Siemens VDO reviews portfolio

FRANKFURT - Siemens VDO Automotive AG could sell some businesses as company leaders fine-tune the product portfolio in the wake of the VDO acquisition.

Those businesses of the former Siemens Automotive and Mannesmann VDO are under review to determine compatibility and market direction, the company's chairman said.

The merger created a $7 billion supplier with a strong electronics presence.

"We are looking for possibilities to sell businesses that are not our core businesses," said Franz Wressnigg, Siemens VDO Automotive chairman.

Original-equipment activities will be divided into five business units: powertrain, information and cockpit, communications and multimedia, safety and chassis, and car body.

Wressnigg said products with unique market positions exist in powertrain, information electronics and car body electronics.

But some operations may not fit. Siemens leaders have indicated that a business must be in a top-three market position to ensure profitability and longevity.

Wressnigg didn't disclose specific businesses that could be sold, though he did say chassis is a weak area. Even though Siemens VDO is strong in chassis electronics, it lacks the fundamental brake business needed to be a player in stability control and vehicle dynamics.

Wressnigg cited Siemens' exit of the wiring harness business this year as an example of how such decisions could be made. There, Siemens formed a joint venture with market leader Yazaki.

The cockpit business also is under review, although the company has stronger positions in this segment.

VDO brought in a significant cockpit business, while Siemens had a joint venture on cockpits with Sommer Allibert. Since Siemens bought VDO and Faurecia acquired Sommer Allibert, the two remaining companies are in discussions to work out how each will pursue the cockpit business.

Wressnigg acknowledged the difficulty of selling auto parts businesses in today's flagging economic climate. Many other businesses are up for sale at a time when supplier valuations and revenues are down.

That may increase the likelihood that Siemens VDO will reconcile its product portfolio through more joint ventures or alliances or even by swapping unwanted businesses with another supplier.

You can reach Amy Wilson at awilson@crain.com

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