Aptiv at Deutsche Bank Auto Conference: Strategic Spin-off Insight

On Wednesday, 11 June 2025, Aptiv (NYSE:APTV) presented at the Deutsche Bank Global Auto Industry Conference 2025. The company outlined its strategic plan to spin off its Electrical Distribution Systems (EDS) business, highlighting both growth opportunities and challenges in the global automotive market. While the spin-off is aimed at optimizing growth, Aptiv also addressed potential industry headwinds, including tariffs and global vehicle production declines.

Key Takeaways

• Aptiv plans to spin off its EDS business to enable independent growth strategies.
• The company aims to achieve market parity in China by the end of 2025.
• Aptiv’s direct tariff exposure is minimal due to regional manufacturing.
• The RemainCo will focus on diversifying into non-automotive markets.
• Aptiv intends to maintain its investment-grade status.

Financial Results

• Aptiv’s EDS business currently generates $8 billion in revenue and boasts higher margins than competitors.
• The spin-off is expected to be less capital intensive and more cash flow generative than Aptiv’s former powertrain business.

Operational Updates

• The RemainCo will focus on active safety user experience solutions and engineered components.
• Aptiv is working with customers to mitigate the impact of tariffs and has successfully passed on costs they cannot change.

Future Outlook

• Global vehicle production is expected to decrease by 3% this year, with a 4% decline anticipated in Q2.
• Aptiv targets a 70% domestic mix in China, aiming for market parity with local OEMs by the end of 2025.
• The company is confident in its Q2 outlook despite softening in North America and Europe’s EV sectors.

Q&A Highlights

• CEO Kevin Clark emphasized the strategic advantage of the EDS business in leveraging expertise into other markets like drones and robots.
• CFO Varun LaRoya reassured that Aptiv remains comfortable with its current level of leverage and intends to stay investment grade.

For a detailed understanding, readers are invited to refer to the full transcript below.

Full transcript - Deutsche Bank Global Auto Industry Conference 2025:

Unidentified speaker, Host: Joined by Aptiv, a a global industrial tech leader that provides advanced electrical safety, connectivity, and software solutions to both the light vehicle, commercial vehicle markets, and also other industrial markets as well. Key to Aptiv’s story right now is the company is looking to spin off its EDS business, which I’m sure we’ll we’ll dive into more during the conversation. From the company, I’m very honored to be joined by Kevin Clark, chairman and CEO, Varun LaRoya, CFO. And we certainly look forward to diving into many of the most pressing issues facing the industry.

Varun LaRoya, CFO, Aptiv: Great.

Unidentified speaker, Host: Wanna start with the the big one, the spin. Why is it important in your view to have the the EDS spin now? And, unfortunately, I am old enough to remember that there were parallels with the Delphi. There there may be some parallels with Delphi powertrain spin. So curious on your kind of high level views on on that and also why now.

Kevin Clark, Chairman and CEO, Aptiv: Yeah. So thanks for having us. Yeah. We we we welcome the opportunity to engage with you and our investors. So why now on the spin?

May may maybe a little bit I’ll talk a little bit about the EDS business and and and compare and contrast that to the portfolio of businesses we have within Aptiv. So EDS business, it’s the number one or number two player across literally every market that it operates in. It’s a little over $8,000,000,000 in revenues, a leader when you think about vehicle architecture as it relates to wire harness technology. Roughly over 50% of that business is full service solution. So we’re designing and optimizing vehicle architecture for the OEM.

And as a result of that, over a number of years, we’ve developed the leading competitive position literally across across the globe and much higher margins than than our competitors when you look at the the the universe of competitors that are out there. It’s a what we refer to as a program or platform sort of business for each vehicle program versus our other businesses that are really product businesses, whether that be interconnect solutions, it’d be our advanced active safety business or user. We’ve built product platforms that go across multiple vehicle lines. In the EDS line of work, it’s a much more customized solution based on a particular vehicle, the features, the powertrain, other sorts of items. So the approach our approach to customers, the approach to optimizing cost structure, driving profitability.

It’s a very different approach. When we look at the space that the EDS business plays in, it’s a space where we should see consolidation within the automotive industry. That’s our strong view. That business is uniquely positioned to participate in that. It’s also a business that we think is is pretty easily leverageable into other markets.

