When Rolf Bulander takes over as head of Robert Bosch’s industry-leading car parts division from Wolf-Henning Scheider in April, he will inherit a business enviably positioned at the forefront of auto innovation while gaining authority not afforded to his predecessor.
Bosch also is a company increasingly torn between the traditional roots that made it strong and the rapidly developing demands imposed by a digital marketplace. Privately held Bosch hasn’t achieved an 8 percent operating margin, its current target, in more than a decade, but other publicly traded, more cost-driven Tier 1 suppliers such as German rival Continental are more profitable. Continental on Jan. 12 reported that its adjusted earnings before interest and tax margin topped 11 percent last year.
In addition, emerging competitors such as Germany’s ZF Friedrichshafen, which is in the process of taking over driver-assistance and safety specialist TRW Automotive, appear poised to chip away at Bosch’s revenue lead. The Stuttgart-based supplier has realized it must adapt its manufacturing-heavy business model to provide more mobility solutions and services. This, however, is a transition that Bosch managers acknowledge will see it encroach further into the territory of its customers, the automakers.
Two-thirds of the 46 billion euros Bosch generated in 2013 sales revenue came from its automotive business, where it is a leader in connected cars, fuel efficiency, electromobility and safety. To maintain its technological edge, it outspent the r&d budget of its closest direct competitor, Continental, by more than a 2-to-1 margin in 2013, filing 20 patents on average every working day. Fortune named it one of the world’s most admired companies.