SRI Q3 2024: OEM Recovery Pushed to H2 2025 on Macro Headwinds
- Strong MirrorEye Momentum: Executives highlighted robust demand for the MirrorEye system, noting its adoption as standard equipment by key OEMs and promising customer feedback. This positions the company to benefit from improved take rates and revenue growth as new programs ramp up in mid-2025.
- Positive OEM Recovery Outlook: Despite near-term challenges, OEM customers anticipate a recovery in the second half of 2025, particularly on the commercial vehicle side. This includes potential prebuy activity ahead of stricter emissions regulations, setting the stage for stronger long-term growth.
- Innovative Product Expansion: The introduction of the Leak Detection Module addresses a critical need in the expanding hybrid vehicle market by effectively managing evaporative emissions. As emissions standards tighten, this integrated solution is positioned to capture significant future demand.
- Macroeconomic headwinds persist: Executives noted that the current global demand is weak, with continued production volume headwinds and a challenging macro environment expected to persist into 2025, especially in the commercial vehicle segment.
- Slower OEM recovery and ramp-up delays: There is an expectation of a delayed recovery in OEM production, with the outlook for 2025 remaining weak and initial OEM volumes, particularly in North America, starting lower than anticipated.
- Underperformance in key revenue segments: Early indications show that MirrorEye and Control Devices revenues are trailing initial projections, with shifts from aftermarket to OEM purchases and slower ramp-ups contributing to lower-than-expected revenue figures.
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Growth Strategy
Q: How drive revenue growth amid headwinds?
A: Management is focusing on growing aftermarket and non-OE orders while leveraging MirrorEye launches to offset weak macro conditions and drive incremental revenue growth. -
OEM Recovery
Q: When will OEM production recover in 2025?
A: They expect a recovery in the second half of 2025 on the commercial vehicle side, aided by pre-buy strategies before new emissions regulations. -
MirrorEye Timing
Q: When does the Daimler MirrorEye program launch?
A: The Daimler Truck North America program is set for a mid-2025 launch with initially low take rates that should improve based on strong customer feedback. -
Revenue Mix
Q: How are revenue projections trending overall?
A: Earnings reflect a decline in certain segments, with Control Devices and initial MirrorEye aftermarket volumes offset by a shift towards OEM-focused orders and improved mix expectations. -
Leak Detection
Q: What role does the leak detection module play?
A: It addresses the evaporative emissions issue in hybrids by efficiently capturing gasoline vapors during extended electric driving, crucial as emissions standards tighten. -
Market Competitiveness
Q: Are you first with this leak detection tech?
A: Although competitors exist, management asserts their solution is the most integrated and elegant, offering a higher value proposition. -
Production Outlook
Q: Is flat car production a global or NA trend?
A: For North America, car production is expected to remain flat, while China is anticipated to grow in the low to mid-single-digit range.
Research analysts covering STONERIDGE.