Lear at Morgan Stanley Conference: Automation Drives Growth

On Thursday, 11 September 2025, Lear Corporation (NYSE:LEA) presented at Morgan Stanley’s 13th Annual Laguna Conference, detailing its strategic focus on automation and digital platforms. The company expressed optimism about its growth prospects and margin expansion, despite challenges like the recent cyber attack affecting Jaguar Land Rover’s production. Lear highlighted its partnership with Palantir and strategic acquisitions as key drivers for future success.

Key Takeaways

• Lear’s full-year revenue is tracking towards the high end of its guidance.
• Automation initiatives are expected to save $65 million annually.
• The company plans to exceed $250 million in share buybacks this year.
• Lear is expanding its presence with Chinese domestic OEMs, targeting a revenue share increase from 40% to 50% by 2027.
• Operating income for Q3 is projected between $230 million and $240 million, contingent on JLR’s recovery.

Financial Results

• Full-year revenue is projected to reach the high end of guidance.
• Second half revenues are slightly below $11.5 billion: $5.7 billion in Q3 and $5.8 billion in Q4.
• Operating income for Q3 is expected between $230 million and $240 million, potentially impacted by JLR’s cyber attack.
• Net performance target increased to $150 million, with automation contributing $65 million in savings.
• Free cash flow is likely to exceed $500 million for the year.
• CapEx remains around 3% of sales, benefiting from efficient in-house equipment production.

Operational Updates

• Lear has acquired eight companies over seven years to enhance automation.
• Partnership with Palantir enhances digitization and AI capabilities.
• New advanced manufacturing center in Michigan to showcase automation.
• Automation initiatives lead to a 200-500 basis point improvement in cost competitiveness.
• New seating facilities in Europe and China feature advanced automation for BMW and Audi models.
• Inventory pipeline project with Palantir reduces inventory levels and improves cash flow.

Future Outlook

• Focus on growth with Chinese domestic OEMs and key conquest opportunities.
• Vertical integration in Asia is a competitive advantage, especially in China.
• Revenue share with Chinese OEMs expected to grow from 40% to 50% by 2027.
• Exploring opportunities with BYD outside China, including Turkey and Brazil.
• Automation and innovation are crucial for meeting customer price targets and profitability.

Q&A Highlights

• Automation payback period is one to two years in high-cost facilities.
• Palantir partnership fully integrated with 11,000 users company-wide.
• Rapid deployment of systems for tariff claims demonstrates Palantir’s agility.
• Lear’s thermal comfort awards total $150 million, driven by design and manufacturing advantages.
• China EV program SU7 exceeded volume expectations at the award time.

Lear’s comprehensive strategy in automation and digital platforms positions it well for future growth. For detailed insights, refer to the full conference transcript below.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Unidentified speaker: When did you guys get us? Oh, we’re live. Okay.

William: Yeah.

Unidentified speaker: Let’s go.

William: All right.

Unidentified speaker: We good?

William: All right. Really happy to have the Lear team joining us today. We have Frank Orsini, Executive Vice President of Seating, and Jason Cardew, Senior Vice President and Chief Financial Officer. We’re going to give Lear management a chance to just kind of address and provide a little market update and trading update heading into the end of the third quarter. Then we’re going to focus a lot of the discussion around automation and seating and kind of how Lear is taking advantage of new technologies to produce some margin as this industry doesn’t get any easier. If you have more tools and use AI to help improve your efficiency across your operations, that’s going to make a really big difference. Maybe Jason, over to you just to kind of kick things off. Any statements you want to make up front?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, thanks, Adam. I appreciate the opportunity. That speaks to those two investors today and for you, hosting the conference. You know, as you just alluded to, we’re really excited to talk about some of the progress we’ve made in automation and our digital platform. I think it is a true differentiator for us as we move forward. At the start of the year, we laid out a couple of metrics that we thought were really important to share with investors around growth and margin expansion. On the growth side, it was focused on key conquest opportunities, some really attractive platforms that we’re pursuing, as well as growth with the Chinese domestics. We’ve made a lot of progress on both fronts. In the first quarter, we announced the award of the F-250 wire program. Portion of that was conquest. That was really important.

