DELPHI 2012 Annual Report Download - page 53

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Going forward, our strategy will be to build on these accomplishments and continue to develop and manufacture
innovative market-relevant products for a diverse base of customers around the globe and leverage our lean and flexible cost
structure to achieve strong earnings growth and returns on invested capital. Through our culture of innovation and world class
engineering capabilities we intend to employ our rigorous, forward-looking product development process to deliver new
technologies that provide solutions to OEMs. Key strategic priorities include:
Targeting the Right Business with the Right Customers. We intend to be strategic in our pursuit of new business and
customers. We conduct in-depth analysis of market share and product trends by region in order to prioritize research,
development, and engineering spend for the customers that we believe will be successful. Collaboration with customers in our
15 major technical centers around the world helps us develop innovative product solutions designed to meet their needs. As
more OEMs design vehicles for global platforms, where the same vehicle architecture is shared among different regions, we are
well suited to provide global design and engineering support while manufacturing these products for a specific regional market.
Leveraging Our Engineering and Technological Capabilities. We seek to leverage our strong product portfolio tied to the
industry’s key mega-trends with our global footprint to increase our revenues, as well as committing to substantial annual
investment in research and development to maintain and enhance our leadership in each of our product lines.
Capitalizing on Our Scale, Global Footprint and Established Position in Emerging Markets. We intend to generate
sustained growth by capitalizing on the breadth and scale of our operating capabilities. Our global footprint provides us
important proximity to our customers’ manufacturing facilities and allows us to serve them in every region in which they
operate. We anticipate that we will continue to build upon our extensive geographic reach to capitalize on fast-growing
automotive markets, particularly in China, Brazil, India and Russia. In addition, our presence in low cost countries positions us
to realize incremental margin improvements as the global balance of automotive production shifts towards emerging markets.
Leveraging Our Lean and Flexible Cost Structure to Deliver Profitability and Cash Flow. We recognize the importance
of maintaining a lean and flexible cost structure in order to deliver stable earnings and cash flow in a cyclical industry. Our
focus is on maximizing manufacturing output to meet increasing production requirements with minimal additions to our fixed-
cost base. Additionally, we are continuing to use a meaningful amount of temporary workers to ensure we have the appropriate
operational flexibility to scale our operations so that we can maintain our profitability as industry production levels increase or
contract.
Pursuing Selected Acquisitions and Strategic Alliances. We intend to continue to pursue selected transactions that
leverage our technology capabilities and enhance our customer base, geographic penetration and scale to complement our
current businesses.
Trends, Uncertainties and Opportunities
Rate of economic recovery. Our business is directly related to automotive sales and automotive vehicle production by our
customers. Automotive sales depend on a number of factors, including economic conditions. Although global automotive
vehicle production increased almost 6% from 2011 to 2012 and is expected to increase by an additional 2% in 2013, economic
uncertainties persist in Europe, resulting in reduced consumer demand for vehicles and a decrease in vehicle production in
Europe of 6% from 2011 to 2012. Continued economic weakness in Europe or weakness in North America or Asia could result
in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our
business, results of operations and financial condition. Additionally, volatility in oil and gasoline prices negatively impacts
consumer confidence and automotive sales, as well as the mix of future sales (from trucks and sport utility vehicles toward
smaller, fuel-efficient passenger cars). While our diversified customer and geographic revenue base have well positioned us to
withstand the impact of industry downturns and benefit from industry upturns, shifts to vehicles with less content would
adversely impact our profitability.
Emerging markets growth. Rising income levels in the emerging markets of China, Brazil, India and Russia, are resulting
in stronger growth rates in these markets. Our strong global presence and presence in these markets have positioned us to
experience above-market growth rates. We continue to expand our established presence in emerging markets, positioning us to
benefit from the expected growth opportunities in these regions. We are capitalizing on our long-standing relationships with the
global OEMs and further enhancing our positions with the emerging market OEMs to continue expanding our worldwide
leadership. We continue to build upon our extensive geographic reach to capitalize on fast-growing automotive markets,
including China, Brazil, India and Russia. We believe that our presence in low cost countries positions us to realize incremental
margin improvements as the global balance of automotive production shifts towards the emerging markets.
We have a strong presence in China, where we have operated for nearly 20 years. All of our business segments have
operations and sales in China. As a result, we have well-established relationships with all of the major OEMs in China. We
generated approximately $2.3 billion in revenue from China in 2012. With only 22 of our 33 offered products locally
manufactured in 2012, we believe we have the opportunity to expand additional product lines into China, and as a result, we
see further growth potential.