So when you think about solutions that are out there, whether they be drones or or or robots or aircraft or satellites, they all have wire harness, all of them. And just given the dominant position, the technical prowess, the management capability that we have in that EDS business, combined with the margin profile, which is different than the margin profile of our interconnect or ASUX business. Right? So think, you know, mid to high single digits sort of operating margins versus the ECG business with close to 20% operating margins. Our ASUX business with a a plan and target to get the mid teens given the software nature.

Growing that business is more difficult to do as a part of Aptiv versus separate as stand alone business where that business can have its own capital allocation strategy, its own product strategy, and quite frankly, investors who are focused on that particular business and its opportunities for growth. I would say different from the powertrain spin, Edison, going back a few years, that was 2017. Our powertrain business, high level of technology, but also very high level of CapEx and very long term commitments from a customer standpoint. So powertrains go through these very lengthy life cycles. And a number three or number four market position versus the leaders in that industry.

This particular business is much less capital intensive. It’s much more cash flow generative, and it has a leading position, as I mentioned, across every single market. So it’s really about how do we optimize that business and position it for for for, you know, outsized growth.

Unidentified speaker, Host: On on the remainco, I think myself and and many too, we we see the value value creation potential there. Can you talk about the the profile of the company in in a little bit more detail in terms of growth Sure. In terms of strategy? Sure.

Kevin Clark, Chairman and CEO, Aptiv: So that businesses will include our ASUX business, which is principally active safety user experience solutions that are perception systems, advanced compute, and software. That’s the nature of the product portfolio there. And then our engineered components business, which are interconnect, some cable management solutions. So comparables in that space are players like Amphenol, like TE, a private company called Molex. Those are the big players in that business.

It’s a highly engineered. So engineered in on a relative basis tends to be lower cost solution, high cost of failure. So displacement of that technology is once you’re designed in and you’re part of a solution, you tend to stay in. So so that explains the margin profile of that business. Both of those businesses have a greater nonautomotive footprint.

So within the ASUX business, it tends to be heavier weighted in a and d and telecommunications. Most of that sits with Wind River, and and all of it is software. On the engineered component side, I’d say it’s more distributed. Includes industrial. It includes data centers.

It includes telco. It includes some some A and D space. Both of those businesses, we think, are are uniquely positioned to continue to grow in automotive, but also grow outside of automotive, which has been one of our focus areas for the last last five years. So while we’ll continue to pursue opportunities, obviously, in the automotive space, we’ll also be very, very focused on how do we diversify revenues into other markets in a real intelligent way. You’ve alluded

Varun LaRoya, CFO, Aptiv: in the past m and a

Unidentified speaker, Host: being a big part of it. Is that very, very important to to remain co coming to Mano?

Kevin Clark, Chairman and CEO, Aptiv: Yeah. I think it’s a big it’s a big value creation opportunity. So Adaptive, over the last over the last ten years, we’ve done roughly 21 m and a transactions, I think, six divestitures. There’ll be two spins with the with the EDS spin. So so we’ve been successful from an M and A standpoint.

On the on the ECG side, that market is very fragmented. There’s a number of opportunities from an M and A standpoint. It’s where, in the past, we’ve done a lot of M and A transactions. A number of our quite frankly, the bulk of our transactions have been in that space as we’ve built that business. We’ll continue to do that with bolt on transactions, so we’ll continue to do that.

On the ASUX side, their m and a opportunities, I think we’ll be leaning more towards investment opportunities on the software side to grow that portfolio of products or to take our existing portfolio and bring it into other markets. So it will be a big big big piece of the overall strategy. And it’s a business that, from a cash flow standpoint, given the margin profile of the business, will generate, you know, a significant amount of cash flow, certainly more than what we have a consolidated after base. You know?

Unidentified speaker, Host: On EDS, consolidation,

Varun LaRoya, CFO, Aptiv: I think, has

Unidentified speaker, Host: been talked about in that in that subcategory for for a while. Why why do you

Varun LaRoya, CFO, Aptiv: think it’s taken or why do you

Unidentified speaker, Host: think nothing bigger has happened? And and I guess, did you consider selling it or at any point?

Kevin Clark, Chairman and CEO, Aptiv: I I’d say we’re focused on how do we maximize value. So that that’s that’s our objective. The spin we control. Right? That’s our timetable.

