

Morgan: In the past lamps were quite small, just functional. Then they started getting bigger. Now the trend is to go back to small. This is driven by a leading technology that allows us to go into a low profile. The LEDs enable us to go with smaller modules.

Stevenson: It is not the size but the sleekness that we are looking for. Lamps help to define the brand. They provide the ‘wow’ impact. This is what excites a customer when he comes looking for a vehicle. The design and get-up of the lamp are very important.

Q: Isn’t downsizing driven by space constraints in the vehicle?

Morgan: Today we see the appearance of separate lamps because we are trying to give a different look and appearance to the vehicle. Lighting is being used as an accent but it still has to be functional. Safety and functionality have always been the primary reasons for lighting. Now we have the ability and options to move the lamps around the vehicle.

Q: LEDs are the order of the day – they are attractive, energy-efficient, and durable. There is also the organic LED. What is your take on this?

Morgan: We are working on the organic LED. The prototype is ready for implementation – for tail functions and side markers. We have some more work to do on turning indicators and day-time running lamps as they are of higher power and sensitive to humidity and temperature. Organic material is on a substrate encapsulated with a cathode and anode. We need to make sure that the material is protected from humidity. If encapsulation fails, humidity gets in and those terrible black areas will appear. It is something we are very careful about.

Q: While this is an issue, what are the advantages of organics?

Morgan: Two things: One is that it is very thin so you can get light in areas where you could not get it before. Second is that there are two different types of organics. When the light is turned off they look like very shiny metalised portions and they can also be transparent. When they are transparent you can see through them and when the light is turned on they appear and glow. The metalised is more efficient – light goes in both directions and comes out one way. The transparent one is less efficient as light goes in both directions. But it allows us to perpetually layer functions behind each other. It is very interesting from the styling perspective.

Q: Another new trend is the Adaptive Front-lighting System (AFS) which you are already supplying.  Global market penetration is 15 percent. Do you see further growth and, as a designer, what is your plan for capitalising on this technology?

Morgan: More and more functionalities have come in. We are going to move into things like matrix technology with addressable arrays. Today AFS is dynamic bending where you turn the steering wheel and the lamps also rotate. We will move away from mechanical movement into solid state solutions. There are many things like the yaw rate of the vehicle, steering wheel sensor, acceleration-deceleration of the vehicle, and speed of the vehicle that come into play now. The matrix can beam into cameras to detect incoming traffic and track it. It is all about extended functionality.

Stevenson: I think the technology is very interesting and a number of Safety institutes believe that it saves lives. Safety regulatory groups are starting to insist that this technology be put on more and more vehicles.

Q: What percentage of the Varroc’s portfolio has AFS?

Stevenson: About 10-15 percent.

Morgan: There are different levels of lamps. You do not have a vehicle that just has AFS.  You always have a base model with halogen technology in place. It is a matter of different levels of functionality. Above that we need to adapt ourselves to the customers’ needs. What we design for a Jaguar or Land Rover is different from what we would design for a Mahindra or Ford. It depends on the customer, the application and the market you are addressing, so you need to be flexible. You have cost targets and functionality targets. That is why we spend so much time with our customers to understand their needs and the needs of the market. In India you do not drive at 200 kmph but in Germany they do. So the beam pattern has to change for Indian markets. We have a very strong programme for Indian market applications where we have adapted our designs to meet those market needs.\ Q: What are the current trends in automotive lighting; do you see the return of old designs?

Morgan: In the past lamps were quite small, just functional. Then they started getting bigger. Now the trend is to go back to small. This is driven by a leading technology that allows us to go into a low profile. The LEDs enable us to go with smaller modules.

Stevenson: It is not the size but the sleekness that we are looking for. Lamps help to define the brand. They provide the ‘wow’ impact. This is what excites a customer when he comes looking for a vehicle. The design and get-up of the lamp are very important.

Q: Isn’t downsizing driven by space constraints in the vehicle?

Morgan: Today we see the appearance of separate lamps because we are trying to give a different look and appearance to the vehicle. Lighting is being used as an accent but it still has to be functional. Safety and functionality have always been the primary reasons for lighting. Now we have the ability and options to move the lamps around the vehicle.

Q: LEDs are the order of the day – they are attractive, energy-efficient, and durable. There is also the organic LED. What is your take on this?

Morgan: We are working on the organic LED. The prototype is ready for implementation – for tail functions and side markers. We have some more work to do on turning indicators and day-time running lamps as they are of higher power and sensitive to humidity and temperature. Organic material is on a substrate encapsulated with a cathode and anode. We need to make sure that the material is protected from humidity. If encapsulation fails, humidity gets in and those terrible black areas will appear. It is something we are very careful about.

