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Infotainment, telematics define LG’s new future with $6.2 billion in orders

LG is looking to set the standard for the in-vehicle systems of global premium vehicles such as Mercedes-Benz, BMW and Audi

By Jul 05, 2022 (Gmt+09:00)

3 Min read

LG's in-vehicle infotainment system
LG's in-vehicle infotainment system

When LG Electronics Inc. surprised the market last year by announcing that it was exiting the mobile phone business, one of its mainstay businesses, investors wondered, what's next?

It didn’t take long for the South Korean electronics giant to come up with an answer.

The company said on Tuesday it has secured 8 trillion won ($6.2 billion) in new orders for vehicle components, meaning telematics and in-vehicle infotainment (IVI) systems and e-power trains, in the first half of this year.

The figure represents over 13% of LG’s total order backlog in that business of 60 trillion won in 2021. And the company says it expects to win an additional 7 trillion won new vehicle component orders in the second half, bringing its accumulated order backlog to 65 trillion won by year-end.

Since its ungraceful exit from the loss-making mobile phone business, the company has been looking for new growth drivers, and now hopes to establish itself as a major force in the electric vehicle component solutions business.

LG Electronics, which already counts global carmakers such as Mercedes-Benz AG, Renault Group and General Motors Co. as its major clients for vehicle components, said it aims to expand its customer base with advanced in-vehicle system technologies.

LG Magna e-Powertrain's EV engine system
LG Magna e-Powertrain's EV engine system

LG-MAGNA, ZKW BACK UP VS BUSINESS

In April of this year, LG Magna e-Powertrain Co., LG’s joint venture with Canada’s auto parts maker Magna International Inc., broke ground on a factory to produce EV components in Mexico, its third plant globally, to meet growing demand for eco-friendly automobiles in North America.

The JV operates manufacturing facilities in Korea and China. LG said last month it is spending 101.6 billion won to expand its facility in Nanjing to make more EV motors and inverters for GM and other automakers.

LG Electronics expects LG Magna’s sales to rise more than 50% a year on average until 2025 as demand from global EV makers accelerates.

In 2018, LG Electronics acquired Austria-based automotive lighting company ZKW Group, which counts German premium carmakers including Mercedes-Benz, BMW, Audi and Porsche as its clients.

LG Electronics acquired Austria-based automotive lighting company ZKW Group in 2018
LG Electronics acquired Austria-based automotive lighting company ZKW Group in 2018

TOP TELEMATICS PLAYER

LG Electronics has been fostering its automotive electronics business to enhance its presence in the future mobility market since the company set up a vehicle component division in 2013. It later expanded the division into a vehicle components solutions (VS) unit covering infotainment technology.

The company’s VS unit posted 6.7 trillion won in sales on a consolidated basis last year, up 24% from the previous year. The growth came amid falling demand from carmakers, which were reeling from a global shortage of automotive chips, putting some of their production facilities on hold.

According to market research firm Strategy Analytics, LG Electronics was the world’s top telematics maker with a 22.7% market share as of the first quarter, and has enjoyed a double-digit market share in the automobile audio, video and navigation (AVN) market since last year.

Earlier this year, LG said it is supplying its infotainment systems to Mercedes-Benz for the German carmaker’s 2022 EQS EV models.

“Leveraging our strong partnerships with global carmakers, we will continue to provide differentiated value to our customers,” said Eun Seok-hyun, president of LG’s VS division.

Write to Shin-Young Park at nyusos@hankyung.com
In-Soo Nam edited this article.
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