Robert Bosch sees no growth in car production until 2025, CEO Volkmar Denner said.
The German supplier sees weakness in nearly all markets, but especially in China and India, he said.
China’s weakness has hit the company hard, Denner told Automobilwoche, a sister publication of Automotive News Europe.
Denner said it was not clear how many jobs Bosch would cut this year, declining to comment on speculation that the world’s biggest car-parts maker plans to cut 1,000 posts.
He spoke about the opportunities created by electric mobility, possible plant closings and where jobs are still being created.
Where is Bosch struggling the most?
We expect car production to decline 5 percent this year. We are seeing weakness in nearly all the markets, but it is especially pronounced in China and India. The weakness in China's hitting us hard. We have been extremely successful there in past years. But as a leader in innovation, Bosch can still grow in weak markets if, for example, more technology is incorporated into vehicles to reduce CO2 or to automate driving. Still, we cannot completely escape the market trend.
When do you expect some relief?
We are being cautious and assuming that car production won't grow again until 2025. That may be somewhat conservative, but several trends are coming together. On one hand, trade disputes are producing uncertainty. On the other, the industry is being transformed. Consumers are holding off on purchase decisions in light of the new powertrains. The growth of car-sharing can also lead to reduced demand for vehicles.
Electric mobility is one growth area where you are winning orders worth billions.
This area includes Bosch's core components for electric mobility, such as 48-volt batteries, electric motors, power electronics, all the way to complete drivetrains such as our e-axle. China is the largest market for electric mobility, and Bosch is the market leader there. Of course, orders are also coming from Europe and the United States.
To what degree is the business influenced by automakers making electric components themselves to save jobs?
It was foreseeable that the value-creation chain would change. There are a great many companies supplying internal combustion engines with injection valves, pumps, sensors, exhaust treatment systems and the like. They are naturally eliminated with the electric motor. But we've always said that the power electronics would stay with suppliers because they are relatively high-volume, making it possible to achieve economies of scale.
What else would be left for suppliers?
In the battery area, we predicted that manufacturers would purchase their 48-volt batteries but would overwhelmingly build high-voltage batteries themselves. That's exactly what happened. With electric motors, it depends on whether there will be about as many variations as there are with internal combustion engines. If a supplier can supply several manufacturers from a single construction kit, it has a significant edge based on its economies of scale. We saw a similar development in control units at the launch of the gasoline injection system. Some manufacturers developed the first two generations themselves. Today it is good business for suppliers, and vehicle makers develop portions of the software on their own to differentiate themselves.
Electric is growing, diesel is on the decline. Busch unions are talking about 1,000 jobs being eliminated at the company in Germany alone. Can you confirm that?
Bosch's international production network is one of the company's great strengths. For example, due to the boom in China's truck market, we were able to secure jobs at our facilities in Germany. On the other hand, you have to wait and see what the trend is. Diesel's share of new vehicles in Germany is currently 1.5 percentage points higher than it was last year.
Is that enough?
We still don't know if this will last. In Europe, the figure is minus 4 percentage points. Last year, we eliminated 600 jobs. At this point, it is impossible to predict the number of jobs that we will have to adjust this year. But we will do all we can to handle it in a socially responsible way.
Many suppliers are thinking about closing entire plants. Is this a concern at Bosch?
We continue to monitor our situation. This has always been standard practice at Bosch and part of our entrepreneurial success. The head of our powertrain area has aptly said that we do structural change, but we don't break structures. But it is clear that an industry with this kind of high vertical integration needs time for these processes of adjustment. We are really just at the start of the transformation. As an innovation leader, it is natural for us to develop new fields of work. That secures employment as well.
Is the fuel cell a suitable replacement?
What we are doing here is revolutionary. Based on classic business doctrine, we couldn't put the industrialization of the fuel cell in the existing organization. We proceeded differently and took advantage of the expertise available in the diesel area. It is important for the facilities to develop an outlook for the future. That's why we have based pre-series projects for mobile fuel cells in Homburg and for stationary fuel cells in Bamberg.
Can this offset the diesel?
Probably not. The works council members know this. Fuel cells, however, have the advantage that they resemble an internal combustion engine with its valves, pumps and other parts more than they resemble an electric motor. More components are needed. This ultimately can benefit employment levels. In any case, this isn't just a placebo. This is a serious effort.
But just for the period after 2025, right?
We are starting with trucks. Heavy vehicle transportation continues to be the domain of the diesel for the time being. So we are doing this already because we need an offset when volumes decline there. With Weichei Power in China and Nikola Motors in the U.S., we have two partners with very different concepts. This is a sign of the creativity and versatility that we are demonstrating in this area.
The future of the automobile is networked, automated, shared and electric. Can you clearly identify where the best business opportunities are?
Our first strategic goal is to play the same dominating role in electric mobility that we are playing with the internal combustion engine. That is essential to secure our future. And then there is the market for driver-assistance systems and robotaxis. The growth will be very strong there as well. Numerous developments are in the pipeline and sorting themselves out in the networking area. For example, we are working with the world's largest car-sharing providers, including Didi, Lyft and Uber. Didi will use our cloud service for battery management to increase the range of its fleet. Bosch is offering mobility services providers a wide-ranging portfolio.