Q: While this is an issue, what are the advantages of organics?

Morgan: Two things: One is that it is very thin so you can get light in areas where you could not get it before. Second is that there are two different types of organics. When the light is turned off they look like very shiny metalised portions and they can also be transparent. When they are transparent you can see through them and when the light is turned on they appear and glow. The metalised is more efficient – light goes in both directions and comes out one way. The transparent one is less efficient as light goes in both directions. But it allows us to perpetually layer functions behind each other. It is very interesting from the styling perspective.

Q: Another new trend is the Adaptive Front-lighting System (AFS) which you are already supplying.  Global market penetration is 15 percent. Do you see further growth and, as a designer, what is your plan for capitalising on this technology?

Morgan: More and more functionalities have come in. We are going to move into things like matrix technology with addressable arrays. Today AFS is dynamic bending where you turn the steering wheel and the lamps also rotate. We will move away from mechanical movement into solid state solutions. There are many things like the yaw rate of the vehicle, steering wheel sensor, acceleration-deceleration of the vehicle, and speed of the vehicle that come into play now. The matrix can beam into cameras to detect incoming traffic and track it. It is all about extended functionality.

Stevenson: I think the technology is very interesting and a number of Safety institutes believe that it saves lives. Safety regulatory groups are starting to insist that this technology be put on more and more vehicles.

Q: What percentage of the Varroc’s portfolio has AFS?

Stevenson: About 10-15 percent.

Morgan: There are different levels of lamps. You do not have a vehicle that just has AFS.  You always have a base model with halogen technology in place. It is a matter of different levels of functionality. Above that we need to adapt ourselves to the customers’ needs. What we design for a Jaguar or Land Rover is different from what we would design for a Mahindra or Ford. It depends on the customer, the application and the market you are addressing, so you need to be flexible. You have cost targets and functionality targets. That is why we spend so much time with our customers to understand their needs and the needs of the market. In India you do not drive at 200 kmph but in Germany they do. So the beam pattern has to change for Indian markets. We have a very strong programme for Indian market applications where we have adapted our designs to meet those market needs.

Q: What’s that?

Morgan: Opti-matrix is basically a low cost version of this system where we use reflectors and reduce the number of elements but allow the same level of functionality at a much lower cost.

Stevenson: We want to drive innovation to mainstream vehicles; safety must be for all – not merely for the rich. We have to find a way for that innovation and those technologies so that all can take advantage of it.

Q: People are now giving more value to safety and not much worried about cost. This trend is seen even in emerging markets like India.

Stevenson: We have an aging population and people say they cannot see driving at night. We provide a much better driving experience as they can drive with their hi-beam turned on all the time.

Q: But the younger people will be seeking more flashy looks in the vehicle, so you are pulled apart in two directions – one, to cater to these two extremes, and two, to provide a solution at an optimal cost. How do you do it?

Morgan: That is a good point. How do we take safety and functionality and blend it with sexy, smart looking styling? It is the front part of lighting, taking engineering and art and bringing them together. This is where companies like Varroc play a major role. We get involved now much earlier with OEMs, we do design workshops with them and get them involved in styling.

In the past technology was always a limitation; today we can do much more. We have design workshops with styling studios to show vehicle designers what we can do. Daytime running lamp is a legal requirement in Europe where it is a huge selling point. People don’t totally understand why they want daytime running lamps. We have data that show it saves lives, so what better technology can you have. People want it because it looks cool and it saves lives. This is something that Indian regulations should look at very seriously as fatalities are high here. We would recommend making daytime running lamps mandatory for the Indian market.

Q: Will Varroc focus more on the matrix segment?

Morgan: From the global perspective, definitely yes. We have a few programmes already under development using matrix technology.

Q: What’s your take on laser headlamps?

Morgan: They are very expensive, about 50 percent costlier. But there are a few things. One is that today hi-beam laser is used as an additional hi-beam for long-range visibility. It does not give you a huge volume of light but a high intensity of light. That is why it is good for the hi-beam. In the future the flux will come and we will get sufficient light volume. The eventual advantage of laser will be very low profile lamps because we will have high intensity in a very small space.

Q: How do you see the next five years from the perspective of the global slowdown and the opportunities available?

Stevenson: In the lighting industry we are not feeling the slowdown because OEMs are no longer releasing vehicles for a five or six year life cycle. Many OEMs think of lighting as the jewellery on the exterior of the vehicle. So they are turning their programmes over every three years. It is a two-and-a-half or three year cycle. Because so many exciting things are happening in lighting, the OEMs are releasing a lot of different variants that in turn increase revenue. With Laser and AFS going into the vehicle, the end-revenue for lamps also is increasing. In certain cases like China the revenue has dropped and the Indian market has been a bit sluggish but our revenues continue to escalate through the trends going on in lighting.

