Gentex' two-way mirror strategy
When it comes to new mirror technologies, Gentex CEO Steve Downing wants to have his cake and eat it, too.
Gentex, the world’s top supplier of auto-dimming mirrors, is counting on untapped Asian markets to fuel growing sales of its core mirror product, which generates half of the company’s revenues.
But Gentex is also marketing potentially hot new products, such as a digital rearview display, which uses rear-facing cameras to eliminate a motorist’s blind spots.
In theory, these digital displays will someday eliminate the need for side mirrors. But Downing, 40, is betting that won’t happen.
“The thesis is that mirrors are dead,” said Downing, who was named CEO of the Zeeland, Mich., company in January. “The irony is that our shipments continue to increase. In lower-cost markets such as China there is tremendous interest in electrochromic mirrors.”
So Downing is attempting a technology straddle: marketing rearview and side mirrors that can also display video images.
Gentex has been showcasing a side mirror that also houses a rear-facing camera. Motorists can use the side mirrors in traditional fashion, or they can view a digital image — stitched together from three rear-facing video cameras — in the center mirror.
“We think it’s better to offer a hybrid solution that allows motorists to decide whether they want to turn it on or off,” Downing said. “If something goes wrong with the cameras, you always have your mirror.”
Gentex does not yet have any customers for the hybrid side mirror, but Downing has reason to be confident.
Downing: Sales of mirrors rising
The company enjoys strong demand for its Full Display Mirror, which can be used either as a traditional center-mounted rearview mirror, or as a display screen for a single rear- mounted camera. Orders have come from General Motors, Toyota, Nissan, Subaru, Jaguar Land Rover and an unnamed sixth customer. The product is popular because motorists can choose the video display or toggle to a conventional mirror.
It’s important to offer motorists a choice, Downing said. When they use the video feed, roughly 5 to 10 percent of motorists suffer motion sickness or have depth-of-vision problems. Automakers don’t want to alienate those customers.
While it’s early, the digital display looks like a promising revenue generator for Gentex.
In 2019, the company expects to produce 500,000 digital displays — up from 150,000 last year — as automakers add them to mass-market models.
The displays aren’t cheap. The wholesale price is $200-plus, and adding features, such as Gentex’s Homelink garage door opener, can drive the cost higher.
By contrast, a conventional auto-dimming mirror is $75 or so, while a no-frills mirror costs as little as $5.
Downing believes digital displays are on the cusp of a rapid market rollout, and he may be right. In September, IHS Markit predicted that annual global production of center-mounted digital displays would reach 1.8 million units in 2025.
By that time, annual production of hybrid side mirrors is expected to top 1.4 million units, and an additional 410,000 vehicles a year will sport cameras instead of side mirrors.
A Gentex rear-facing camera mounted on the roof, shark-fin style. This camera feeds a video image to the Full Display Mirror.
To be sure, these projections are a bit tricky. Japan and the European Union have OK’d replacement of side mirrors with cameras, while the United States has not. But IHS analyst Brian Rhodes says actual production may be higher, given the recent spate of contracts.
“Every couple of months, it seems another automaker is making an announcement,” Rhodes said. “We are forecasting that production of hybrid side mirrors will increase pretty dramatically.”
Other suppliers seem to agree. Panasonic Corp. supplies digital displays to Nissan, and Continental AG is marketing its own version.
But Gentex has a head start, and the company is fairly bullish about its prospects. In an earnings call with analysts last month, Downing predicted that Gentex sales will rise 5 to 10 percent this year and next.
About half that revenue will come from sales of conventional auto-dimming mirrors, while the rest derives from digital displays, electronic toll payment devices and other products.
Gentex also is testing the appeal of U.S.-only products in foreign markets. Downing is examining Homelink’s appeal in China, where urban car owners often pay $20,000 and up for a parking space in a garage.
Homelink would allow a motorist to raise or lower barriers that guard their parking space.
Tesla, Porsche and Land Rover currently offer Homelink to Chinese customers, while two dozen automakers offer Gentex self-dimming mirrors there.
Downing is hopeful that Gentex can expand its niche in China, which currently generates 5 percent of the company’s global revenue.
“We’ve started to spread our wings and go into new areas,” Downing said. “I want to push the envelope a little bit.”