We received an invitation to the PHINIA media meeting at the end of August, but the event was postponed because this company, which was spun off from BorgWarner and successfully listed on the New York Stock Exchange in July this year, did not have a Chinese name.

At first, I thought the postponement was an excuse, but when I was invited again in early November, I found that the Chinese name of “Fenia Delphi” was listed in the invitation letter. As a leading automotive supplier with a factory in China, the English company name, although foreign, always shows the arrogance of an outsider. Using the Chinese name in formal occasions is a convincing and rigorous attitude.

YOUNG PHINIA

How was PHINIA born? This story started three years ago. In January 2020, BorgWarner announced the acquisition of Delphi Technologies through a non-cash equity consideration transaction worth approximately US$3.3 billion, and announced the completion of the acquisition of Delphi Technologies in October of that year. This acquisition has enabled Delphi Technologies’ traditional fuel power system to effectively supplement BorgWarner, and the addition of Delphi Technologies’ commercial vehicle and after-sales business has enabled BorgWarner’s business to be better balanced. After the acquisition, two business units were separated, one is the fuel system business unit and the other is the after-sales business unit.

Many people thought that BorgWarner’s large-scale acquisition would make the name of Delphi disappear in the long river of history, but no one could have imagined that in July this year, the two divisions were merged and separated from BorgWarner, called PHINIA, with brands including Delphi, Delco Remy and Hartridge. The Chinese name of PHINIA is Ｆｉｎｉａ Ｄｅｌｆ. Of course, this Chinese name is intended to continue customers’ memory and goodwill towards Delphi when doing business in China, and also to show the blood relationship between PHINIA and Delphi.

After the split, BorgWarner focuses on electrification, including electric drive and electronic control, while PHINIA focuses on traditional fuels and zero-carbon alternative fuels. Yang Hongyong, general manager of PHINIA Fuel Systems China, revealed to the on-site media including TheCars that in the previous BorgWarner period, PHINIA’s business priorities were differentiated. After the independence, it has a moderate scale and strong autonomy, which is not only flexible but also more forward-looking.

How do PHINIA’s business advantages unfold? According to Yang Hongyong, PHINIA has a professional and experienced team. Brady Ericson, who serves as PHINIA’s president and CEO, has worked at BorgWarner since 2000. Since 2011, Brady Ericson has been a senior executive at BorgWarner, serving as president and general manager of three different business units, as well as BorgWarner’s CSO Chief Strategy Officer. Since March 2022, he has served as BorgWarner’s global vice president and president and general manager of BorgWarner’s fuel system and aftermarket division. He has overseas experience and has held positions in four different countries in Europe and Asia.

The CEO personally participated in the design of PHINIA’s name and logo. PHINIA is actually composed of PHI and NIA. PHI comes from the last three letters of Delphi’s English name DELPHI, and NIA stands for “goal” and “bright” in English.

The logo consists of an arrow symbol and text. The arrow symbol shows a sense of acceleration and forward movement. The perfectly symmetrical shapes intersect at the arrow point, which also symbolizes strength and ambition. It is visually inspired by fuel injection technology.

Providing value to customers requires leading products

PHINIA is headquartered in Auburn Hills, Michigan, and has 12,900 employees in 44 locations in 20 countries around the world. PHINIA’s business growth sector mainly comes from Asia, with China accounting for the largest share. According to official data, the Chinese market accounts for about 20% of the global turnover of US$3.4 billion.

The growth of China’s business comes from three aspects. The first is traditional businesses such as fuel and hybrid. The second is the commercial vehicle field, which is also the focus of PHINIA, such as alternative energy such as hydrogen fuel. The third is industry expansion, such as non-road business, such as industrial fields, aerospace, etc.

Many Tier 1s would say “in China, for China” or “local for local”, but with the increasing export business of many companies including PHINIA China, it has now become “local for global”, and there is even a new word glocal. Glocal means global+local, representing the global localization strategy, that is, global vision + local advantages. Based on this concept, PHINIA China adheres to its own process standards while being well aware of the needs of Chinese customers. Not only that, PHINIA Global also promotes the GOLD operating model, namely Globally Optimised, Locally Driven.

Yang Hongyong said that PHINIA not only has local advantages, but also has a global brand, which is also the key point for customers to find PHINIA. “For example, if customers want to export products to the EU, they need to meet the strict local laws and regulations. PHINIA has sufficient capabilities and resources in the local area, which solves the customer’s needs.”

According to the latest third-quarter financial report for 2023, PHINIA’s adjusted sales were US$870 million, a year-on-year increase of 1.28%, including US$535 million in fuel systems and US$335 million in after-sales business. Adjusted EBITDA in the third quarter reached US$117 million, and free cash flow reached US$118 million.

Actively respond to the pain of transformation

In the new era, some auto parts suppliers are transforming by either acquiring existing businesses to improve their own segments to adapt to market requirements, or by opening new businesses and transferring employees, which requires long-term training and adjustment.

There are growing pains in PHINIA’s transformation, but unlike other Tier 1 and Tier 2 companies, PHINIA’s transformation did not enter unfamiliar fields. Instead, it completed the transformation based on existing advantages. For example, the corporate mission of “sustainable development, zero-carbon future” is a business based on internal combustion engines, but it used to be a carbon-containing fuel vehicle, and now it burns alternative fuels and hydrogen fuels, becoming low-carbon and zero-carbon. The span of PHINIA’s core technology transformation is not large.

At the just concluded Automechanika Shanghai, PHINIA exhibited its industry-leading hydrogen fuel injection system, providing a full range of solutions including intake port injection and direct injection.

PHINIA also has a forward-looking approach, which is to establish some product lines. These product lines are not based on existing businesses, but are focused on the future and are of concern to PHINIA. At the same time, each line has a product manager in charge, who always grasps the direction of development of the corresponding product line. This management model can help PHINIA reduce the pain caused by transformation and also carry out corresponding talent reserves, so that when the countdown to transformation really begins, there will be several professional teams to connect.