Valeo CEO Christophe Perillat says he is looking to China to streamline the century-old supplier, as it pursues new business areas beyond clients such as Renault and General Motors.
“I call China the fitness center of the auto industry,” Perillat said in an interview in Paris. “What we learn over there is incomparable with what we learn elsewhere because of the speed.”
Various processes Valeo has examined in China cost roughly 35 percent less than in Europe, said Perillat, whose company makes car parts including cameras, lighting systems, and sensors. Some 4,300 Valeo engineers out of a global engineering workforce of more than 20,000 are currently based in China, he said.
“When you look at steel, aluminum, when you look at investments, cost of manufacturing, cost of a production line, cost of building a plant, cost of everything, China is 35 percent cheaper,” he said.
Among lessons learned, Valeo has sped up prototyping, optimization of parts and reduced layers of management.
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Just as Japan’s ascent in the 1970s reshaped the industry with lean production and efficiency, China’s rise, led by Valeo customers such as BYD and Xpeng, is rewriting the rules again. Key levers include flatter development timelines, deep supply chain integration, bold ideas, and cars that gain new features in real time through over-the-air updates.
As an example, in Europe, it takes roughly a month to get a prototype for a new part. In China, the prototype arrives “in the night, and is on the bench the next morning,” Perillat said in the interview.
Quick prototyping “does not exist anymore in Europe,” he said. “And this is why it’s so important to keep an industry in Europe. When you have some specific expertise that is leaving Europe, it leaves for good.”
Another Valeo client, Renault, which does not sell cars in China, set up its own research and development hub in the country as a way to learn how to develop vehicles in a cheaper and quicker way. That allowed the automaker to roll out its new electric Twingo city car in just two years.
The switch reverses the direction of travel for innovation. Around a decade ago, new development would be done in Europe, and then deployed globally, Perillat said. Now industrial wins come from China to make their way elsewhere. He pointed to the efficient technique of die-casting parts as an example.
“You’re not going to find in Europe anymore, aluminum die casting,” he said. “I can multiply the number of examples of segments of our industry that are gone.”
Since taking the helm in 2022, Perillat has been downsizing Valeo’s European footprint, with factory closures in countries such as France and Germany while opening new plants in China, India, and the U.S. He has eliminated roughly 10,000 jobs, with global workforce now totaling about 100,000.
He has assigned hundreds of engineers to adapt the group’s technologies for defense and other sectors, for example cooling techniques for data centers, a new area of expansion outside of the automotive industry.
Perillat says quick decision-making is key to surviving in the current environment, which prompted him to eliminate several layers of management.
“We need to run all the time,” he said. “If we don’t run quick enough, we’re just going to be surpassed by others.”
Valeo ranks No. 13 on the Automotive News Europe list of the top 100 global suppliers, with worldwide sales to automakers of $20 billion in 2025.
