At this month's Geneva auto show Honeywell announced its VNT (Variable Nozzle Turbine) turbo helps the new Volkswagen Polo BlueMotion's 1.2-liter diesel achieve emissions of 87 grams per kilometer. That's down 15 percent from the previous-generation Polo Blue Motion's 1.4-liter diesel.
Roland Berger Strategy Consultants estimated that combining turbochargers with downsized engines will reduce CO2 emissions by up to 15 percent.
Last year was a tough year for all automotive companies and Honeywell Transportation Systems was no exception. Sales declined more than a quarter to $3.4 billion from $4.6 billion in 2008.
One reason for the sales decline was reduced demand in Europe for turbos, which account for 60 percent of Honeywell Transportation Systems' business (brake friction materials, air and oil filters and spark plugs represents the rest).
Diesel sales suffered because of scrapping incentives, which encouraged people to trade-in their old cars for gasoline-powered minicars and subcompacts.
Because of the subsidies, the market share for new cars with diesels dropped to 45.9 percent last year from 52.7 percent in 2008, according to data from ACEA, the European automakers association.
People stayed away from diesel versions of the minicars and subcompacts because they are 2,000 euros to 3,000 euros more expensive than gasoline-powered versions of the same cars.
Ismail added that the global economic crisis caused some turbo customers to cancel or delay contracts at the start of 2009, but many came back at the end of the year with a different engine or a different platform.
"In the next five years we will be working on 400 new engines, 100 of those projects will happen in 2010," Ismail said.
He said there are other signs that European production is picking up, but the numbers are not even close to the pre-crisis levels seen in 2007 and 2008.
Despite the ongoing challenges, Honeywell Transportation Systems expects the sales growth of 6 percent to 12 percent this year.
Ready for new rivals
When asked whether Honeywell, which has an estimated global market share of more than 50 percent, is worried about competition from the Continental-Schaeffler and Robert Bosch-Mahle joint venture turbo units, Ismail said the new rivals will need at least a decade to match the leader's volumes, which the company declined to disclose.
"Also, they will need to offer something different and they don't right now," Ismail said.
He said the fact that the Conti-Schaeffler and Bosch-Mahle joint ventures plan to start production in 2011 is a good sign for the field.
"It is great to be in the turbocharger business because the future is great," he said.
Roland Berger expects global turbocharger unit sales will double to 30.4 million 2015 from an estimated 15.1 million in this year. However, Roland Berger predicts a less-impressive financial gain for suppliers - a boost in sales to 8 billion euros by 2020 from 6 billion euro in 2010. This will be driven by the addition of more competitors in the field, the increased demand for the part and the need to create low-cost turbochargers to meet anticipated sales demand in price-sensitive emerging markets.
Honeywell Transportation Systems ranks No. 52 on the Automotive News Europe list of the top 100 global suppliers, with sales to automakers of $3.18 billion in 2008.
Honeywell Transportation Systems is one of four business units at U.S.-based Honeywell International. The other divisions cover the aerospace and building industries. Honeywell International reported global sales of $30.9 billion last year, down from $36.6 billion in 2008.