FRANKFURT - Is family-owned German supplier Hella KG too small to flourish in a consolidating auto industry?
'It is a question we ask our customers all the time,' says Hella Chairman Juergen Behrends. 'But the answer we get is to the contrary.'
As a supplier of automotive lighting, Hella, of Lippstadt, Germany, has only half the market share of Valeo, the European segment leader. Moreover, the market is consolidating.
Earlier this year, competitive pressures led Robert Bosch GmbH and Magneti Marelli to combine their lighting operations. But Hella's Behrends says he is not rattled by the industry consolidation.
Automakers 'need middle-sized companies like Hella as an alternative to the big conglomerates and megasuppliers,' he says. 'In lighting, Hella has the critical mass to excel.'
Hella is a technology leader, he adds.
'The car manufacturers need innovation. Their platform strategies cry out for differentiation, and lighting is a real differentiating feature for design, styling and function.'
During the Frankfurt auto show last month, Hella announced that sales for fiscal 1999 rose 14 percent to $2.3 billion. Hella expects sales to rise to $2.7 billion in three years, driven by the increasing value of electronic control systems and a growing share in lighting systems.
Even when pursuing contracts for entire modules, Behrends says he believes Hella has no need to make large acquisitions or sell out.
Hella currently designs front-end modules in a joint venture with radiator specialist Behr GmbH of Stuttgart, Germany. The joint venture supplies modules for the Skoda Fabia.
Behrends is optimistic about the effect of the DaimlerChrysler merger on Hella's business in the long run.
'We have always had an excellent relationship with Daimler,' he says, 'and we have a good relationship with Chrysler in the United States. They want at least two strategic partners (in lighting), and Hella should be one of them.'
Behrends believes Renault's link with Nissan could have a similar long-term result.
'They do not want to work with only one supplier like Valeo,' he says. 'They want a strong second supplier.'