LG Electronics has signed the contract with Honda for supply of telematics system. Contract details including the financial term were not disclosed. LG Electronics shares rose 3.33 percent to finish last Thursday(10th Sept’20) at 93,200 won ($78.66) in Seoul.
Automotive telematics systems for Honda Motor will be produced at LG Electronics’ manufacturing lines in Incheon, Korea and Haiphong, Vietnam.
LG Electronics expects the contract with Honda Motor would help its vehicle component solutions (VS) business return to a profit next year after the losses of 18 consecutive quarters since 2016.
LG Electronics claimed a 17 percent share in the global automotive telematics system market last year, down from 19.6 percent in 2018, according to Strategy Analytics (SA). It used to be the market No. 1 supplier but lost the lead to Germen brand Continental last year.
The Korean company is seeking to snatch back the crown from its German rival in the global automotive telematics system market that is estimated to grow to $7 billion in 2025 from $4.3 billion in 2020 according to Strategy Analytics.
LG Electronics has already secured an automotive part order from Cadillac to supply its digital cockpits for new 2021 Cadillac Escalade in February. It signed supply contracts for infotainment systems with Mercedes-Benz and Hyundai Motor’s premium brand Genesis in recent years.
Korean tech giant has been doubling down on its effort to groom vehicle component solution business under leadership of young leader Koo Kwang-mo who has been actively seeking to realign business structure and to find new growth engines. LG Electronics acquired Austria’s automotive lighting systems supplier ZKW for 1.44 trillion won ($1.21 billion) in 2018 and is planning to invest 898.5 billion won in the vehicle solutions business this year, equivalent to the scale for the home appliance business.