LG Elec’s vehicle systems plants running above full capacity

LG Electronics Inc.'s automotive electronics production plants have surpassed 100% of their operating rate this year as of the end of September.

According to LG Electronics' third-quarter report, the factory utilization rate of its Vehicle components Solutions (VS) division averaged 101.1% on a cumulative basis this year.

That is a 12.9 percentage point increase over the same period last year and marked the division’s highest-ever operating rate.

An operation rate above 100% means a production line is fully and continuously in operation, churning out more products than its capacity can support.

By comparison, the utilization rate of LG’s air conditioner and washer production lines averaged 96.3% and 90.8%, respectively, during the same period.

The South Korean home appliances maker also produces car infotainment systems, automotive lighting and electric vehicle (EV) powertrains. It ships them to Mercedes-Benz, Porsche and BMW, as well as General Motors, Hyundai Motor Co. and Kia Corp.

LG’s VS business, viewed as a future growth engine, posted record-high quarterly profit in the July-September period. Its operating profit soared 40.4% on-year to 134.9 billion won ($104 million), with sales up 6.7% to reach 2.5 trillion won during the period.

The figure represents about one-seventh of the company’s total operating profit of 996.7 billion won in the quarter. Sales at the division account for one-tenth of LG Electronics’ total revenue during the period.

“It is even more meaningful that the utilization rate has increased alongside the rise in absolute production capacity,” said an LG Electronics official.

HEAVY INVESTMENT

The growth of the operating rate was driven by a sharp increase in investments.

LG has injected 573 billion won into its automotive electronics division so far this year as of end-September — the greatest spending among all of its business divisions.

For all of 2023, it earmarked 800 billion won for the VS division, an increase of more than 20% over the previous year.

OUTPUT VOLUME

This year, LG’s cumulative production of automotive electronics systems reached 29.3 million units as of the end of September.

This fuels expectations that the VS division’s annual output will comfortably beat the 25.4 million units recorded in 2019, when its average operation rate stood at 100%.

LG Magna e-Powertrain Co. commenced operation of its new production lines in Ramos Arispe, Mexico, in the third quarter of this year. It is a joint venture with Canada’s Magna International Inc.

The JV is also building an EV components factory in Hungary, which is expected to come online in 2025.

Write to Ye-Rin Choi at rambutan@hankyung.com
 


Yeonhee Kim edited this article.