Samsung, LG's electric auto parts sales soar despite EV slump
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The Korean automotive electric parts sector is thriving even as electric vehicle sales slow down, driving significant gains for Samsung Electronics and LG Electronics in the second quarter.
Automotive electric parts encompass a range of components integral to modern vehicles, particularly electric and hybrid models. These include infotainment systems offering multimedia and connectivity features, digital cockpits replacing analog gauges with digital displays and premium car audio systems from brands like Harman Kardon.
In the second quarter, Samsung's audio subsidiary Harman recorded sales of 3.62 trillion won ($2.66 billion) and an operating profit of 320 billion won. This marks a substantial improvement from last year, with profits up 70 billion won compared to the same period and a 33.3 percent increase from the previous quarter.
Harman's brands, including JBL, Harman Kardon, Bowers & Wilkins, and Bang & Olufsen, are featured in many top vehicle models worldwide. Acquired by Samsung in 2017 for $8 billion, Harman has significantly boosted its profits since, from 60 billion won in 2017 to 1.17 trillion won last year, despite a dip during the pandemic.
In the first half of this year alone, Harman has achieved 506 billion won in operating profit, setting high expectations for continued growth in the latter half.
“With the peak season on the horizon, Harman plans to broaden its product selection and introduce distinctive items to solidify its market leadership,” said a Samsung Electronics official during the earnings call on Wednesday.
On a similar winning streak, LG Electronics' automotive electric parts business is thriving, driven by a stable portfolio and strong order volume from electric and traditional vehicles. In the second quarter, its Vehicle Component Solutions division, which handles automotive electric parts, reported solid sales of 269.9 billion won and a record-breaking operating profit of 81.7 billion won. This success is driven by LG's focus on premium automotive infotainment products.
Last year, LG's Vehicle Component Solutions division reached sales of 10.176 trillion won and an operating profit of 133.4 billion won. In the first half of this year, the division has already surpassed last year's total profit with 133.7 billion won, setting the stage for a potentially record-breaking year.
Looking ahead, there is strong optimism that LG's automotive electric parts business will continue to deliver exceptional results. The division has ambitious plans to hit 20 trillion won in sales by 2030. LG’s automotive electric parts operations focus on three main areas: infotainment (LG Vehicle Component Solutions), electric vehicle powertrains (LG Magna), and automotive lighting systems (ZKW).
The Vehicle Component Solutions division alone accounts for over 12 percent of LG’s total sales. LG plans to grow further by expanding its offerings with premium new products and advanced driver-assistance systems.
"Even with the current EV slump, we anticipate growth to stay in the high single digits compared to last year, thanks to steady sales in infotainment systems and the increased demand for premium auto parts," an LG Electronics official said during the earnings call on July 5.
By Moon Joon-hyun(mjh@heraldcorp.com)
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