DBR Case Study: LG Electronics VS Division Rising Power in the Automotive Industry Meeting Needs with Diversification and Trust LG Electronics’ VS Division (formerly the VC Division) rose as a nextgeneration leader in the global automotive industry. The key reasons are as follows:
1. LG Electronics addressed automakers’ pain points in a timely manner. In 2018, the company transitioned its existing VC Division into the VS Division, focusing on providing integrated solutions. This transition allowed LG to resolve the unmet needs automakers had experienced with traditional parts suppliers during the shift to electric and autonomous vehicles. It also opened the way for LG to fully utilize its capabilities and experience gained in its home appliance business through a solutions-based approach.
2. The company improved its profitability by overhauling its structure. LG discontinued low-margin contracts, the main cause of its deficits, and strengthened relationships with key clients offering higher profitability. The company upgraded its product lineup to target the premium market and proactively enhanced its capabilities.
3. LG established solid customer trust. While producing most of the core components for electric vehicles, the company maintained its position as a supplier and refrained from competing directly with its clients. Transparent and swift communication further strengthened trust with its customers.
4. The company effectively diversified its business portfolio in a short period through aggressive mergers and acquisitions (M&A) and joint ventures (JVs). LG invested in businesses that allowed it to transfer its existing core competencies while filling gaps in its portfolio, thereby maximizing the impact of these initiatives..
“Can this even be made? Even the top one or two companies in the industry haven’t made such a proposal.”
This was the response Mercedes-Benz directed at LG Electronics’ VS (Vehicle Component Solutions) Division. Mercedes-Benz’s request was simple: could LG integrate several displays from the driver and passenger seats into one system for its flagship electric vehicle, the EQS?
Why had displays in the front seats of vehicles remained separate until now? There were several reasons. Technical limitations posed the greatest challenges, such as durability issues, display standards, and the curved design of dashboards, which made it difficult to embed flat displays. Compared to analog systems, they also lacked convenience and intuitive operation. High production costs and challenging quality control further added to the difficulty.
Faced with this problem, the VS Division gave an unexpected answer. They promised to integrate three displays—an instrument panel, a Center Information Display (CID), and a Co—Driver Display (CDD)—into one in-vehicle infotainment (IVI) system. Moreover, they took it a step further by proposing to create a large screen spanning from the driver’s seat to the passenger’s seat. The request from Mercedes-Benz was met with their own question: “Can you really do this?” It was a solution that even global automotive electronics companies with over a century of history had not been able to propose.
This content was translated into English by AI (using DeepL) from an article that was originally written in Korean in the DBR (Donga Business Review). Therefore, please understand that there may be some awkward expressions.
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