"Year-End Order Backlog Expected to Surpass 65 Trillion Won"
At the groundbreaking ceremony for the 'LG Magna Electric Vehicle Parts Production Plant' held on April 19 in Ramos Arizpe, Mexico, key attendees are seen taking a commemorative photo. From the second person on the left: Jeong Won-seok, CEO of LG Magna; Eun Seok-hyun, Head of LG Electronics VS Business Division; Cho Joo-wan, CEO of LG Electronics; Tom Luker, CEO of Magna Powertrain; and Jeff Morrison, Vice President. (Photo by LG Electronics) [Image source: Yonhap News]
[Asia Economy Reporter Moon Chaeseok]
"Based on LG Electronics' advanced technology across the core areas of the automotive components business, we will provide differentiated value to global automaker customers."
Eun Seok-hyun, Executive Vice President and Head of LG Electronics' Vehicle Components (VS) Business Division, which is emerging as the company's future growth engine, emphasized this while announcing the company's first half performance on the 5th. He expressed the determination to achieve tangible results in the automotive components business while embodying the identity of 'customer experience management,' as advocated by Group Chairman Koo Kwang-mo.
LG Electronics announced on the same day that it secured new projects worth 8 trillion KRW in the automotive components business during the first half of the year. The first half order amount exceeds 13% of the order backlog of approximately 60 trillion KRW as of the end of last year. LG Electronics expects the total order backlog to surpass 65 trillion KRW by the end of the year if this trend continues. This forecast excludes projects that will be commercialized within this year after the orders. Regarding this, LG Electronics explained, "The VS Business Division recently secured infotainment (IVI) systems from a global automaker owning multiple European premium car brands and 5G high-performance telematics from a major Japanese automaker, consecutively."
Digital Cockpit concept photo equipped with LG Electronics infotainment system. (Photo by LG Electronics)
LG Electronics' automotive components business is composed of three main pillars: ▲ Vehicle infotainment systems from the VS Business Division ▲ Vehicle lighting systems from subsidiary ZKW ▲ Electric vehicle powertrains from the joint venture LG Magna e-Powertrain. All three are showing steady growth. The VS Business Division's consolidated sales last year reached 6.7004 trillion KRW, an increase of about 24% compared to the previous year. This was the result of overcoming the global vehicle semiconductor shortage. It is estimated that the division turned a profit in the second quarter for the first time since the fourth quarter of 2015.
The infotainment system, the core business of the VS Business Division, simultaneously provides various driving-related information and entertainment functions. Key products include telematics (vehicle wireless internet technology), audio-video-navigation (AVN) systems. Citing market research firm Strategy Analytics, LG Electronics explained that its telematics held an estimated 22.7% share of the global market in the first quarter, ranking first. In the AVN market, LG Electronics has recorded double-digit market shares since last year.
Leveraging this technological prowess, LG Electronics is expanding cooperation with major global automakers by supplying infotainment systems based on plastic OLED (P-OLED) to premium electric vehicles such as the 2022 model EQS from Germany's Mercedes-Benz AG, infotainment systems for the new electric vehicle model Megane E-Tech from France's Renault Group, and plastic OLED-based infotainment systems for Cadillac from the U.S. automaker General Motors (GM).
Subsidiary ZKW possesses differentiated technology in the headlamp sector. It has secured premium automakers such as BMW, Mercedes-Benz, Audi, and Porsche as customers.
LG Magna recently broke ground on its third electric vehicle parts production plant in Mexico, following facilities in Incheon and Nanjing, China. LG Magna plans to build a production plant with a total floor area of 25,000 square meters in Ramos Arizpe, Coahuila, Mexico, by next year to manufacture key components such as drive motors and inverters for GM's next-generation electric vehicles.
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