BEIJING U.S.-based auto parts supplier Delphi Corp is on the lookout for acquisitions in China as it expects to outpace revenue growth in the booming Chinese auto market, Chief Executive Rodney O'Neal said on Saturday.
"Obviously we're looking," O'Neal told Reuters on the sidelines of the Beijing auto show. "We've got a great balance sheet right now and we're out looking."
O'Neal said privately held Delphi posted recent revenue growth that outpaced sales growth in China and would continue to do so as the market evolves toward more safety and fuel-saving technology in vehicles.
"We know that based on government policy and what the consumer wants, the market will move in our direction," he said. "We should continue to outperform the market quite easily."
The Chinese auto market grew at more than 45 percent in 2009 to become the world's largest. In the first three months of 2010, industry sales increased more than 70 percent.
In October, Troy, Michigan-based Delphi, the former parts unit that General Motors spun off in 1999, emerged from four years in U.S. bankruptcy in which it slashed about 80,000 workers and divested or dropped many of its businesses.
The restructuring corresponded with a steep downturn in U.S. auto sales that tipped both GM GM.UL and Chrysler into bankruptcy in 2009 under U.S. government support. GM also bought back units from Delphi, including a steering business.
Delphi is now focused on providing safety equipment, hybrid and fuel-saving technology and components that allow vehicles to be connected to communications networks.
"Our last four years have been a transformation and contraction, and now it's about top line and expansion and growth. We're a growth story now," O'Neal said.
Any acquisition in China would have to complement that strategy and bring Delphi business that otherwise would take longer and cost more to cultivate on its own, O'Neal said.
"We would probably look at an acquisition if it would fill some very specific strategic gaps that would otherwise take us longer organically to do," O'Neal said. "That could be partnerships."
O'Neal said he met on Friday with nine Chinese automakers that represent 80 percent of the output by domestic car manufacturers in China. The point was to lobby for new parts business from the fastest-growing segment of the Chinese car market, he said.
Delphi derives about 40 percent of its sales in China from parts and technology sold to Chinese automakers, but expects that ratio of business with the companies to rise, O'Neal said.
China's auto market is highly fragmented with more than 80 brands, but the government has indicated it wants fewer and stronger carmakers in a more consolidated manufacturing base.
O'Neal said there was no timing set for an initial public offering for Delphi that would make it a listed company again.
"My job is to run this company and make it as valuable as possible," he said. "I think the owners working with our board will look at this monetization issue, but that's for another day and another time. The markets will help dictate that."
(Reporting by Kevin Krolicki; Editing by Stacey Joyce)