Surging demand for all-wheel-drive vehicles has fueled strong sales growth of parts supplier GKN Driveline.
Company sales rose 10 percent in 2011, the firm says. And if one adds the revenues of Getrag Group’s driveline operations — which GKN acquired for $441 million (339 million euros) in October 2011 — then revenues are up 15 percent.
“One of our biggest growth centers is all-wheel drive,” said sales and marketing director Jim Voeffray. “We see awd growing as much as 30 percent in the next three years. We predict it could become as much as 30 percent of our business in the next five years.”
The hugely popular crossover segment has generated a major boost in demand for all-wheel-drive systems. Models such as the Range Rover Evoque and Volkswagen Tiguan are engineered as front-wheel-drive, with an optional awd capability.
Surging sales of all-wheel-drive vehicles in the United States, Russia and particularly China has been unexpected, Voeffray said.
“The success there has been a bit of a surprise,” Voeffray said. “You take a vehicle like the Tiguan. When VW originally planned sales it thought the awd mix was going to be 25 percent, but it’s been more like 75 percent compared with two-wheel drive.”
GKN Driveline started out as an ironworks in 18th century Wales. The company business now has 15 factories in Europe and 20,000 employees worldwide.
Headquartered in Redditch, England, it is the largest business unit within GKN plc, the global engineering group.
GKN Driveline supplies most of the parts that deliver power to the rear wheels, including the power take-off unit, propshaft and final drive unit.
To ensure future sales growth, GKN is working to improve awd fuel economy. Currently, key elements like the rear propshaft turn constantly, even when power is delivered only to the front wheels.
GKN and others have developed a technology called Disconnect, which improves fuel economy by allowing the rear drivetrain to remain dormant until it’s needed. This should improve fuel economy by 3 percent to 5 percent, Voeffray said.
“From 2014 on, you’ll see Disconnect going across the market in the United States,” said Voeffray. He predicts it will allow automakers to promise “all-wheel drive with two-wheel-drive fuel economy.”
GKN Driveline also is making a long-term bet on electric drivetrains. The company devotes 25 percent of its engineering budget on development of electric drivetrains, Voeffray said.
The company is doing so even though it expects electric drivetrains will generate only 10 percent of total sales by 2020. Current customers include Peugeot, which uses GKN’s electric-drive axle for its 3008 hybrid crossover.
GKN Driveline ranks No. 50 on the Automotive News Europe list of the top 100 global suppliers, with sales to automakers of $3.65 billion in 2010.