That’s our execution of our project plan. So that’s the path we’re headed down. If there’s an alternative to a spin that is that is is better for shareholder returns, that’s certainly something that we would we would entertain. Why I I think your question is really why hasn’t there been more consolidation automotive industry? Yeah.

Sure. Right? Fair.

Unidentified speaker, Host: Fair.

Kevin Clark, Chairman and CEO, Aptiv: And that’s supply base and and and OEM. And I listen. I don’t have a great answer, but as you all know, it takes a buyer and a seller and an agreement on value, and that’s not always easy to do.

Unidentified speaker, Host: Awesome. Capital structure. So coming out of all this, obviously, it seems like the strategic priorities are are a bit different between the two. How does one think about, you know, the the setup on that respect?

Varun LaRoya, CFO, Aptiv: Yeah. Well, thank you. And, again, I’ll just echo what Kevin said earlier. Thank you for having us. It’s great to see you, but also to meet with investors and potential investors, so thank you for the opportunity.

With regards to capital structure for both EDS and the new active RemainCo, the point is both businesses have a prodigious amount of free cash flow conversion. EDS will have more than 80% conversion of net income. RemainCo will have over 90% conversion. So that’s kind of just to kind of set the table, which is a tremendous position to be in. With regards to RemainCo, we intend to remain investment grade.

We are investment grade at this point of time, and we’ll remain very comfortable with the level of leverage we’re currently running. And as you know, Edison, that we’ve been running the better part of almost three quarters ahead of our publicly committed debt paydown leverage from last summer’s ASR. And then with regards to EDS, strong sub investment grade, That’s really what we are targeting. So there will be leverage, but it will be well contained. That business has a certain set of strategic imperatives, some of which that Kevin mentioned, but also to, you know, give it a good standing in terms of what they need to kinda go and chart out.

Unidentified speaker, Host: Let’s shift gears a little bit more to the the industry in the in the more near term. So it’s been a volatile start to the year, I think, from a a policy perspective, certainly. With some stability, I wanna say cautiously optimistic now, how are you seeing the the production schedules in in North America and maybe some

Varun LaRoya, CFO, Aptiv: of the the imports coming in.

Kevin Clark, Chairman and CEO, Aptiv: So so q two so we gave full year guidance in February. I’ll take a step back, and our overall outlook for global vehicle production was down 3%. That was our effectively our outlook for the calendar year. Q1 came in, in line with our expectations when vehicle production was down on an active average weighted market basis down 2%. We didn’t give full year guidance or update full year guidance on our Q1 earnings call.

We gave guidance as it related to Q2, just given all the uncertainty that you’re referring. High level of confidence in our Q2 outlook. Think that’s vehicle production down roughly four points. Haven’t have seen a little bit of shifting of schedules, but kind of I’d call it puts and takes with offsets. A little bit more weakness in North America, offset with strength in China.

The longer term schedule, so q three, q four, we’ve seen a little bit of shifting. I’d say a small bit of softening, but but not much. We’re watching it really closely. Obviously, given the environment and and and kind of the the uncertainty regarding trade, regarding tariffs, regarding rare earth minerals, regarding, you know, impact on vehicle production, we do have some worry that we’ll see a little bit of softening in the back half. But we haven’t seen anything yet to really call I think call that ball.

I just so we’re naturally in light of just just just being sensitive to that. There are certain areas that we’re, you know, reducing investment. We’re cutting cost. We’re playing wait and see. Regardless, we feel like we’re in a a good position from an overall overall competitive and and and full year results standpoint.

I don’t know if there’s anything else No. I think

Varun LaRoya, CFO, Aptiv: I guess just to add, we would like to get back to giving clarity to our investors. So as soon as the dust settles, and certainly, when we come out with second quarter earnings, we will update. So I just want to kind of put that to yourself there in addition to what other things are. Yes.

Unidentified speaker, Host: Totally. Curious on your on your thoughts maybe by region. North America, obviously, I think you kind of covered pretty well. Europe, any any any signs you’re you’re seeing there? I know emissions has been, you know, topical.

Has that impacted? And I know this indirectly impacted, but indirectly.

Kevin Clark, Chairman and CEO, Aptiv: Yeah. Some some some slowdown in EVs offset with largely with with with increases on on the internal combustion engine side. China obviously continues to be strong. We expect that trend to continue. So I I would we characterize it as a little softening in North America.