On the seating side, we have a number of conquest opportunities that Frank and the team are having very productive discussions with our customers on. We expect to have an update later in the year on those opportunities. On the growth side, I think we’re progressing well. On the margin side as well, we highlighted this net performance target. At the start of the year, it was $125 million of earnings expansion through net performance. On the second quarter earnings call, we updated that to $150 million, and we remain on track to deliver that to the business. The things that we can control are really progressing well. You may recall that we reported earnings pretty early in the cycles before the EU trade deal was announced, before the South Korea trade deal was announced, before there was clarity on how the copper tariffs were going to be applied.

We were, I think, appropriately conservative in our guidance at that point. As we look at the second half of the year, it’s on track to come in a little bit better than what we had anticipated. Production’s holding up. Demand in general is holding up. Inventory levels on our key platforms are in a good place. We’re a little bit more optimistic about the second half as a result of that. There have been a couple of kind of one-off issues on the mix side that have hurt the third quarter a bit with GM’s downtime in Salal, for example. More recently, JLR’s cyber attack impacting their global production. They haven’t been able to build vehicles for the last two weeks. That has impacted us as well. With all that being said, we see full-year revenue tracking towards the high end of our guidance range.

That would lead to second half revenues just a little bit below $11.5 billion, $5.7 billion in the third quarter, $5.8 billion roughly in the fourth quarter. Operating income is tracking sort of in between the midpoint and high end of our guidance range. Positive from the, you know, converting on the higher revenue, partially offset by the mix issue I alluded to, some very highly vertically integrated platforms that have been down a bit in the third quarter, but we expect that to come back in the fourth quarter. In terms of Q3 specifics, we’re sort of expecting operating income in the $230 to $240 million range. We did factor in two full down weeks for JLR in that. There’s another two weeks, which is all that’s left in the quarter, maybe on the lower end of that range.

If they restart production next week, we’re probably closer to the high end of that range. I think the second half is really playing out a little bit better than we had anticipated at this point.

Unidentified speaker: Great. We’re going to get into some more operational targets. I want to go straight to automation, actually, just since you teed it up. Frank, here to also kind of delve into how you’re using these tools on the seating side, and we can bring in any other topic. What is your broad view just for the audience on how AI will impact the auto industry and how Lear is using AI tools? You got a high level, talk about that, existing tools and kind of your direction of travel on automation. Then I’ll delve a little deeper.

Frank Orsini, Executive Vice President of Seating, Lear: Perfect. I’ll lead this portion of the discussion. Thanks again, Adam, for having us today. It really means a lot to be here with you guys. As far as automation, I’ll get to the AI topic because it’s also an important topic. You know, for Lear, we’ve been on more than a decade-long journey of really establishing our company as a leader in integrated automation and digital manufacturing. I know that a lot of our competitors get on stages very similar to this, and everybody talks about automation. What I’d like to do is get a little more specific about where I believe Lear is really differentiating our capabilities against the competition. I know how we’re attacking this topic, and I think it’s very important. There’s no other auto supplier in our competitive set that has bought eight companies in seven years.

Our goal with those acquisitions was to create product and process innovation around how we would automate. We’ve been very intentional with our strategy. That’s eight companies that we brought into the portfolio. The other thing that we’ve done that I think is transformational is we’ve partnered with Palantir, who’s the best in the industry when it comes to digital platforms and certainly great AI capabilities. That, Adam, provided a first-mover advantage for us in these extremely important categories of digital platforms for our companies, digitization of the manufacturing process and everything like that. That’s all inclusive of AI. Great cultural fit between us and Palantir, we think they’re the best in the industry, and partnering with them, I think, puts us at a very strong competitive advantage.

The other thing that we’ve done at Lear is through the acquisitions and organically, we’ve built a tremendous amount of talent, specialized talent around areas like automation, data science. We’ve been working very hard on manufacturing integration of all of our systems and equipment, and then, of course, the algorithms that we’ve been working on to support our AI platforms. The other thing that Lear brings to the table that none of our competitors do is we can build 80% of our capital at a 20% to 30% cost-competitive advantage for our customers. The most important part of that is we are building what we call purpose-built capital.

What we mean by that is all the work that we’ve been doing in the design of the products for automation and then the equipment and the integration, to your point, of how we bring those solutions to the shop floor, is completely specific to Lear and what we’re designing into our automation strategy. It really does separate us. The last thing on automation, and then I’ll jump to AI here. Ray mentioned this in our last earnings call, but we are putting an advanced manufacturing and integration center in our backyard in Michigan. The goal of that facility is to highlight what lights out manufacturing looks like. The progress has been amazing, what we’ve been doing with thermal comfort systems and the modularity strategy that we have. The equipment and the production process that we put in place is 100% automated for that product.

