Lighting the way

OEMs and tier suppliers are developing new vehicle lighting systems such as OLEDs and laser lightsFront and rear lights are generally manufactured in the same regions as the cars onto which they are fitted. There is limited international shipment of completed light assemblies, although there is a notable concentration of both bulb and light-emitting diode (LED) manufacture in Asia, even for European and North American light assemblies.The plastic housing, reflectors and front lenses are typically made by tier-one lighting companies, while motors, ballast (for Xenon) and necessary wiring and other parts come from a network of tier-two and tier-three suppliers within each major region.

There is a complex supply chain feeding into each lighting assembly plant which, at least in the developed markets of Europe, North America and Japan, also tend to specialise in either front or rear lighting. At factories built within the last 15-20 years in emerging markets, such as China, India and others in South-East Asia, production tends to be mixed, with these plants producing both front and rear lighting, albeit on different assembly lines.

Supplying European OEMsIn Europe there are three major suppliers. Automotive Lighting began life in its current form in 1999 as a joint venture between the lighting divisions of Magneti Marelli and Bosch, but it is now a 100% subsidiary of Magneti Marelli. It produces around 22m front lights a year and a similar number of rear light assemblies in 16 factories around the world, mostly in Europe. It has opened plants in China, Malaysia and Russia in recent years, the latter specifically to support Ford, Renault and Volkswagen’s expansions there.

The Russian plant makes front, rear and fog lamps, rather than being dedicated to just one lighting type. A plant has recently opened in Xiaogan, China, to supply Changan, both at its own plants and joint-venture factories with Ford and Suzuki, as well as Dongfeng’s JV plants with PSA, Renault and Honda.

Hella, operating from 12 production sites in Germany, the Czech Republic, Slovakia, Slovenia, China and Mexico, is another of the big three European lighting suppliers. Whereas Automotive Lighting specialises in just lighting, Hella also has strong business in automotive electronics and body control modules. Lighting, however, is its main business and Hella has been at the forefront of LED development with the German vehicle companies especially, as well as being their major supplier of Xenon systems.

Heller’s European plants operate as a vertically integrated group of factories which tend to supply light assemblies from the location nearest to the car plant into which lights are delivered. In North America, it supplies mainly the German transplants, as well as General Motors.

Its GM business includes interior lighting for the Chevrolet Camaro, which involves a complex global supply chain; the design and development for this programme was divided between the US and Germany, with the electronics being supplied by Hella India, mechanical components coming from Hella Mexico and LED modules coming from Hella Slovakia. It also has two JV factories in China, one with BAIC (to supply Mercedes models made in China) and the other with Changchun Faway, whose main customer is FAW, one of Volkswagen’s production partners in China.

Valeo, is the third major European supplier. Its European operations are centred on R&D and manufacturing facilities in France, but it has been growing strongly outside Europe in recent years. It has a minority stake in Ichickoh of Japan through JV arrangements and in 2012 Valeo acquired an 80% stake in Ruby, a lighting specialist in China, and former subsidiary of Chery cars. It also has an 85% stake in a JV with Ichickoh that was established to provide an entry route into China, which is expected to account for 25% of Valeo’s lighting business in the long run.

In India, Valeo operates a plant with an annual capacity of 750,000 units, mainly set up to supply the growing Renault-Dacia operations in the country. In North America, it has plants in Indiana and Mexico, supplying front lights, auxiliary lights, and combination rear lamps to the North American factories of Ford, Nissan, Chrysler and Toyota.

Being big in JapanIn Japan, the main suppliers are Koito and Stanley, both of which have operations across Asia and beyond; as the third-placed supplier, Ichickoh, has a 6-7% share of the Japanese market (versus around 40% for Stanley and nearer 50% for Koito) and also operates across Asia, both alone and in association with Valeo of Europe.

Koito is the largest lighting supplier in Japan and, in fact, is the biggest OE lighting supplier worldwide, with a global market share of just over 20%, ahead of the three European companies (whose global shares are smaller than Koito’s because of their minimal presence in Japan and much of Asia). Outside Japan, Koito has manufacturing operations in eight countries, including North America, China, Europe and Asia. It already has four plants in China and will expand there as volumes made by its Japanese customers especially increase.

Stanley is the second-biggest supplier in Japan and has also expanded beyond the country in recent years. It has developed a strong vertical position in LEDs, choosing to design and develop LED emitters and optics itself, whereas other companies outsource some of this work. Stanley’s business is almost entirely focused on the Japanese brands, unlike Koito, which has developed several non-Japanese contracts. In Europe, Stanley has a plant in Hungary which supplies the Suzuki factory there and also delivers some of the rear lights to Japanese transplants in Europe.

In Korea, lighting supply is divided between Hyundai Mobis and SL Corporation, each covering just under 50% of the market. Of the two, Hyundai Mobis is the most international, having opened plants in North America (to supply Chrysler), in China (from where it will supply lamps for halogen applications to BMW worldwide) and, since April 2014, in Europe (opening a plant in Ostrava, Czech Republic, to supply Hyundai and Kia mainly, but which it will also use as a base to target the European operations of vehicle manufacturers it currently supplies from elsewhere in the world.Interestingly, there is no significant North American supplier, especially since Visteon exited the lighting market, selling its small business here to Varroc of India. Chrysler has a small lighting business of its own, but this is expected to be folded into Automotive Lighting in due course. GM’s former components unit, Delphi, exited from lighting more than a decade ago, ceding this business to the major European suppliers and indeed the Japanese.

Developing lighting technologyIn front lighting, the market divides into: halogen lights, which still account for the vast majority of the market; high-intensity-discharge (HID) Xenon lighting, which is still mainly a Japanese and European phenomenon, the North American market having been slow to adopt this technology, partly for regulatory reasons; and, more recently, LED lights. In Europe, daytime-running lights (DRLs) are now mandatory and these are almost entirely now LEDs.

The striking designs of the Audi and Land Rover LED DRLs are typical of the way in which the car companies use lighting as a key element in their design strategies. Rear lights divide between the centre brake light (CHMSL, or centre high-mounted stop lamp), and rear-light combination lamps, with one each on either side of the car.

Halogen lights still account for over 70% of front lighting in Europe and more than 85% in North America, but in Japan, they only have a 50% share. It had been thought that HID Xenon would replace halogen as prices fell and fitment rates rose. However, despite being launched in the early 1990s on premium cars in Europe and Japan, Xenon lighting has not grown as much as expected, partly because of price, but also because the car companies did not make Xenon effectively a loss-leader and absorb the additional cost of this technology within the vehicles’ selling price. As a result, Xenon lighting has a share of around 20% in Europe, versus just 10% in North America. In Japan, Xenon is much more popular, with close to a 40% installation share.

Further adoption of Xenon has begun to be stymied by developments in LED technology; Xenon is more expensive than halogen and its assemblies are also bigger, necessitating changes to the front-end design of the vehicle. Xenon lights generate more heat than halogen units and need cooling modules to be designed into the vehicles which use them, adding to the cost and size of the assembly. By contrast, LEDs overcome many of the technical problems of both Xenon and indeed halogen lights. LED light assemblies are smaller than either Xenon or halogen and the diodes have working lives which are much longer than the other light technologies – often longer than the lives of the cars themselves. LEDs have a penetration of less than 5% in Europe and around 6-7% in Japan for main front lighting modules – rates which are expected to rise to 12-14% in Europe and over 20% in Japan by 2020.