Aptiv (APTV) Deutsche Bank Global Auto Industry Conference summary

Industry conditions and market dynamics

• Global vehicle production is forecasted at 93.5 million units, with Europe down 2%, China up 3%, and North America flat, reflecting a mixed regional outlook.

• Significant schedule reductions occurred at major customers due to high inventory levels, impacting both EV and internal combustion segments.

• EV production growth has slowed, especially in North America and Europe, while China continues strong EV momentum.

• Chinese OEMs are gaining market share, with local bookings now surpassing international ones, indicating a shift in customer mix.

• OEMs are replacing reduced EV output with internal combustion vehicles, maintaining overall unit numbers.

Business performance and operational initiatives

• Margin expansion initiatives launched in 2023 are yielding results, with strong Q1 margin performance despite external headwinds.

• Manufacturing and engineering cost optimizations, including shifting engineering to lower-cost countries and SG&A discipline, are supporting margins.

• Supply chain disruptions, which cost $315 million in 2022, have been reduced to near zero in 2024.

• Additional $50 million in cost savings targeted for 2024 to offset volume declines.

• Flexibility in variable costs and ongoing SG&A reviews help manage changing volumes.

Electrification and EV strategy

• Global customers remain committed to EVs, but North American and European timelines are being pushed out; China maintains strong EV growth.

• Electrification portfolio, under $2 billion in revenue, is well-positioned for both hybrid and full battery platforms.

• Long-term EV penetration is expected at 30%-35% by 2030, with China potentially nearing 100% electrification of light vehicles.

• Hybrid opportunities in North America may emerge, especially for trucks and SUVs.

• Growth in EV revenue has slowed from 25%-30% to low-to-mid single digits for 2024.