North America and Europe, some softening on on the EV front. Europe about where we expected the things to play out today. And then China, we’re seeing strength.

Unidentified speaker, Host: Andre, maybe you can dive a little bit more into to what you’re seeing there. I think there’s some hope that some of the foreign automakers JVs may be seeing a little bit of bottoming out after, you know, kind of getting, you know, decimated over the last year. Do are you seeing any signs of that? Maybe some of the JVs stabilizing?

Varun LaRoya, CFO, Aptiv: Oh, do you wanna listen. There certainly was a slightly better than expected q one from a production perspective. The question is the level of sustainability and then really where the long term direction of those is. That direction of travel will continue towards China domestic.

Unidentified speaker, Host: How how do we think about your your mix, I guess, toward for local games? I know you’ve you’ve quantified it at various points. I know that’s growing. When does that become kind of in line with the market and then it becomes kind of

Varun LaRoya, CFO, Aptiv: a deal with? Yeah. Listen. So and great question. Thank you.

If you’re to go back in terms of 2024, our China revenues were approximately 54% on our domestic. Over the past couple of years, we’ve been picking up the better part of 10 points a year to a point where based on where our current trajectory is, we expect to exit 2025 at market parity, which we expect to be about 70%, 30% to 70% for China domestics. So that’s where we will exit the year. So as you think about what has been a headwind for us over the past few years, that essentially will moderate or basically will kind of bottom out, you know, going into ’26 with regards to China growth relative to our customer mix.

Kevin Clark, Chairman and CEO, Aptiv: So important China market for those of you here. Traditionally, when we’re awarded business, so we’re we refer to them as bookings, new business bookings. We’re awarded business in the The West. So in The US or or the European markets, it’s typically a two to three year launch cycle between awarded launch of a program with with with. The reason we’re able to close that gap from a mix of our revenues versus industry production mix in China.

In China, it’s nine months to twelve months. I mean, it’s literally a to a half. So we have programs in China, ADAS programs we’ve been awarded the last couple last couple years. We’re literally a program awarded at the March or April. We’re launching a new ADAS system, a level two plus plus ADAS system within nine months.

So bookings in China have been have been strong the last couple years, especially last last year, very strong. So bringing on those new programs happens very, very quickly.

Unidentified speaker, Host: In terms of the the growth you’re getting to parity, is that kind of the same between the RemainCo and the SpinCo, or is it is there any noticeable difference?

Kevin Clark, Chairman and CEO, Aptiv: It’s a little bit faster on the RemainCo than it would be on the

Varun LaRoya, CFO, Aptiv: SpinCo, but

Kevin Clark, Chairman and CEO, Aptiv: both are making significant progress. Listen.

Varun LaRoya, CFO, Aptiv: Give me other piece to kinda when when we talk about our China business and this for, you know, being here with everyone here, but also those that are gonna calling in, that we do business with the clock eight, ten, 12 OEM. Right? And so as you think about, you know, this is the these are likes of Cherry, Geely, BYD, Great Wall, you know, those are folks that we deal with. And we and we’re happy with the business that we do with them, and as they continue to grow, that certainly helps. There certainly are several more, dozens more OEMs below that threshold also, and that’s activity that we have very consciously not actively participated in.

The price points, level of quality, it’s not something that we would be able to add value both to them but also back to our shareholders. I just wanted to classify just to give that clarity in terms of who we do business with out there, and as they grow, we’re certainly there to support them, not only in China, but also for the export volume. And as now, they’ve been they’ve they’ve to move out into South America and Europe and other international markets. Given our footprint, we certainly are, you know, actively engaged with helping them get international operations up and running also.

Unidentified speaker, Host: Last thing on on on China, know you mentioned getting to parity, which is very impressive. I think very few US auto suppliers can can say that. Does that have any implications for margins? Or in in the context of what we’ve what we’ve heard is, obviously, it’s it’s very cutthroat on pricing. So is that something that worries you now?

Kevin Clark, Chairman and CEO, Aptiv: Yeah. I I think to the to the really good point Varun made, there be an impact on margins? From our from our standpoint, that’s something we can manage through in terms of customer mix, program mix as well as cost structure. Right? Cost structure, I’ll start with that.

We’ve been consolidating footprint. We’ve been rotating west. We’ve been rotating both our engineering and manufacturing activities. So so further reducing cost to deliver solutions in in in China. We have global platforms on the ASUX and HCT business that we leverage the global aspect of product design, but it’s obviously manufactured delivered in China.

