Bosch exec expects global growth despite European woes
Robert Bosch's auto division boosted global sales 2 percent last year to a record 30.9 billion euros, or about $40.83 billion, but missed its 2012 sales target by $793 million, mainly because of weakness in Europe.
For 2013, auto division boss Bernd Bohr, 56, expects global sales to rise 3 to 5 percent.
He was interviewed in German by Matthias Krust, staff reporter for Automobilwoche, a sibling publication of Automotive News, at Bosch's headquarters in Stuttgart.
Q: How did the vehicle technology division do in 2012?
A: The growth in revenue has come in just under our expectations. While the first six months matched our forecasts, we were hit hard by the weakness of south European manufacturers. These manufacturers have a high percentage of diesels, and Bosch is a major supplier. The rise in gasoline direct injection was not able to offset this. The upshot is that 2012 was not a good year for the division as far as revenue goes.
What do you expect this year?
We are cautiously optimistic and expect revenue growth of 3 to 5 percent, with demand only likely to really grow during the second half of the year. We are assuming stable revenue in Europe. For the most part, we will clearly grow in gasoline direct injection in the two-figure percent range. The U.S. will grow. In China and India, we foresee market growth in the high single figures.
Reducing fixed costs is a top priority, right?
We assessed the market trend a bit too optimistically during the first half of 2012. We should have stepped on the brakes somewhat earlier.
What will you do differently this year?
We are going to reduce the investment budget. We will take a close look at the head count trend in Europe, reduce the investment in equipment and facilities and examine all the other budgets, starting with travel costs. But we won't cut r&d since we can only continue to differentiate ourselves from the competition through innovation.
Analysts estimate that Europe has an overcapacity of as much as 30 percent. Will Bosch have to close factories as a result?
No, there are no plans for that. I also believe that you won't find the 30 percent figure that you cited at any supplier.
As a supplier, you manufacture products in a factory for various customers, and you can align yourself with the average demand.
In addition, there are opportunities for flexibility with shift models and, especially in Germany, very good opportunities to make adjustments due to collective bargaining agreements and temporary staff.
Are you ruling out layoffs?
We are pursuing a long-term policy related to our facilities and so far have not attracted attention by wielding a crowbar. We naturally must keep a close watch on the competitiveness of our facilities on an ongoing basis.
If we start to make adjustments proactively and they run over a long period, it is possible to shape them in a socially responsible way.
A number of electric vehicles will launch in Europe this year. Are we on the verge of a breakthrough that will lead to high-volume business?
I don't see a mass market. Today, lithium ion batteries cost about 8,000 to 10,000 euros [$10,800 to $13,500]. That still makes electric vehicles too expensive. Moreover, for a substantial sum of money, you still only get a car with a short range and other limitations.
How will the market develop?
We currently put the global market for electric vehicles at about 2 to 3 percent of total car volume. That will change slowly in the coming years. Only the well-to-do and absolute enthusiasts will get an EV.
We foresee a high-volume market starting in 2020. Then we expect 12 million electrified vehicles. About 3 million of them will likely be purely electric cars and another 3 million plug-in hybrids. In addition, there will be about 6 million hybrid vehicles. Overall, that means a global market share of 10 to 12 percent.
Can Bosch play a significant role here considering it ended its battery partnership with Samsung SDI?
We are currently very happy that we have no large volume production of lithium ion cells. In the cell market for automotive applications, capacity is currently more than double the demand, which is leading to extreme price pressures. But one thing is also clear: In the midterm, we again want to cover the entire value chain for batteries and achieve decent market share.
You can reach Matthias Krust at email@example.com.