UPDATED: 3/17/14 2:01 pm
Editor's note: An earlier version of this story incorrectly referred to Honeywell's two plants in China. The plants are already built.
The push to improve fuel economy has shaken up the auto industry's once-cozy world of turbocharger suppliers.
Traditional suppliers include Honeywell, which says it is the world's leading turbo producer, and BorgWarner Inc., a major supplier in North America, Europe and Asia. But Continental AG and Robert Bosch GmbH have developed turbochargers, and they are getting contracts.
By 2018, 30 percent of light vehicles produced in North America will be turbocharged, up from 16 percent last year, according to LMC Automotive, a suburban Detroit research firm.
Automakers are downsizing their engines -- then turbocharging them -- to improve fuel economy and meet federal corporate average fuel economy standards that rise to 54.5 mpg by the 2025 model year, said LMC analyst Kevin Riddell.
"It's a relatively inexpensive way to get better [fuel economy] numbers," Riddell said. Turbocharged engines are cheaper than hybrid powertrains, he said.
- 2013 ................... 16%
- 2018 estimate ...........30%
Source: LMC Automotive
Continental makes the turbocharger for a 1.0-liter engine for the 2015 Ford Focus, scheduled to go on sale this fall in the United States. Previously, Honeywell and BorgWarner divvied up Ford's turbocharger orders.
And this fall, Mitsubishi Heavy Industries plans to enter the United States, beginning turbocharger production in Franklin, Ind.
In 2012, the Japanese supplier said it would target annual global sales of 10 million turbochargers and a 30 percent market share over the next three years.
Those are lofty targets, given that Honeywell produces about half of the world's turbos, according to analysts' estimates.
As the market grows, suppliers are preparing for a free-for-all. Honeywell and BorgWarner "are the big dogs, but we're just starting to see this turbo market getting bigger," Riddell said.
Turbochargers paired with downsized engines can improve fuel economy roughly 20 percent without a loss of performance, Honeywell said. Conventional gasoline- and diesel-powered vehicles account for the lion's share of turbochargers.
But as fuel economy standards rise, automakers may add turbochargers to hybrid and even fuel cell vehicles, predicts Steve McKinley, Honeywell's vice president of engineering for the Americas.
"It's all about fuel economy," McKinley said. "As automakers move to 54.5 mpg, all the technologies that save fuel are being put into play."
Growth in U.S. and China
Honeywell expects turbochargers will account for 38 percent of global vehicle sales by 2018, up from 31 percent in 2013.
Europe, where virtually all diesel engines are turbocharged, remains the biggest market. But China is moving up fast. Honeywell expects the market penetration for turbos in China to rise to 33 percent by 2018, up from 22 percent last year.
Honeywell has two turbocharger plants in China.
The big growth markets "are definitely China and the United States," McKinley said. "Those are the two big markets for us."
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