We’re going to be able to demonstrate that at our location in Rochester Hills. That will be something that we’ll be bringing customers to, which I think will be very helpful to demonstrate our capabilities. We’ll be inviting the investment community there as well, and of course, for our employees. Automation for us is extremely critical, and I think we’re doing a lot to differentiate. On the AI topic, because this is a very important topic, from a Lear perspective, we look at digital platforms overall, and we look at how AI will benefit our strategy around digital platforms and bring capabilities to those digital platforms. What we’re doing right now is we are integrating digitization and AI capabilities into every aspect of our business. It’s in how we engineer the products and how we design them. It’s in how we purchase material. It’s in how we manufacture our products.

As I mentioned, that’s a big focus for us. Testing and validating our products is very important, and we’re using data platforms and AI capabilities there as well. How we continue to drive free cash flow and have a broader visibility over the pipeline, how material is moving, how we’re buying and storing inventory, and things of that nature is really helping us. The other thing that I think Lear has done over the last several years is differentiate our capabilities by developing in-house AI systems and algorithms and things of that nature. We’ve talked in the past about a couple of products that are very interesting. One is LearView, where we have our own proprietary algorithms around vision systems for how we manufacture our products. That technology is being deployed globally.

I think actually last year on the stage, we talked a little bit about Thagora and what a great acquisition that was. Thagora is all based about vision systems and AI and algorithms that are allowing us to nest and cut our leather more efficiently than anyone else in the industry. Again, another differentiation in terms of how we’re competing. The real goal here is to redefine what the future of manufacturing is going to look like. In our world, it looks like more efficient shop floors. It’s less space requirement, less overhead requirements for our future. It’s about producing a quality product on a reliable production system. It’s also about having a safe and ergonomic shop floor for our employees. When I think about the advantages that we’re bringing to the table for our customers and our shareholders, it’s really around cost competitiveness on a different level.

It’s speed to market and it’s world-class shop floors. We’ve captured that cost competitiveness range depending on the complexity in the particular program, somewhere between 200 to 500 basis points of improvement. I think it really puts us in a different position in terms of how we’re competing and how we’ve really embraced and leveraged these capabilities to differentiate our company.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, and just to add a couple of comments to Frank’s comments there. I think in terms of the financial impact of that, certainly the longer-term benefit is much greater than what we’re seeing near-term, but it is impacting our financial results this year. We have $65 million of savings, so of that $150 million of net performance, $65 million is a result of these efforts. We see that continuing to ramp up, $65 to $75 million a year next year and again in 2027. The full benefit is more readily apparent when you’re starting a new facility.

It’s one thing to transition an existing manufacturing process and add automation, but as we’ve launched new facilities, for example, last year, we launched a new seating facility in Europe and one in China for the BMW 5 and 7 Series, and that brought the full arsenal of automation capability that we had in place at that point in time. Next year, we’re launching a new facility in Europe with Audi for the Q7 program, which is going to be the next generation of these manufacturing processes. The programs we’re quoting now, these conquest opportunities that we have, which Frank alluded to, where we see a 200 to 500 basis point advantage relative to the competition, we’ll see the full suite of these initiatives driving that level of cost improvement.

While it’s relatively modest at $65 to $75 million a year for the next several years, as these new programs launch, the impact grows significantly. On the cash flow side, Frank mentioned briefly this inventory pipeline project we have. That is allowing us to reduce inventory levels. I failed to mention in my opening remarks, we are seeing an improved outlook for free cash flow, likely something north of $500 million for the year. That’s allowed us to really accelerate the share buyback program that we have in place. We bought or will buy back about $100 million here in the third quarter, a similar amount likely in the fourth quarter or maybe a little bit more than that. We talked about $250 million in share buybacks for the year.

We’re likely going to be able to do more, again, as a result of these efforts to improve working capital and drive free cash flow and then return that to shareholders.

Unidentified speaker: Jason, how has this changed your CapEx outlook? You have to, you know, there are costs to achieve and acquire these technologies that you then implement up front. How do we think about how this changes CapEx or how do you think about payback periods?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, generally what we’re seeing, particularly in our high-cost jet facilities, is a one to two-year payback on these automation efforts. The payback is very attractive. These are great investments. While it has led to higher CapEx, generally, it’s not really moving the needle in terms of our total CapEx as a % of sales.

