Published by Uma Rajagopal
Posted on October 21, 2024
By Nathan Vifflin and Mara Vilcu
(Reuters) -French car part supplier Forvia has secured new deals with Chinese automakers BYD and Xiaomi, it said on Monday, sending its shares up nearly 10%.
The world’s seventh largest car parts supplier by revenue, whose Chinese sales account for a quarter of total revenue, is hoping new contracts with Chinese manufacturers will offset ailing auto demand from domestic manufacturers.
The company has been selected to supply Chinese electric vehicle giant BYD’s second European factory, in Turkey, it said in a statement alongside its third quarter sales. It also has reached deals with Chinese auto manufacturers Chery and Li Auto.
Forvia’s ability to secure business with BYD outside China is reassuring as it helps to mitigate the fears that Chinese automakers will not use international suppliers such as Forvia in their expansion of their footprint into Europe,” said Stephen Reitman, an analyst at Bernstein.
Forvia also said that it received a first contract from Xiaomi.
Xiaomi is one of the key telecom companies entering now the EV and car market and it’s very good that we are able to extend our reach with Chinese manufacturers also with the latest ones,” Forvia’s finance chief Olivier Durand said on an investor call.
The company said it expected a return to outperformance compared to automotive production in China in 2025, after a third-quarter sales drop.
That target is ambitious, said Alphavalue analyst Adrien Brasey, adding that it will “strongly depend on Forvia’s ability to increase its exposure to Chinese carmakers.
Sales for the third-quarter reached 6.53 billion euros ($7 billion), a 2.6% decrease year-on-year, while Chinese sales fell 13.5%.
In late September, Forvia cut its annual sales and profit forecasts for the second time in three months, reflecting weakness in the European and North American markets and delays in China.
($1 = 0.9207 euros)
(Reporting by Nathan Vifflin and Mara Vilcu; editing by Matt Scuffham and Emelia Sithole-Matarise)
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