What impact is the chip shortage having on Webasto?
We are being affected in several ways. Some customers had to temporarily close their plants when they couldn't get enough chips, which had a negative impact on our sales, especially of sunroofs. Additionally, this ongoing volatility has made it very difficult for our customers to forecast the quantities of products they need from suppliers. As a result, there can be up to a 20 percent difference in the volume they originally asked for and the number of units they really purchase within one month. The short notice periods cause capacity and cost challenges for us. Third, we also have to fight extremely hard to get our own chips because all our products – from roofs to heaters to charging stations – have semiconductors. A special task force is working very hard to make sure we get enough chips. In some cases, however, we have had to use brokers, which increases the cost by more than double what we would usually pay.
How long do you expect this to be a problem?
We believe it will continue into 2022.
What is your industry outlook for vehicle production for Europe, the United States and China?
Overall, the demand from end customers is there. The limiting factor is what we can produce despite the chip shortage. Right now, if you order a car it can take six to nine months to get it. That being said, we expect the European market to be stable while China and North America will be strong. The bottom line is that the industry has an overall issue with capacity restrictions due to supply bottlenecks.
What about Webasto's prospects in each of those three markets?
Our business in China will be quite strong. In Europe we expect a significant increase but not at the magnitude we saw at the beginning of the year. Our outlook for North America is pretty good, but very much dependent on whether some of our customers can get back online after having to stop production because of the chip shortage.
Will Webasto grow faster than the overall market in each of those key regions?
That is always our goal. In fact, in 2020 we dropped less than the overall market. Therefore, I believe that we grow faster than those markets in the future. What is driving this is our entry into offering new technologies. We invested heavily and this has opened brand new fields for Webasto. Meanwhile, our roof business will grow more in line with or slightly above those markets largely because of the benefits we are getting from the shift to panorama roofs, which is boosting our revenue.
Do you believe Europe should increase its number of chip factories?
Yes, I support that because I believe each region of the world should have some level of capability to produce something as essential as chips to avoid risks caused by single sources. Europe doesn't need to get 100 percent of its chips from plants here, but it should have the ability to meet half of the region's demand.
Your annual report says Webasto has “multiple large-volume roof orders” can you provide some details?
We received an order from BMW for the 4-Series convertible, which is a strong selling car in that niche. The last-generation car's folding hardtop, which we also produced, was replaced by an innovative softtop that has special honeycomb-design construction that provides excellent acoustics. The other big order is for the Mercedes-Benz S-Class. Although it is not a high-volume car, there is a very high fitment rate for our panorama roof system, which has a lot of new features such as the ability to open or close with a simple hand gesture.
What do you mean when you say Webasto plans to benefit from an equipment rate growing toward 20 percent?
That is related to the Indian market and our new plant there. Currently the overall fitment rate for roof systems in India is in the low single-digit percentage range. It will rise to 10 to 12 percent in the midterm and toward 20 percent in the SUV segment, which to us is the minimum level to justify adding production in a country or region. For example, in China it is 62 percent (see chart, below).