Unidentified speaker: It’s a reallocation.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, so it’s more reallocation plus benefiting from, as Frank described, that purpose-built equipment. We’re building the equipment more efficiently, 20% to 30% less than when we were buying it on the outside. We see CapEx, the % of sales, right around 3% as we look out over the next several years. It’s still a capital-light business.

Unidentified speaker: I got a couple of questions here before I turn to William, but William, I want to talk about one of William’s PA investments, Palantir. You mentioned, yeah, his hit rate is not amazing, but this one is pretty good. Tell us about that relationship. Who approached who? What’s it like working with Palantir at the risk of giving away secrets because everyone else will want to work with them too, but just tell us what they’re like and how they took your systems and data and helped you make decisions that create a better outcome.

Frank Orsini, Executive Vice President of Seating, Lear: Do you want to take a run at it?

Unidentified speaker: Yeah, take a run at it. Because you mentioned the culture is the same. I’m like, really?

Frank Orsini, Executive Vice President of Seating, Lear: It’s similar in that we’re both extremely passionate about innovation and moving fast. The culture between even Ray, our CEO, and Alex is really strong. We started working together on a couple of projects, Adam, and really started building out what the total opportunity was. Palantir is great to work with. They bring a lot to the table in terms of capabilities and talent that they’re supporting us with. We’ve supported all of that with what we believe to be one of the best use cases in the industry where we’re really trying to separate as a tier one automotive provider and making sure that we have the best technology and capabilities. We’re looking at projects in the administrative functions to help take cost out. We’re absolutely focused on the shop floor.

It’s heavily centered around live data on the shop floor that allows us to make fast decisions on whether it’s dynamic line balancing, cycle time, deviations, and how we’re manufacturing our products. That live data is unmatched in the industry, in our opinion, and it’s absolutely a competitor.

Unidentified speaker: They’re across the organization. It’s not just limited facilities. It’s not a pilot. They’re embedded.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: We’re two years into this. Yeah, it’s fully embedded in our organization. I think that’s part of the cultural fit that they saw and we saw. They saw how quickly we were willing to scale this platform globally, and we’re seeing tremendous benefits from it. I’ll just give you one easy example. Frank alluded to the administrative side. When the tariff announcements were made, we were able, within 10 days, to build a system within Palantir Foundry to take the data from our customs brokers and translate it into a commercial claim with our customers. Ten days to build a system and present an auditable document to our customers in terms of the cost. That has led to purchase orders coming out quickly. We’re starting to collect cash already on tariffs. We could not have done that in the past.

We’ve had consultants come into our company and talk about, you know, putting a program together to facilitate this. It’ll take them 10 days just to develop a proposal. We were already fully implemented with the system by that point in time. It is really transformative. I think we had a leader in our European seat business that was the first to embrace this, and that was the pilot. That was really the start of last year where we started to deploy it in our just-in-time seat facilities. It’s really allowed us to reduce labor time in our just-in-time plants, improve efficiencies, you know, 2 to 5% across the whole system. The impact is massive, and the potential is great.

Frank Orsini, Executive Vice President of Seating, Lear: We have 11,000 users company-wide working within their Palantir Foundry platform for digitization, and their AI capabilities are excellent as well. Good choice, William.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, I think the other point too, we have 10 of the highest, you know, kind of highest potential projects that have been separated within all the work we’re doing with Palantir. Frank and Nick, his counterpart on the E-Systems side, have built these global centers of excellence where that team is responsible for deploying each of those 10 technologies across the whole 240+ manufacturing facilities we have globally. It’s been a great initiative, and we’re not too far away from probably announcing some additional exciting developments in that partnership with them.

Unidentified speaker: All right, one more for me on this, because I’m just kind of, you mentioned automating a module assembly and kind of bringing in some customers and showing them what you’re doing. Presumably, this is very low scales, more demonstration, proof of concept, right? I’m curious, A, who are your benchmarks? I mean, from my seat, Autoliv gets mentioned a lot, and you increasingly in the same breath with them, which is a good thing, because Autoliv’s, they’re a damn good company, and they’ve got, they did things in automation that no one believed in terms of their, you know, initiators and module assembly here in high-cost countries, taking a lot of labor out and bringing in great results and doing what, you know, just executing. I didn’t know if they were a benchmark.

