A new joint venture has redrawn the map in one of the industry's fastest-growing and most fiercely competitive sectors – front-end modules.
The partnership between Hella-Behr and Plastic Omnium, called HBPO, will be a powerful force in the industry.
Valeo, which also has a joint venture with Plastic Omnium, is Europe's market leader for front-end modules. Valeo delivered 1 million of them in 2003.
HBPO expects to deliver 2 million front ends a year to automakers within two years.
It will account for 1.25 million of the 3.5 million to 4 million outsourced front-end modules assembled worldwide.
Combined sales will total E350 million in 2004.
The partners will have a total of eight plants in countries such as Germany, Slovakia, Spain, Mexico, Korea and the Czech Republic.
German companies Hella, a lighting and electronics specialist, and Behr, a heat exchanger expert, formed Fahrzeugsysteme GmbH in 1999 to offer front-end modules to automakers. Plastic Omnium, which is based in France, specializes in exterior body part and modules.
The front-end module segment is on the verge of "huge growth," said Thomas Hedenborg, the former CEO of Hella-Behr Fahrzeugsysteme who is now chief of the new joint venture.
"We estimate that in five to seven years' time about 30 percent of new cars will be equipped with a front- end module." Hedenborg said that translates into about 15 million units.
One factor pushing OEMs toward purchasing front-end modules is the new EU pedestrian safety rules due to take effect in 2005 and 2010.
Hedenborg said the joint venture will help the partners meet the tougher guidelines.
The EU wants to reduce pedestrian fatalities, which account for about 30 percent of all vehicle-related deaths in Europe.
"We felt we could succeed in optimizing the interfaces between headlights, bumpers, beams, engine cooling and all the elements for pedestrian shock protection," said Marc Szulewicz, Plastic Omnium's automotive division president.
Together, the three partners will contribute between 60 percent and 85 percent of the content of a front end.
Plastic Omnium and Hella-Behr say they began looking for a partner or partners at the same time. They even bid together on two projects before deciding to go ahead with the joint venture.
Hella-Behr is looking for a stronger presence with French automakers such as PSA/Peugeot-Citroen and Renault while Plastic Omnium sees growth potential with German automakers.
Plastic Omnium also has a joint venture with Valeo.
"We understand this move," a Valeo source said. "If you want to do business with certain OEMs, you need this sort of arrangement."
The source declined to say whether Valeo would continue to work with Plastic Omnium.