The automotive electronics business is emerging as a new cash cow for South Korea’s LG Electronics Inc., a household name in the home appliances market, after its vehicle system (VS) division turned to black in 2022.
The division is on track to break the 100 trillion won ($76 billion) mark in total backlog orders by the end of this year, the company said on Thursday as it marked the unit's 10th anniversary.
LG also unveiled a 10-year roadmap for the VS unit, whose earnings are projected to double versus last year, during the anniversary celebration events on Wednesday and Thursday.
The VS unit, launched in 2013, combined all of the automotive electronic components businesses scattered across LG Group subsidiaries.
Since then, it has bulked up through acquisitions, including the purchase of Austria’s lighting systems manufacturer ZKW in 2018 and the setup of joint venture LG Magna e-Powertrain Co. with Canadian auto parts maker Magna International in 2021.
LG’s VS unit has three pillars: in-vehicle infotainment systems; lighting systems; and EV power trains.
In-vehicle infotainment systems encompass telematics and audio, video and navigation (AVN) equipment. Telematics combines GPS systems, wireless devices and black box technologies to record and transmit vehicular data in real time.
LG's vehicle components customers include global automakers According to market research firm Strategy Analytics, LG Electronics remained the world’s top telematics maker with a 22.4% market share as of the first quarter. It also has enjoyed a double-digit share of the automotive AVN segment since 2021.
With the VS unit’s total order backlog expected to rise to 100 trillion won from last year’s 80 trillion won, its earnings are also likely to improve accordingly.
The division’s revenue is projected to jump 25% to 10.8 trillion won in 2023 versus a year earlier, according to a consensus forecast by brokerage companies. Operating profit is forecast to nearly double to 310 billion won, compared with last year.
Among those attending the anniversary celebration were LG Electronics CEO Joo Joo-wan and VS division chief Eun Seokhyun.