If they were, how close were you to be seeing what they do, and then what other benchmarks do you see? In terms of really scaling these things, how long would it take for you, what’s your outlook for you getting from a kind of demonstrating proof of concept to really integrating like a fully automated module or almost fully automated module assembly into your broader operation?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, I think you’re right. Autoliv is a benchmark in this area, and that’s a company we have studied and learned from. I think, Frank, maybe talk about what we’ve done with this ComfortMax automation and where we’re at in terms of the deployment of it. I mean, we’re maybe a couple of years away from it being in a production facility.

Frank Orsini, Executive Vice President of Seating, Lear: Yeah, Adam, what we’re putting into that facility is actually production intent equipment with production cycle time performance. It’s not a prototype situation. It is really built around integrated manufacturing and full automation. To Jason’s point, there are two product lines in our TCS strategy, ComfortFlex and ComfortMax. ComfortMax is when we take our TCS technology and put it all the way into the trim cover. What this process is doing right now is it’s taking all of the components, lumbar massage, heat, vent, cooling, all of that goes into a module. That module then gets put into a trim cover. It’s fully automated. Our cycle times are good. We’re going to continue to make improvements, but it’s a full functioning end-to-end lights-out application of what real manufacturing can look like with real automation.

Unidentified speaker: What’s the human degree in the loop? How about zero human? What would that operation before the automation, what would the pre-automation human componentry be in terms of either people or labor as a % of the cost?

Frank Orsini, Executive Vice President of Seating, Lear: Yeah, dozens and dozens of people. I mean, each station would have had a number of people working on them, and there’s over 20 stations in the process. It is true automation, and it was all intentional, like I said earlier. It starts with the product design, though. A big part of this, Adam, is...

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: as efficiently or as cost effectively without the digital manufacturing capabilities that Lear has developed.

Frank Orsini, Executive Vice President of Seating, Lear: Yes, the design has to evolve. All of our design and engineering around the products themselves was about complexity reduction. We redesigned every component of the lumbar system and the massage system. The way we approached it was a design for automation, then we created the equipment around it, and then we laid out the entire manufacturing strategy and process around it. It truly is impressive, and the team has done an absolutely amazing job. We will be able to walk you guys through that as we get closer with dates in the future.

Unidentified speaker: Awesome. William.

William: I think we talked a lot about the cost side of automation. You know, it’s very obvious, you know, the cost savings with automation, but does it even help on the revenue side? You know, your ability to win new business, improve that you’re more reliable, and maybe scale a little bit better than maybe some of your competitors?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, absolutely. I think that’s extremely important right now. We’re helping our customers solve this affordability issue. Cost is a key area of focus for our customers and speed to deployment as well. This helps in both regards. Just as an example of what we did a couple of years ago, we took over the Grand Wagoneer Wagoneer seats from a competitor nine months from the time of the award to the time we launched that shift facility at full volume, not during a changeover, not during a mid-cycle change, literally Friday to Monday, switched from one supplier to us and launched at full volume. In fact, at a volume level that our competitor wasn’t able to achieve throughout the first two years of the program. I think that’s a perfect proof point of how all these technologies and capabilities that we have built can lead to revenue growth opportunities.

As we’re pursuing these conquest opportunities with a number of customers and important programs, the feedback we’re getting from customers is that we are, in fact, at a significant cost advantage relative to our competitors. What that allows us to do is meet our customers’ price targets, help them lower the cost of the vehicle, and at the same time, continue generating returns well in excess of our cost of capital, which the Seating business has done for a very long time.

William: Maybe talk about some of those conquest wins a little bit better. Where are you gaining share? When you break up the reasons why people are moving from your competitor to you, do you think it’s more of the cost side? Do you think it’s some of the seating innovations that you talked about, ComfortFlex, ComfortMax? Do you think it’s a combination of the two? What do you think is driving those conquest wins?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, I think, you know, initially the main driver is our cost and quality advantage. For example, this 5 and 7 Series win that we had with BMW in Europe and in China was really a result of that. That business has launched and met the financial return objectives that we had established. I think longer term, the developments that Frank alluded to in ComfortMax and ComfortFlex and in automation will be a catalyst for just-in-time seat growth as well. That’s, you know, the way the customer product cycles work, it’s going to take a few years before you see that really impacting revenues in a significant way. In the meantime, we’ve had $150 million or so of Thermal Comfort awards since the acquisitions, and we continue to win new business based on this advantage that we’ve built from a design and manufacturing standpoint.

