Bosch's auto unit boss expects sales rebound in 2013
Europe will remain weak; U.S., China to grow, Bohr says
Bosch auto boss Bernd Bohr: "We should have stepped on the brakes somewhat earlier."
Photo credit: Bloomberg
Robert Bosch's auto division boosted global sales by 1.7 percent to a record 30.9 billion euros last year, but missed its 2012 sales target by 600 million euros.
Auto division boss Bernd Bohr said last year's forecast was too optimistic. For 2013, he expects sales to increase by 3 percent to 5 percent, but to reach that goal cuts will need to be made.
Bohr recently met with reporter Matthias Krust of Automotive News Europe's German sister publication, Automobilwoche, at Bosch's headquarters in Stuttgart.
How did the vehicle technology division do in 2012?
The growth in revenue has come in just under our expectations. While the first six months matched our forecasts, we were hit hard by the weakness of south European manufacturers. These manufacturers have a high percentage of diesels, and Bosch is a major supplier. The rise in gasoline direct injection was not able to offset this. The upshot is that 2012 was not a good year for the division as far as revenue goes.
What do you expect this year?
We are cautiously optimistic and expect revenue growth of 3 to 5 percent, with demand only likely to really grow during the second half of the year. We are assuming stable revenue in Europe. For the most part, we will clearly grow in gasoline direct injection in the two-figure percent range. The U.S. will grow. In China and India, we foresee market growth in the high single-figures.
Nevertheless, reducing fixed costs is a top priority, right?
We assessed the market trend a bit too optimistically during the first half of 2012. We should have stepped on the brakes somewhat earlier.
What will you do differently this year?
We are going to reduce the investment budget. We will take a close look at the head count trend in Europe, reduce the investment in equipment and facilities, and examine all the other budgets, starting with travel costs. But we won't cut r&d since we can only continue to differentiate ourselves from the competition through innovation.
Analysts estimate Europe has an overcapacity of up to 30 percent. Will Bosch have to close factories because of this problem?
No, there are no plans for that. I also believe that you won't find the 30 percent figure that you cited at any supplier. As a supplier, you manufacture products in a factory for various customers, and you can align yourself with the average demand. In addition, there are opportunities for flexibility with shift models and, especially in Germany, very good opportunities to make adjustments due to collective bargaining agreements and temporary staff.
Are you ruling out layoffs?
We are pursuing a long-term policy related to our facilities and so far have not attracted attention by wielding a crowbar. We naturally must keep a close watch on the competitiveness of our facilities on an ongoing basis. If we start to make adjustments proactively and they run over a long period, it is possible to shape them in a socially responsible way.
A number of electric vehicles will launch in Europe this year. Are we on the verge of a breakthrough that will lead to high-volume business?
I don't see a mass market. Today, lithium ion batteries cost about 8,000 to 10,000 euros. That still makes electric vehicles too expensive. Moreover, for a substantial sum of money, you still only get a car with a short range and other limitations.
How will the market develop?
We currently put the global market for electric vehicles at about 2 to 3 percent of total car volume. That will change slowly in the coming years. Only the well-to-do and absolute enthusiasts will get an EV. We foresee a high-volume market starting in 2020. Then we expect 12 million electrified vehicles. About 3 million of them will likely be purely electric cars and another 3 million plug-in hybrids. In addition, there will be about 6 million hybrid vehicles. Overall, that means a global market share of 10 to 12 percent.
Can Bosch play a significant role here considering it ended its battery partnership with Samsung SDI?
We are currently very happy that we have no large volume production of lithium ion cells. In the cell market for automotive applications, capacity is currently more than double the demand, which is leading to extreme price pressures. But one thing is also clear: in the mid-term, we again want to cover the entire value chain for batteries and achieve decent market share.
You can reach Matthias Krust at email@example.com.