Order Intake Exceeds KRW8tn in First Half of 2022
LG Electronics' automotive electronics business is growing fast. It posted eight trillion won in order intake in the first half of this year.
LG Electronics announced on July 5 that its VS Business Division has recently won orders for in-vehicle infotainment systems from a global automaker that owns many European premium car brands and orders for 5G high-performance telematics from a major Japanese automaker. LG Electronics supplies electronic components to Mercedes-Benz, BMW, and Honda.
“The 8 trillion won order intake does not include orders that are to generate sales later this year,” said an official at LG Electronics. “This means that sales are increasing fast.”
LG Electronics’ automotive electronics business consists of three components. The company's VS Business Division specializes in in-vehicle infortainment systems; its subsidiary ZKW manufactures lighting system; and LG Magna e-Powertrain, a joint venture between LG Electronics and Magna International, focuses on powertrains for electric vehicles. The company's infotainment systems go into Mercedes-Benz AG’s premium electric vehicle EQS 2022 model, French Renault Group’s new electric vehicle model Megan E-Tech and General Motors’ premium brand Cadillac.
LG Electronics is the No. 1 player in the global telematics (wireless vehicle Internet technology) market. According to Counterpoint Research, a market research company, LG Electronics accounted for 35.2 percent of the world telematics market in the fourth quarter of last year. Its gap with second-ranked Continental (25.3 percent) was wide. It has also recorded double-digit market shares in the audio, video, and navigation (AVN) market since last year.
ZKW has secured premium car manufacturers such as BMW, Mercedes-Benz, Audi, and Porsche as customers in the headlamp sector. Headlamps are a major lighting component for automobiles.
Analysts say that LG Electronics’ automotive electronics business has grown rapidly thanks to its competitive edge in supply chain management (SCM). The COVID-19 pandemic and Russia’s invasion of Ukraine have disrupted competitors’ supply of automotive electronics components.
Brisk orders for LG Electronics’ automotive electronics products are leading to a steady increase in sales. Sales of the company's VS Business Division reached 6.7 trillion won in 2021 on a consolidated basis, up 24 percent from the previous year.
LG Electronics’ automotive electronics business is projected to account for more than 10 percent of the company’s total sales in 2022. LG Magna has recently started the construction of its third electric vehicle parts production plant in Mexico, following those in Incheon, Korea and Nanjing, China. The company plans to build a production plant with a total floor space of 25,000 square meters in Ramos Arizpe of Mexico by 2023 to produce key parts such as drive motors and inverters for GM’s next-generation electric vehicles.