DELPHI 2013 Annual Report Download - page 28

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availability, interest rates, fuel prices, consumer confidence, employment and other trends. Although OEM demand is tied to
actual vehicle production, participants in the automotive parts industry also have the opportunity to grow through increasing
product content per vehicle by further penetrating business with existing customers and in existing markets, gaining new
customers and increasing their presence in global markets. We believe that as a company with a global presence and advanced
technology, engineering, manufacturing and customer support capabilities, we are well-positioned to benefit from these
opportunities.
We believe that continuously increasing societal demands have created the three “mega-trends” that serve as the basis for
the next wave of market-driven automotive technology advancement. Our challenge is to continue developing leading edge
technology focused on addressing these mega-trends, and apply that technology toward products with sustainable margins that
enable our customers, both OEMs and others, to produce distinctive market-leading products. We have identified a core
portfolio of products that draw on our technical strengths and align with these mega-trends where we believe we can provide
differentiation to our automotive, commercial vehicle and aftermarket customers.
Safe. The first mega-trend, “Safe,” represents technologies aimed not just at protecting vehicle occupants
when a crash occurs, but those that actually proactively reduce the risk of a crash occurring. OEMs continue to
focus on improving occupant and pedestrian safety in order to meet increasingly stringent regulatory requirements
in various markets, such as recommendations by the U.S. National Highway Traffic Safety Administration for rear
view cameras in all vehicles. As a result, suppliers are focused on developing technologies aimed at protecting
vehicle occupants when a crash occurs, as well as those that reduce driver distractions and proactively mitigate the
risk of a crash occurring. Examples of new and alternative technologies that incorporate sophisticated detection and
advanced software for collision avoidance technologies, include lane departure warning systems, adaptive cruise
control, driver awareness and automatic braking.
Green. The second mega-trend, “Green,” represents technologies designed to help reduce emissions, increase
fuel economy and minimize the environmental impact of vehicles. Green is a key mega-trend today because of the
convergence of several issues: climate change, higher oil prices, increased concern about oil dependence and recent
and pending regulation in the U.S. and overseas regarding fuel economy and carbon dioxide emissions. OEMs
continue to focus on improving fuel efficiency and reducing emissions in order to meet increasingly stringent
regulatory requirements in various markets. On a worldwide basis, the relevant authorities in the European Union,
the United States, China, India, Japan, Brazil, South Korea and Argentina have already instituted regulations
requiring further reductions in emissions and/or increased fuel economy through 2016. In many cases, other
authorities have initiated legislation or regulation that would further tighten the standards through 2020 and
beyond. Based on the current regulatory environment, we believe that OEMs including those in the U.S. and China,
will be subject to requirements for even greater reductions in CO2 emissions over the next ten years. These
standards will require meaningful innovation as OEMs and suppliers are forced to find ways to improve thermal
management, engine management, electrical power consumption, vehicle weight and integration of alternative
powertrains (e.g., electric/hybrid propulsion). As a result, suppliers are developing innovations that result in
significant improvements in fuel economy, emissions and performance from gasoline and diesel internal
combustion engines, and permit engine downsizing without loss of performance. At the same time, suppliers are
also developing and marketing new and alternative technologies that support hybrid vehicles, electric vehicles and
fuel cell products to improve fuel economy and emissions.
Connected. The third mega-trend, “Connected,” represents technologies designed to seamlessly integrate the
highly complex electronic world in which automotive consumers live into the cars they drive, so that time in a
vehicle is more productive and enjoyable. The technology content of vehicles continues to increase as consumers
demand greater safety, personalization, infotainment, productivity and convenience while driving. Also with
increased smart phone usage in vehicles, driver distractions can be dramatically increased, which in turn results in
greater risk of accidents. Delphi's MyFi suite of infotainment products seamlessly integrate smart phones with
vehicles allowing greater connectivity to the devices and cloud based content and services. Delphi's MyFi then
couples active safety products to monitor the environment inside and outside the vehicle to help enable
connectivity in a safer environment. Coupled with alerts, audio commands and responses, driver awareness can be
enhanced and increased connectivity enabled.
We expect these mega-trends to continue to create growth and opportunity for us. We believe we are well-positioned to
provide solutions and products to OEMs to expand the electronic and technological content of their vehicles. We also believe
electronics integration, which generally refers to products and systems that combine integrated circuits, software algorithms,
sensor technologies and mechanical components within the vehicle will allow OEMs to achieve substantial reductions in weight
and mechanical complexity, resulting in easier assembly, enhanced fuel economy, improved emissions control and better
vehicle performance.