Delphi Automotive is getting a makeover ahead of an era when technology for autonomous vehicles is expected to be a big chunk of the supplier’s business.
On Wednesday morning, the company unveiled its new name—Aptiv—for its business centered around next-generation cars that are steeped in software. Its powertrain division, which is being spun off into its own independent company, will be known as Delphi Technologies. The company made the announcement in Boston during a meeting with investors, who still need to approve the names, and a further rollout is expected at the CES technology show in January.
“We need to provide much greater levels of value
at much deeper levels.”
– Glen DeVos, Delphi
It’s a makeover driven by both Silicon Valley and Wall Street. Delphi has transformed itself in recent years to compete in the development of autonomous vehicles and is currently running pilot projects with self-driving taxis in Singapore and Boston. As it continues to focus on self-driving systems and redesigning the electronic architecture of vehicles to support self-driving software, it made sense to split that business from its traditional powertrain group, said Glen DeVos, chief technology officer at the newly named Aptiv.
“When you think of the investor community, these are two different types of investors, and people focused on powertrain are diverging from software investors,” he said.
Aptiv sounds like a contrived name workshopped to death by branding executives in windowless conference room. At the same time, it sounds vaguely futuristic enough to signify a Mars mission or an ambition of some importance. Name considerations aside, Wall Street has welcomed Delphi’s structural business changes. The split was announced in May, and the company’s stock price has increased by 26 percent over the past six months. The separation of the companies is expected to be completed in early 2018.
The move reflects the growing need for specialization by global automotive suppliers that were once accustomed to providing a wide assortment of parts and products. It also provides an opportunity for them to shift from low-margin product lines and reliance on OEMs to areas that provide greater returns.
By divvying up the company, the plan seems to be to make the parts more profitable than the whole.
“Narrowing the portfolio and focusing on margin expansion is a much better place to be,” DeVos said. “We need to provide much greater levels of value at much deeper levels. Telematics, safety, and software-driven systems provide that, and we’re moving quickly in that direction.”