DELPHI 2012 Annual Report Download - page 27

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• Powertrain Systems—This segment provides systems integration of full end-to-end gasoline and diesel engine
management systems including fuel handling, fuel injection, combustion, electronic controls, test and validation
capabilities, diesel and automotive aftermarket, and original equipment services. We design solutions to optimize
powertrain power and performance while helping our customers meet new emissions and fuel economy regulations.
• Electronics and Safety—This segment provides critical components, systems and advanced software for passenger
safety, security, comfort and infotainment, as well as vehicle operation, including body controls, reception systems,
infotainment and connectivity systems, hybrid vehicle power electronics, passive and active safety electronics,
displays and mechatronics. Our products integrate and optimize electronic content, which improves fuel economy,
reduces emissions, increases safety and provides occupant infotainment and connectivity.
• Thermal Systems—This segment provides powertrain cooling and heating, ventilating and air conditioning
(“HVAC”) systems, such as compressors, systems and controls, and heat exchangers for the vehicle markets. Our
products improve the efficiency by which the powertrain and cabin temperatures are managed, which are critical
factors in achieving increased fuel economy, reduced emissions and occupant comfort.
Financial Information about Business Segments
We operate our core business along four operating segments, which are grouped on the basis of similar product, market,
and operating factors.
Net Sales by Segment
Year Ended December 31, 2012 Year Ended December 31, 2011 Year Ended December 31, 2010
Net sales % of Total Net sales % of Total Net sales % of Total
(in millions excluding percentages)
Electrical/Electronic Architecture........................ $ 6,815 44 % $ 6,642 41 % $ 5,620 41 %
Powertrain Systems.............................................. 4,656 30 % 4,970 31 % 4,086 29 %
Electronics and Safety.......................................... 2,732 18 % 2,931 18 % 2,721 20 %
Thermal Systems.................................................. 1,541 10 % 1,755 11 % 1,603 12 %
Eliminations and Other......................................... (225) (2)% (257) (1)% (213) (2)%
Total................................................................... $ 15,519 $ 16,041 $ 13,817
Refer to Results of Operations by Segment in Item 7. Management’s Discussion and Analysis and Note 21. Segment
Reporting of the notes to the consolidated financial statements, included in Item 8. Financial Statements and Supplementary
Data of this Annual Report for further financial information about business segments.
Our business is diversified across end-markets, regions, customers, vehicle platforms and products. Our customer base
includes all 25 of the largest automotive OEMs in the world, and, in 2012, 25% of our net sales came from emerging markets
(Asia Pacific and South America). Our six largest platforms in 2012 were with five different OEMs. In addition, in 2012 our
products were found in 17 of the 20 top-selling vehicle models in the United States, in all of the 20 top-selling vehicle models
in Europe and in 17 of the 20 top-selling vehicle models in China. We have further diversified our business by increasing our
sales in the commercial vehicle market, which is typically on a different business cycle than the light vehicle market and has
grown to 11% of our 2012 net sales. In addition, approximately 7% of our 2012 net sales were to the aftermarket, which meets
the ongoing need for replacement parts required for vehicle servicing.
We have established a worldwide design and manufacturing footprint with a regional service model that enables us to
efficiently and effectively serve our global customers from low cost countries. This regional model is structured primarily to
service the North American market from Mexico, the South American market from Brazil, the European market from Eastern
Europe and North Africa, and the Asia Pacific market from China. Our global scale and regional service model enables us to
engineer globally and execute regionally to serve the largest OEMs, which are seeking suppliers that can serve them on a
worldwide basis. Our footprint also enables us to adapt to the regional design variations the global OEMs require and serve the
emerging market OEMs.
Our Industry
The automotive parts industry provides components, systems, subsystems and modules to OEMs for the manufacture of
new vehicles, as well as to the aftermarket for use as replacement parts for current production and older vehicles. Overall, we
expect long-term growth of vehicle sales and production in the OEM market. In 2011 and 2012, the industry saw increased
customer sales and production schedules. However, OEM vehicle production in Europe decreased by 6% from 2011 to 2012
and current OEM production volumes in Western Europe, and, to a lesser extent, North America, remain substantially lower
than OEM production volumes prior to the disruptions that the economic and credit markets experienced in 2008 and 2009.
Demand for automotive parts in the OEM market is generally a function of the number of new vehicles produced, which is