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Industry Profiles
Volkswagen Profile
Monday, 01 April 2019

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Volkswagen are a huge group, one of the first in the world for automotive production, and the Volkswagen brand is both the historic root of the group and the most important of the group's 12 brands.
Like other companies, Volkswagen have seen challenging times, for instance during the redeployment after the monoculture of the emblematic Beetle, and more recently after the diesel emissions compliance issue. But each time, they took the opportunity to re-accelerate. And now after a lot of measures to ensure the best governance and to enhance productivity, the Volkswagen group—and the Volkswagen brand particularly—seem stronger than ever, having kept customer confidence. This is demonstrated by sales that at the group level reached a new record in 2018 at 10.9 million cars, an increase of 1.1% over 2017.

For the Volkswagen brand, a new sales record was set with 6,244,900 cars sold despite the economic uncertainties at the end of 2018, the difficult new homologation process in Europe, and the slowdown in China. This shows the resilience of the Volkswagen brand and the deep attachment from customers to its associated values of quality and strong technical content. VW is one of the most respected brands in the world and considered as a leader for volume production.
Volkswagen's lighting is emblematic of the brand, first symbolised by the original Beetle bearing the best technology possible at a price affordable for a maximum number of people. Lighting at Volkswagen has also a strong technical content. The new technologies are first introduced on higher-range cars, then spread quickly to progressively lower price classes. Volkswagen take care on a case-by-case basis to introduce expensive technologies only when there's obvious added value. That's why laser lighting for high beam range extension was not chosen; this function is now developed with high-performance LEDs at a much more affordable price and is so considered by Volkswagen for all future models.

But despite this attention to costs, Volkswagen's story is peppered with very interesting innovations. A Volkswagen had the first BiXenon headlamps (on the 2002 Phaeton), and Volkswagens were first in the world with ADB on the Touareg and Phaeton in 2010. Now, Volkswagen are in the process of democratising the best lighting technologies, so extending for instance the application of full LEDs to all models in Europe, North America, and Asia within the next three years, and extending ADB safety in parallel to all models targeting a take rate of 50% in 2025 (the current 30% figure is already impressive).
Safety and style are the two drivers of innovation in Volkswagen, and we can also observe their application for rear-lighting with the interesting "click-clack" system changing the signature from tail to stop function to reinforce the attention of following drivers—an idea in the process of democratisation to all models.
Volkswagen are now strongly preparing for a future of smarter and smarter lighting and driver assistance systems, and of cars becoming more and more autonomous, electrical and connected. For front lighting, a high-definition digital light using micropixel LED technology with thousands of pixels to optimise the light output for safety and communication is being prepared for application within the next five years. For rear lighting, Volkswagen are developing a matrix LED system to achieve very flexible signatures and communicate with text and signs.
During our DVN visit to VW, we saw a strong lighting team under the management of Ricardo Plöger, a team very motivated and developing with passion very interesting technologies that will certainly help Volkswagen to maintain their pioneering spirit and technical leadership for volume production.

Varroc Lighting Systems
Tuesday, 16 October 2018

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Varroc are a relatively new company, founded in India in 1990 by the current Managing Director Tarang Jain with their father Naresh Chandra as Chairman and non-executive Director. The company started activities with plastic parts, then electrical and metallic parts for the Indian transportation industry—particularly for two wheelers. Varroc then extended their activity to lighting in India, still mainly for two- and three-wheelers, this being still today in India their core business for lighting. Varroc are currently the two-wheeler lighting leader in India. Global sales of Varroc group in FY17-18 are at €1.24bn ($1.43bn), supported by 36 plants and 16 R&D Centres round the world.

For the lighting business which is now the main activity of Varroc Group with 61% of sales, the main development occurred in 2012 with the acquisition of the lighting activities of Visteon, boosting at that time the global turnover of Varroc above $1bn and allowing them to become a major participant in the international vehicle lighting industry.

Varroc had strong growth during the last five years at +14% per year, but with an acceleration in the last quarter reported at +28% thanks to internal growth and acquisitions. Varroc's lighting market share is around 4% worldwide, and Varroc say they're currently the 6th lighting set maker worldwide, targeting to rise to third or fourth. Varroc still hold the strong positions with customers held before by Visteon, particularly with Ford and Jaguar Land Rover.

But Varroc have also expanded their activities thanks to a good cost competitiveness mainly due to their locations in low-cost countries naturally in India, as well for global business in Europe in Czechia and Poland, and in North America in Mexico. During the last twelve months, Varroc have accelerated their globalisation with new production plants in Morocco and Brazil, new R&D centres in Czechia and Poland, new activities in small lamps with the acquisition of Sa-ba in Turkey and Bulgaria and new sales centre in Japan.

Varroc are not only supplying low cost products; they also have developed high technology systems for instance LED Matrix ADB for the Jaguar E-Pace, Matrix ADB with laser high beam for the Range Rover Sport or Matrix ADB for the Bentley Continental. These developments were realised in close cooperation with some key suppliers that is a part of the Varroc strategy to accelerate their offer for high-tech products despite a relative lower level of resources compared to their main competitors.

Varroc want to be part of the high technology leaders and for that are increasing R&D resources at a strong rate of 150 new R&D engineers per year. Varroc have for instance announced soon the production of low-cost LED reflectors systems and are developing high definition ADB system with up to 1.3 million pixels. But the central strategy of Varroc Lighting Systems to develop their business is "to bring leading edge technology to the mainstream markets with high quality, cost competitive solution".
Varroc are very ambitious for the future, wanting to be one of the three main lighting suppliers in the world. Varroc have some important strengths: a central location in India, likely the "next China" for mass production of cars; a relatively large number of plants and R&D centres in low-cost countries, a global presence, and improvements for developments of high-tech products. 
Varroc can also rely now on a new financial support as they have in 2018 introduced the parent company Varroc Engineering in the Indian financial market, so they can continue their quick pace for acquisitions or be part of a future important merger.

Nevertheless, this path to become part of the top three could be relatively long as Varroc are still today relatively small compared to their five main competitors that are currently about three to five times bigger and still growing.

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