And then to the point that that Baron made, we’re very focused on where do we bring the most value so that we’re not competing just on cost. Right? And we operate in areas where, in reality, the the the capabilities or the the the landscape of competitors out there are smaller that you need to compete on systems capability, engineering capability, quality. So we run into less of that sort of price pressure. Do you need to be competitive?

Absolutely. Are we able to be competitive? We are, and we’re able to do that while while at the same time we maintain our margins with incremental cost action. Shifting

Unidentified speaker, Host: to the the longer term, SVA, we you know, we’ve obviously heard a lot about that in in the last couple years. We’ve seen some more activity, I guess, from from some of the OEMs. How do you think about that going forward? Is that something, you know, still a huge priority, or you think OEMs essentially would try to insource?

Kevin Clark, Chairman and CEO, Aptiv: No. It’s a it’s a huge priority that we remain uniquely positioned to do, and and and OEMs are are headed down that path faster pace in China today, which I would refer to as kind of an SCA light with more focused on zonal controllers, less focused on taking wire harness content out of the car. So so fastest moving there. A few of the European OEMs, obviously, are continuing down that path. North America slower.

EV adoption has some impact. Not that you not that you can’t use SVA on an on an ICE platform. You can. But the aspect of redesigning vehicle architecture is easier to do when you’re designing a clean sheet program for electrification. Gives you more flexibility to do that.

As we’ve seen a slowdown in North America, it’s impacted some of the pace of that activity. I’d say all the OEMs across the globe are are focused on SVA, are headed down a path towards SVA, but at different at different pace. As it relates to OEMs doing things internally or externally, which is a question we get asked across our portfolio, I we would say it’s a mix. We’d say the trend actually is is reversing. There’s a number of OEMs, and you are aware of them that have spent exorbitant amounts of money trying to do things internally, and those activities have not been successful.

So a recognition that they need suppliers like Aptive. We’re very intentional in our approach commercially. We have open architectures where the extent our our our customers wish to do some or part of a solution, they’re able to do it. You know, we’ve designed our ADAS stack, our user experience stack, where it’s open architected from a software hardware standpoint. It’s chip agnostic so that we give our customers flexibility to partner with those that they wanna partner with or do some of the activity internal.

Unidentified speaker, Host: In terms of the I don’t know if you’ve provided any order book numbers around SBA or or customer account. Any sense to help us kinda figure out the the trajectory of that

Varun LaRoya, CFO, Aptiv: of that business in the long term?

Kevin Clark, Chairman and CEO, Aptiv: Yeah. So we haven’t provided a public update recently. I’d say no change since the last time that we have. I would say the amount of activity or with OEMs, plus we we’re working with more than 20 OEMs across the globe at this point in time. I’d say the pace of activity has picked up significantly, and we’ll continue to do so.

Unidentified speaker, Host: You mentioned that, you know, some of the OEMs have tried to do this in house and and and spend a lot of money to to not necessarily much success. What do what do you think are the hardest aspects of that? Why why is it so kind of difficult for them?

Kevin Clark, Chairman and CEO, Aptiv: Well, I I think it’s it’s experience and expertise principally in and around systems integration, both from a software standpoint and a hardware standpoint. And you have players like ourselves who’ve done that for a number of decades. Right? I mean, we have the experience of doing that. And I think that’s item number one.

I think item two, where we play from a cost standpoint, you think about it, we’re developing solutions for we

Varun LaRoya, CFO, Aptiv: do business with, I don’t

Kevin Clark, Chairman and CEO, Aptiv: know, the top 50 OEMs across the globe. And we’re doing things relatively consistently across that customer mix. It’s hard to envision a scenario where any single OEM can bring that much experience capability leverage from a from an overall customer standpoint to bear and do it as a cost effectively as we’re able to do it. But importantly, I just want to make sure we reiterate this. Our approach to our customers is we want to help our customers get to where they want to be, but we want to enable them.

And it’s important that we participate in that path from a revenue standpoint. But we’re very, very, you know, we’re very open in terms of we sell open systems where we’ll work with customers or their suppliers to enable or deliver the solution that they’re looking for, whether that’s vehicle architecture on the wire harness side or that’s what we do at a s at ASUX with overall, you know, ADAS or user experience system.

