Frank Ordonez, president of Delphi Product & Service Solutions, and Bill Lafontaine, vice president, brand & communications for Delphi Product & Service Solutions, shed some light, and a positive outlook, on changes in the auto industry and plans for Delphi’s aftermarket division going forward.

AMN: Can you please update us on where Delphi’s Product & Service Solutions business stands in light of the announcement that Delphi is preparing to emerge from bankruptcy?

FO: What we announced was a plan to exit from bankruptcy, hopefully at the end of July but we are clearly not out. We have plenty of steps to go through. We feel very confident with our plan, but I want to make sure you understand that I’m not sitting here telling you that Delphi has emerged. My customers know where I stand. We’re very hopeful and very confident that we’re going to get it done but there are going to be some bumps in the road as we go through this process. Nothing is ever easy.

The restructuring of Delphi, although this announcement on emergence brings light to restructuring, the restructuring is nothing new. It’s been going on for four years. In fact, almost everything you saw in that announcement has already happened – in terms of restructuring.

In terms of the aftermarket, we’ve known right from day one what the restructuring is, what product lines would be affected and we planned for that ahead of time. In the North American market, we’ve had very very little, if any, impact in the aftermarket because we always went to the aftermarket with the ‘safe, green and connected’ type of parts. So it’s not going to affect anybody who is currently a customer of Delphi at all. The restructuring has been very successful and has put Delphi in a position to be a very strong company, should we emerge as planned at the end of July. The financials of the balance sheet, the status of the company, all of that will make Delphi a very strong company. If anything, we’re going to pick up some momentum in the marketplace – not only in the aftermarket but in the original equipment business as well.

Honestly, the restructuring has had no impact on Delphi in North America. It’s had some impact on Delphi’s overseas operations, in some of the product lines we’ve exited. But again, we were ready for that and we planned for it. We did what we had to do and that’s behind us. In terms of immediate impact on any customer that I know of, it should be none. The steering business, we’ve known about that for three years.

BL: All of our portfolio decisions were made publicly back in March 2006. We worked with all of our customers from that point until the present and we continue to focus on our core going forward.

AMN: And that core is the safe, green and connected product that we hear so much about?

FO: Our core is really around the electronics, electronics architecture, the thermal business, which in the aftermarket is better known as A/C – radiators, condensers, that kind of product line. We’re also in fuel handling with fuel pumps and fuel level senders and we of course, are in computers – engine control computers, body control computers and in all of the 27 computers in the vehicle, included in that is powertrain. We’re in gas powertain, diesel powertrain and we’re a hybrid powertrain company also. We do all three. All of that is emerging with Delphi. It will be part of the new Delphi moving forward and as you know, we were at the forefront of a lot of those new technologies, as we call it ‘safe, green and connected.’ That is how we summarize the trends in the industry and that is what drives the way that Delphi wants to position itself in the marketplace.

AMN: Do you feel focusing on those three areas has attributed to your success as you reach the end of this restructuring process?

BL: Knowing what the key mega trends were going to be that were going to influence buying behavior, and consumer trends going forward, and really thinking about that in our current parts portfolio, and then planning for the future [was helpful]. For example, as you look at the new fuel economy standards that are coming out of Washington and what we’re going to have to do with emissions, etc., understanding that’s the target for 2016 but also knowing that’s been a trend in the marketplace for years has allowed us to ramp up the technologies that are going to be enablers ultimately to meet those new targets going forward.

AMN: There’s been a lot of talk lately about the thousand-plus dealerships closing this year and the up-tick that independent service and repair facilities might see as a result. Do you feel that Delphi has a role in helping aftermarket technicians to get prepared for the new technologies out there today that the dealerships were previously handling?

FO: We don’t deal directly with the technicians, but it is my strong feeling that a lot of these open dealership points will eventually wind up either as used car dealerships with all makes repair, or as repair shops. And, they are going to have an already-trained force. They are already used to dealing with parts and a lot of them probably deal with ‘all-makes’ already. Where I think Delphi is going to benefit, I believe, is that they will pull the original equipment parts. So, companies like ours will benefit from this trend. I think the aftermarket, in general, is going to pick up some business. If you look at where they are closing dealerships, they are closing them in a lot of rural areas. Somebody’s got to come in and fill the gap. It’s either going to be the aftermarket or these very dealership points are going to become new members of the aftermarket.

We are very excited about the future, really. Not only are their opportunities in the ‘safe, green and connected’ and all of the related technologies, but as Bill mentioned, we could position ourselves to win the OE business on those things.

If you stop and think for a second about the new 36-mpg standard that the administration wants by 2016, that’s going to require an acceleration of all these ‘safe, green, connected’ technologies. And not only is it going to require an acceleration, but in the short-term it may provide an opportunity for the aftermarket, because as you heard in the President’s announcement, it’s about $1,300 additional per car to meet this requirement. People may decide to keep their cars a little longer [as a result], which is good for the aftermarket. So, the short-term I think, looks pretty rosy for the aftermarket, if we seize the opportunity to do all these things.

AMN: Any last comments?

FO: There are a couple of things I will say: I think the issue of telematics is not going to go away. If you heard me two years ago at AAPEX, I talked about telematics. Telematics is going to move forward in the aftermarket, believe me. It’s not going away.

Beyond that, although we’re not there yet, sales went up a little bit in May. I believe the industry could start seeing an up-tick at the end of this year, or the beginning of the next for sure, and certainly as Chrysler and GM exit bankruptcy and the industry stabilizes and gets off the front pages, I think people are going to want to buy these cars.

The other opportunity that I still see strongly on the horizon is the diesel opportunity. That’s still getting sorted out in the U.S. but it’s still the quickest way to get to a lot of these standards without having to re-invest your future in a lot of other stuff.

What’s on the horizon is just very exciting.