The market for convertible roofs has declined nearly by half in recent years. But Holger Engelmann, CEO of Webasto AG, stands by the convertible and sees bright spots for the roof systems business long term.
He was interviewed by Klaus-Dieter Floerecke of Automobilwoche, a German-language sister publication to Automotive News.
Q: Has the convertible market been a disappointment to you?
A: Yes, compared with the condition that the market was in a few years ago. Currently the global market for convertible roofs has leveled off between 500 and 600 million euros ($672 million to $806 million). Five years ago, we were at about 1 billion euros ($1.34 billion) and were hoping that the market might trend toward 1.2 billion euros ($1.61 billion). Depending on the launch and phaseout of car models, we are now expecting a level of up to 700 million euros ($940 million) in the medium term.
With Magna CTS, Valmet and Webasto, there are only three relatively large competitors remaining. Do you expect further consolidation?
Ultimately, I think that the market is no longer providing enough volume for three companies. A convertible roof is a very complex component, and a supplier needs a great deal of development competency to handle its integration into the vehicle. So a company needs an appropriate revenue volume to handle the financing for new development projects.
China continues to be a booming market for vehicle manufacturers. Why is business so difficult there in the convertible market in particular?
For one thing, the country has a relatively high level of environmental contamination, and for another, it has some very hot regions. This hurts the convertible business. In addition, there is a cultural issue. In this country, we show that we are enjoying life if we are tanned. There, a fair complexion is preferred.
That doesn't sound exactly optimistic.
But there is hope. In metropolises such as Shanghai and Beijing, I have had the experience of seeing four or five convertibles pass by over a short period of time. That's why I can imagine that the Chinese market is still developing because the convertible is becoming a status symbol. Or that there will be a positive trend when China gets its environmental issues under control. But that won't happen in the next three to five years. Instead, I expect to see this kind of trend over the long term.
How are you dealing with the decline in volumes?
We are pursuing a two-track strategy. For one thing, we have invested in a new research and development center at our facility in Hengersberg. In this way, we are showing that we are staying with the convertible despite the limited market. For another, we have closed facilities in recent years, but, at the same time, we have kept up our investments in research and development. With optimized production, we are managing to stay above breakeven, even in this hotly contested market.
In past years, the SUV segment has been among the winners. Do you have a roof solution ready for these vehicles?
Yes, this is not merely absolutely conceivable but will be realized in the foreseeable future.