Unidentified speaker, Host: Another big mega trend, you know, autonomous vehicle autonomy, whether it’s ADAS, higher levels of ADAS, or even Robotech C. You were very early on at this very early on getting involved. And and now we’re at a point where you have, you know, Waymo, which is doing more rides than ever, Tesla obviously to launch this month, not happening in China. Where did Aptiv wanna truly play going forward?

Kevin Clark, Chairman and CEO, Aptiv: So our we were early in in autonomy to your point. We always use it as an extension of our ADAS business. Right? When you think about accidents, 95% of the accidents are human errors. So so ultimately, the safest vehicles ultimately will be vehicles that have limited, quite frankly, human control of the vehicle.

So we have a partnership or a joint venture with with Hyundai. So we launched our own autonomy group back in 2015. We ultimately, in 2020, formed a joint venture with Hyundai where they were bringing the they brought the vehicle technology. We had the ADAS or the autonomy technology that we contributed. We’ve progressed the technology significantly.

A couple years ago, we looked at the path, though, to commercializing autonomy. What I mean, making money off of providing autonomous solutions to the mobility and demand market. And our view is that was further out. In terms of doing that and making money, having that profitable, we’re out beyond the end of this decade. So we sold a part of our an additional part of our interest to to to to the Hyundai team.

So we now own, I don’t know, 15% of Motional versus 50% of Motional. We’re very active with it. I’m on the board of Motional, so we meet on a regular basis with with the Motional team and the Hyundai team. We’re firm believers in autonomy. We think it’s gonna take a while to bring cost down to deliver the solutions.

We’ll see expanded, you know, ODDs and solving some of the edge cases. And we continue to bring that into our ADAS solution. The exposure of those learnings, those technologies, emotional as a customer of Aptiv from a from a hardware and software standpoint, and, you know, we’re looking for more ways to partner with them.

Unidentified speaker, Host: Can can’t let you leave without talking a little bit about tariffs. Mhmm. I guess there’s a a couple angles to it. In the near term, I know the idea is to pass on the cost to to the the OEMs. Is that is that playing out as expected and as Steve?

Varun LaRoya, CFO, Aptiv: I’ll actually actually set the table a little bit differently. Given the work we’ve done on a couple of items, one is our mantra of in region, for region. The vast majority of our operations are in region supporting, whether it be Asia, Europe, or for that matter, North America. So in terms of trade flows between continents, not that significant. The point I’ll just kind of share with the broader team out here is 95% of our trade flows into The United States are from Mexico, and 99% of our product is USMCA compliant.

So just kind of setting that piece up to say, it’s not the case when we pass everything on. The question is how do we mitigate and what is the true exposure? Said differently, our direct tariff exposure is de minimis. I think that’s the kind of key piece to understand because, you know, the USMCA compliance number one, having the certificates of origin, being able to track that, you know, having them kind of stood up for scrutiny audit has the case, maybe that is kind of point number one, right? And so that holds, so it kind of leads to a de minimis direct cost exposure.

In addition to that, we’re working with our customers in terms of where we need to reroute certain products for the smaller element or for that matter just kind of moving ahead in terms of seeing what’s around the corner in terms of what the administration is trying to get done. And in whichever way we can support our customers we certainly are working on that front. With that, whatever is something that we are unable to mitigate, for example the wire harness side, the entire industry is in Mexico or in Central America. From that perspective, making sure that we don’t end up becoming uncompetitive. That’s the other piece that we’re working on.

Then whatever is still outstanding in terms of certain products on the active safety side or on the highly engineered components piece, we will get to the right answer in any case. But it’s those elements that we know the industry doesn’t have them here, and so we’re not losing competitiveness. Those are the ones that get lost through.

Kevin Clark, Chairman and CEO, Aptiv: I’d say Edison, for us, the most complex you know, Darren talked about the the the direct impact is de minimis. And, yes, we’ve been successful pushing on costs that we can, you know, we we can’t change supply chain or source. We’ve been able to push that onto our customers. It’s the indirect. Right?

What’s the impact on vehicle production? Does the economy slow? Does decision making slow down within our OEM customers? And we’ve seen some of that. Right?