Q: Will this tend help Varroc in the long-run?

Stevenson: It will definitely help. What we are focused on is addressing customer issues, where do we fit in their solutions. Many customers may be looking at going to lower cost regions in the future, so we are constantly looking at how we can fit in what they want and give them better service.

Q: Coming to specific regions you have a strong foot-hold in North America and large presence in Europe. What is the revenue from each region?

Stevenson: Europe is our largest site and over 40 percent of our total revenue comes from there. We are also in Mexico, China and in India. When you compare Varroc to other global lighting suppliers, our footprint is very attractive. We are in some of the low-cost, high-developing areas. We have a very desirable footprint and we are looking to expand it and take it to other areas where customers have grown.

Q: Which are the markets you are looking at to expand your footprint?

Stevenson: Areas that are challenges for the OEMs. We have three sites in China and one site in India and we will grow in these regions as the OEMs grow. There are also other challenging markets we are looking at like Brazil and Morocco. We are thinking of Eastern Europe. At the end of the day it has to make good business sense. Russia is a difficult market and we made a decision  that it was not the right period for us to enter there. But we might do so in the future. We will look at all options, including likely market share, before deciding.

Q: You said 40 percent of the revenue comes from Europe. What about the rest?

Stevenson: The second largest region would be Mexico followed by China and India.

Q: Europe is getting into the recovery phase. Since you get the bulk of your revenue from Europe do you think Varroc will grow there in the near future?

Stevenson: The market in Europe is growing at three percent. Customers are investing more in lighting that could go up to eight to nine percent in the future. So you have the growth of the region as well as the growth of the product line. Our strategy is going after the lower-cost manufacturing footprint, following our customers, to reinvest everything back into the business. We have a big capital budget that goes in and as we continue to grow we are looking to follow where the customers want us to grow.

Morgan: Technology drives revenue that is why our focus is to take technology and drive it into the higher volume programmes. Our goal is to bring technical innovation into the mainstream.

Q: Has the Volkswagen scandal affected you?

Stevenson: Not so much. It is an important customer but we are not heavily dependent on it. The diesel programme is a small portion of our total revenue.

Q: The sales of Volkswagen are falling. Will it have any impact on Varroc?

Stevenson: We have not seen anything significant so far.

Q: The Asia – Oceania region is witnessing rapid growth due to low-cost manufacturing and rising production levels. There is a lot of headroom available here, so do you see more business coming from countries in these regions including India?

Stevenson: Yes, part of our growth plan is to continue to expand in India as the market evolves. One of the things with our product line is that it is expensive to ship. So you have to be closer to the customer if you want to be successful. This also lowers the total cost and helps you do full development. In each of our manufacturing sites we have engineering personnel who can interact with our customers on a day-to-day basis and deliver what they are looking for.

Q: What about challenges in catering to the CV segment?

Stevenson: The CV segment is an area of opportunity for us. In the past when we were part of Visteon they focused heavily on passenger cars, so we really have very limited business on the CV side. It is an opportunity for us to look at in the future as we joined Varroc, which is very successful in the CV side. They are teaching us that portion of the business.

Q: In India you are catering to a lot of CVs; what about globally?

Stevenson: Yes, but globally we do very little as it has not been an area of focus, but that will be a focus area in the future. We are growing at double digit growth rates YOY and we are quite proud of it as it is. We try to stay well focused on the customer base we have right now which is really in the passenger car segment.

Morgan: CV’s have unique engineering requirements; they have different temperatures, vibration requirements, voltage and operating conditions. Serviceability is very important for them. But we do see CVs moving towards more traditional plans with classic lenses etc. As we move in that direction there will be opportunities available. We are seeing that CV manufacturers are quite interested in lighting – what can be done with lighting as they go forward.

Q: What are your short-term and long-term plans for Varroc?

Stevenson: First of all we have been very fortunate in joining the Varroc family three years ago. We have gone from a small division in a very large company (Visteon) to the most significant division now within Varroc. Varroc purchased Visteon lighting in 2012 and our focus has been on stabilising our business, making sure that we had a very transparent and successful transition from Visteon to Varroc. We continue to grow.

Growth is not just your top line revenue and bottom line profit but it is also growth in innovation, technology, people and so many other areas. I am proud of the success we have had in these three years.  Going forward, it has to be focused around the people, technology and customers. Each functional group within Varroc Lighting Systems is a key piece in our overall success, supporting customers with the best designs possible at the right price. We try to bring technology to the mainstream, to understand what our customers want and how we can adapt to their means. It is part of our long-term vision, to go into new regions and develop those.

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