Future auto market needs compact, energy-saving bulbs

Reporter: Would you please give us a brief introduction of Philips Automotive Lighting?

Dominiek: Philips Automotive Lighting Business Group (BGA) belongs to the Lighting sector in Royal Philips Electronics of the Netherland. Another two sectors Royal Philips Electronics engaged in are Healthcare and Consumer Lifestyle. Philips Automotive lighting conducts business via business lines: Headlight (Xenon, Halogen), Signaling&Interior, Non-car (Two-wheeler, Truck and Bus).
 
We have 6 manufacturing plants located in Germany (Aachen and Plauen), France, Poland, Brazil and China (Songzi, Hubei Province), and 48 sales offices covering all major countries.
 
We are in the leading position in automotive lighting industry in terms of almost all aspects with No.1 market share globally.

Reporter: How do you evaluate the automotive lighting after-market business opportunities in China, and what are your competitive advantages to catch the opportunities?

Dominiek: In China, we find 60% drivers have less than 4 years driving experience. They have not been educated well to pay attention to the relationship between auto lighting and driving safety. As result, around 75% volume shares are taken by low end products. It is key issue for not only Philips but also other auto lighting players to lead customers from price oriented to be value oriented.

Follow this direction, we define customers' demands to two segments, one is "value care" group such as private car and company car drivers. For this group, we would like to leverage Philips leading technology innovation capabilities to offer upgrading products to match their high end demands. Another segment is "cost care" group such as taxi and truck drivers. For these customers, we would like to introduce "TCO" concept and offer well balanced product with great life time and brightness features at reasonable price.

To serve our customers better, channel development plays a key role. We are deploying a project to transfer our channel advantages in tier 1 market to tier 2 and 3 market. Via that, we hope these customers also can enjoy safe and comfortable driving experience via Philips auto lighting products.

In summary, we are confident to win the market via added value offer to end users.
 
Reporter: What expectation do you have on China’s market? And what’s your strategy to keep the leading position in China auto market?

Dominiek: China will be the No.1 market soon in the world in terms of vehicle production and sales. We developed strong presence in China market with majority market share, especially we had the majority market share with innovative product like Xenon bulb (over 1 million pcs delivered in 2008) We redeployed sales force to be more close to our customers in China, reinforced our business development with dedicated carmaker approach team and established our Application Lab in Shanghai in March 2008. All these efforts are to build more long term partnership with lamp set makers and car makers. It makes Philips automotive lighting the value-added service provider rather than bulb supplier only.

Reporter: Right now, global economy is suffering from a financial crisis, especially in the automotive industry. What impact does the crisis have on Philips Automotive Lighting? What measures will you take to sustain your business growth in the economic downturn?

Dominiek: Because we are the No.1 in the market globally, so when the global markets are hit by the crisis, we are also feeling it. And the challenge is huge in a sense that the crisis like we are now seeing is not going to be over in a few months. According to our estimates, it will last until 2012 before cars production can go back to 2007 level.

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