As they try to navigate whatever the the the particular issue issue of the day is related to changes in trade policy. So that’s what we’re watching most closely. That’s what we’re most sensitive to. Obviously, vehicle production has a big impact on on our business and and and revenues, and and, you know, that gets back to our how do we look at the half of the year and how much visibility that we have or don’t have at this point in time.

Unidentified speaker, Host: On the on the recoveries, I maybe this is a question. Are you surprised at at how kind of seamless it’s been, you know, if we

Varun LaRoya, CFO, Aptiv: think about, like, the last couple

Unidentified speaker, Host: of years with with other types of recovery?

Kevin Clark, Chairman and CEO, Aptiv: Well, asking our customers for money is never easy. We manage it well, and I think it’s one of those from our customers. They recognize the ability of the supply chains to supply chain to absorb. With every one of them, though, as a part of this, our commitment is how do we alleviate this? Right?

In the tariff environment, what do we do from a from a sourcing standpoint? How do we work with them? How do we find opportunities for offset? And we’re, you know, we’re very aggressive about about that. How do we get creative?

You know, Verint talked about we we I think if you talk to OEMs across the globe, our our supply chain is world class. I mean, end of this year, our entire global supply chain will be mapped in our digital twin down multiple levels. So we have visibility to where we source from. We have visibility where alternatives are, and we can move very, very quickly. And, you know, that that that brings value to our customers that, you know, most of our competitors, quite frankly, don’t have.

Unidentified speaker, Host: Last question for me. Growth above market. And I think we’re originally, you’re you’re kinda

Varun LaRoya, CFO, Aptiv: thinking about five five points. Any puts and takes for that?

Kevin Clark, Chairman and CEO, Aptiv: Yeah. I I don’t know if we have any update on growth over market other than a comment from me. I I think in today’s dynamic environment, I think with rapid changes in customer mix, vehicle mix, especially in places like China, I think dividing revenues by global vehicle production, it’s something that investors can look at. I’m not sure it’s as straightforward as it was five or ten years. So we’ll obviously, our focus is on revenue growth, high quality revenue growth, delivering margin expansion.

We understand the importance of that. That’s where you’ll where you’ll hear us talking more about. We’ll obviously give you visibility what global vehicle production is in terms of actuals in our outlook. We’ll probably talk about some other things to help it help investors measure progress that we’re making. We’re not sure, you know, that historical calculation is really the most useful to be transparent to investors in determining success determining success of the success of businesses.

Varun LaRoya, CFO, Aptiv: So Do we have time to maybe sneak in one question from the audience? Anyone else? Edison, while people are thinking about questions, was gonna add to what Kevin said is we are focused on growing the business. Okay, growing top line. And as we get into deeper into multiple end markets outside of auto, how relevant does that specific metric become, for example.

Same thing with software, how relevant does it become? But top line growth is key, accretive margins, and then just the free cash flow conversion. That’s what we believe is the key underpinnings of just running a financially successful business with kind of which which rewards those that can support us. Quick question. I would actually have two potentially quick ones, if I may.

The one would be slightly linked to the growth of our market question just on SOPs. And a couple of your competitors have been complaining about OEMs pushing out SOPs, and there’s lower volume ramp ups than than actually planned. Do you see that improving currently in the current environment across Europe and North America?

Kevin Clark, Chairman and CEO, Aptiv: Yeah. Listen. I I I think our our there’s always an element of that that goes on with our OEMs. I I I wouldn’t complain about our customers. It’s something that we’ve navigated for decades and decades.

And I think to the extent there’s uncertainty, obviously, it’s more problematic for our customers, and that tends to slow things down. So we’re working with them, you know, and staying close to them as it relates to their decision production. Have we seen a significant change one way or the other? I I would say not really.

Varun LaRoya, CFO, Aptiv: Thank you. And then just a very short term follow-up. Did you already see any production stops, short ones from the rare earth export restriction?

Kevin Clark, Chairman and CEO, Aptiv: Nothing that we could point directly to. Nothing that we could point directly to. I know there’s been some chatter about it, especially in Europe, but nothing that that I would say is meaningful to to to to raise with you.

Varun LaRoya, CFO, Aptiv: Thank you.

Unidentified speaker, Host: K. K. Thank you very much. No. Thank you.

Varun LaRoya, CFO, Aptiv: Thank you. Great.

Unidentified speaker, Host: K. Thank you, everyone. Yep. Bye, sir.

Varun LaRoya, CFO, Aptiv: Thank you.

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