William: Maybe talk a little bit more about China. I know you have significant business at BYD with Xiaomi. I think you’re on the SU7. I don’t think you’re on the YU7, but you’re on the SU7. How do you assess the quality of some of the Chinese EVs that you’re on today versus some of the EVs you’re on in the West? As you’re winning new business with the Chinese, what do you think your advantage is?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, I think growing with the Chinese domestics is essential for us. We’re under-indexed in China right now, about 40% of our revenues with the Chinese domestic automakers. We see that growing to 50% in 2027, maybe a little bit beyond that. It’s really driven by the success we’ve had with customers. You alluded to BYD, Xiaomi. We are on the SU7. That program has far exceeded the volume expectations that we had at the time of award. There are several other programs. We’re in the quoting process right now with Xiaomi. We have good business with Xiaopeng as well. We’re both on the seating and the e-system side. We’re growing with Leap Motors. We’re growing with Geely and others. More importantly, to just highlight for a second, we made an organization change in Asia about two years ago.

The leader of our seating business, who’s been with us for 20 or 25 years, a fantastic leader in the region with great relationships with the Chinese domestics. We now have him running both seating and e-systems in the region. It’s leading to growth opportunities on the e-system side, on the wire side, where we’re maybe a little bit underrepresented with certain customers like Chang’an, for example, or DFM. That leader running both businesses has opened up a new kind of pipeline of growth opportunities for us in China. The Chinese are having great success in the European market. I think the latest statistics out of roughly 20% of the production in China was exported in the last month. What we’re focused on is looking at customers and programs where we see the greatest potential for volume, whether it’s consumed domestically or exported.

We’re also winning business and pursuing business with BYD outside of China. We’re in the quote process right now for seats in Turkey and both seating and e-systems content in Brazil with BYD. I think some of the points that Frank alluded to and we talked about a moment ago in terms of our pace of innovation, the Chinese move quickly. I think that they’ve had a demonstrated success and built an advantage on certain car lines from an affordability standpoint that’s led to the volume growth there. I think they have an appreciation for our ability to move at that same pace, deploy automation and innovation, and be cost-competitive. The financial returns on our business with the Chinese domestics have been good. It’s working.

Unidentified speaker: William, just one thing on that point. Do you think that the U.S. and European legacy automakers can narrow the gap to China on those areas of speed and iteration?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, I think I want to be careful here and not speak on behalf of our customers, of course.

Unidentified speaker: That’s why I’m checking your body language more than anything.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Yeah, no, we’re seeing changes in the way our customers are developing vehicles. You saw Ford’s announcements a month or so ago as an example of that. I do think that it’s essential that they take steps to close that cost advantage that the Chinese have built. I think that they will achieve that. In the meantime, we’re super focused on growing with the Chinese domestics and better reflecting the overall global market share of all of our customers in our respective businesses.

William: No, I had maybe more a longer-term question. You know, there’s obviously been a lot of growth of the Chinese domestic OEMs. I’d say the supplier complex in China, though, is a lot more underdeveloped. How do you think about the threat of Chinese suppliers potentially disrupting your growth in Europe and domestically in China?

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: Frank, do you want to start on the Seating side?

Frank Orsini, Executive Vice President of Seating, Lear: Yeah, I would tell you this, William. You know, that market has always been competitive for us. We’ve, Jason kind of referenced, we’ve 30+ years, we’ve been operating and competing with local suppliers for the Chinese domestic OEM business. We’ve been successfully growing that business during that timeframe. Jason just mentioned something that’s very important. Our vertical integration in Asia is, you know, we’re the most vertically integrated seat company in the world, but in Asia, we also have full vertical integration. If you want to compete in that environment, you have to have speed and cost. It has to be two of your key goals. Our product portfolio is second to none in terms of technology. We have the full complement of TCS out there. We’ve been winning a lot of business with innovation like zero gravity seating and things like that.

