Demand is growing for turbochargers, especially in gasoline-powered cars, because they help automakers produce smaller, greener engines without compromising on performance. Automakers in Europe need to reduce CO2 ahead of tougher emissions regulations that start to take effect next year.
Roland Berger expects global turbocharger unit sales will double to 30.4 million 2015 from an estimated 15.1 million in 2010. Honeywell, which includes turbos for heavy trucks and construction equipment in its calculation, says the total global turbocharger industry was 22 million units last year.
"That will grow 10 percent in 2011 and 10 percent every year until 2015," Ismail told Automotive News Europe in an interview earlier this month. "So the 22 million turbos globally today could grow to 35 million by 2015."
Most of those turbos will be on the road in Europe, where Ismail said told ANE he expects the market penetration for light vehicles and trucks to grow to 69 percent this year from 65 percent in 2010.
Honeywell says it won $3 billion in new business last year, when factored over the lifetime of the programs. That's enough for Honeywell to stay No. 1 globally in turbos for the next five years, he told ANE sister publication Automotive News earlier this month.
Honeywell expects to introduce more than 100 new turbo applications this year and has more than 500 engine applications in its development pipeline.
Honeywell, which controls half of the global turbocharger market based on analysts estimates, faces increasing competition, especially in Europe. Continental AG's first turbocharger will be produced by the Schaeffler Group starting later this year. A joint venture between Robert Bosch GmbH and Mahle GmbH also will start turbocharger output in 2011.
Ismail told ANE he is not worried about the added competition given that Honeywell has been making turbos for 50 years.
"We're 100 million turbochargers ahead of Bosch-Mahle and whoever else wants to enter this business," Ismail said.
Honeywell Transportation Systems expects to generate $4.5 billion to $4.7 billion in revenue, up from $4.2 billion in 2010, Ismail said. Turbochargers account for about 60 percent of those revenues.
Incentives cover 50%
Honeywell also said today that the incentives it received from the Slovak government will cover half the cost of its initial 38 million euro investment in the factory. The incentives included credits for job creation and tax breaks.
Without being more specific, the supplier said that it considered several other European countries for the plant. It said it ended up picking Slovakia because it provided the best combination of local skilled labor, logistics (it is close to key markets such as Poland and Ukraine), costs and economic stability.