We have a very strong product portfolio to compete from. Our vertical integration makes us very competitive. I think you can’t understate this important piece that the relationships are very important. Our leader out there has incredible, incredible relationships with a very talented and capable team with a ton of experience. The combination of all that is, sure, it’s a very competitive environment, but we’re doing quite well, as Jason mentioned. We’re growing with every key player in that market. We see that continuing, especially as they expand globally. It’s a big opportunity for us. You mentioned South America, Turkey, there’s some big wins.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: In terms of the competitor specifically, you know, in China, we have roughly 18% market share there. I think Yanfeng, Adient, and Lear have a similar level of market share there. We’ve competed successfully against the local Chinese suppliers on the seating side. I don’t see a real issue or challenge there particularly. On the wire side, it’s a series of very small private suppliers for the most part. There aren’t large competitors in our E-Systems in the wire business specifically that we see as really disrupting us, particularly outside of China. Really, none of them have branched out outside of China. None of them really have the scale to compete. What we see in terms of competitors in wire is really the traditional competitive side. It’s Aptiv, Yazaki, Sumitomo, you know, the large global players in China and outside of China continue to be the primary competition.

Unidentified speaker: Just want to see if there’s a question. Just come up for air for a second. Any questions from the audience? Two minutes left. With just a couple of minutes left, I wanted to kind of hit on a bunch of topics, kind of more rapid fire, if that’s all right.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: As long as you don’t ask me about Taylor Swift.

Unidentified speaker: Did I ask you about that last time? When I moved on to Lady Gaga, Lady Gaga is like my obsession now, as my team will tell you. Just to share a little bit about me. Fun fact you didn’t know. Frank, buy, sell, hold, humanoids.

Frank Orsini, Executive Vice President of Seating, Lear: Buy.

Unidentified speaker: Okay, why?

Frank Orsini, Executive Vice President of Seating, Lear: It’s the future, and it’s a very compelling opportunity for all of us. I think it’s something that’s developing. I think it’s something that, you know, we’re seeing a lot of progress in that area. We’re doing some pilot projects with it towards the end of the year and early next. It’s very intriguing.

Unidentified speaker: Buy, sell, hold, Mexico.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: I’d say buy.

Unidentified speaker: Okay, elaborate.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: I think that Mexico is a crucial source of low-cost and talented labor for our most labor-intensive businesses. I think it’s essential for protecting the competitiveness of vehicles built in the U.S. to have access to lower-cost labor. If you think about vehicles built in the U.S., they’re competing against vehicles built in Japan that use low-cost labor from the Philippines, for example, or competing against vehicles built in Europe that have access to North Africa. If U.S. manufactured vehicles are going to remain competitive, not just for the U.S. market, but for export purposes, Mexico is an essential part of that equation.

Unidentified speaker: A couple more for you. Buy, sell, hold, China OEMs coming to the U.S. market in some way over a 10-year period of time.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: I think I’d say over a 10-year period, it’s reasonable to assume there’s going to be some involvement of the Chinese in this market. You’re already seeing small examples of that, whether it’s Polestar building vehicles here in the U.S. I think that Stellantis with their relationship with Leap Motor could use capacity. Just as an example, I have no insight specifically on that, but those types of things seem to make sense where you do have pockets of excess capacity in the U.S. that could be repurposed for producing Chinese domestic or Chinese vehicles.

Unidentified speaker: Frank, eVTOLs or aviation, buy, sell, hold.

Frank Orsini, Executive Vice President of Seating, Lear: What was it?

Unidentified speaker: Aviation, eVTOLs, urban air mobility, drones that would seat.

Frank Orsini, Executive Vice President of Seating, Lear: Yeah, probably buy because I think, you know, in a way, all of this technology is going to evolve, Adam. You know, you don’t want to be shortsighted on what the art of the possible is on some of these things. I do think that there’s a lot to play out in that area, but it’ll be very interesting to participate in it in the future.

Unidentified speaker: All right, just the last one for me. What’s your favorite seat of any car? They’re all great. I know every seat that you make is great.

Jason Cardew, Senior Vice President and Chief Financial Officer, Lear: That’s the dangerous question.

Unidentified speaker: If you had to be in a 12-hour journey, okay, what would be the seat? What’s the model? What is it? What’s the massage feature?

Frank Orsini, Executive Vice President of Seating, Lear: Oh my God.

Unidentified speaker: You didn’t even?

Frank Orsini, Executive Vice President of Seating, Lear: The advancements that we’ve made in comfort and technology, it was off the charts. Like the Zeekr seat that we’re doing in China right now is absolutely amazing. Put me in a Ferrari seat any day of the week, and I promise you you’ll drive 24 hours in that vehicle and you’ll feel beyond comfort with all the technology we’re doing.

Unidentified speaker: Jason, Frank, thanks for your time.

Frank Orsini, Executive Vice President of Seating, Lear: Yeah, thank you. Thanks, Mike.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.