DETROIT -- European suppliers have bold plans for North America.
Another wave of European suppliers is trying to follow in the footsteps of well-established European suppliers in North America, such as Robert Bosch and Siemens VDO Automotive.
Faurecia and TI Automotive Ltd. are making noticeable headway at increasing sales. Faurecia jumped to $1.32 billion (E1.07 billion) in North American sales last year from $180 million in 1998. TI Automotive posted $994 million in North American sales last year, up from $650 million in 1998.
Meanwhile, companies such as Hella KG Hueck & Co. and Behr & Co. KG are ramping up, trying to break $300 million in annual sales here. From 1999 to 2003, European suppliers' sales in North America jumped 29 percent.
By comparison, the combined sales of North American and Asian suppliers in North America fell 3 percent, according to Roland Berger Strategy Consul-tants in Troy, Michigan.
European suppliers held $36.2 billion of the $238.9 billion North American supplier market last year, Roland Berger says. That's up from $28 billion of $237.6 billion in 1999.
European suppliers have several advantages over North American suppliers in this market, analysts say.
Growing with Big 3
European suppliers came to North America to serve BMW and Mercedes-Benz after they openend assembly plants in the US. But the newcomers soon began approaching the Big 3 in hopes of growing.
"The market share of the Big 3 is declining, but it's still huge," said Mike Steventon, head of KPMG LLP's UK automotive section.
|European suppliers that are making a push in North America|
|2003 N.A. sales||N.A. sales goal|
|SKF||$400 million||$650 million in 2008|
|Webasto||$369 million||$500+ million in 2006|
|Kolbenschmidt Pierburg||$320 million||$500 million in 2008|
|Mann+Hummel||$110 million||$240 million by 2010|
|Grammer||$100 million*||$200 million as early as 2007|
But European suppliers have struggled with the Big 3's price-driven procurement style, said Wim van Acker, a partner in Roland Berger's global automotive practice.
"Especially when you're mid-sized, not mega like Bosch, you have to start from the bottom," he said. "Initial discussions are not about superior technology. They're about price."
Still, European suppliers are faring well on pricing. Their advanced technology is a big plus.
Automakers are interested in advanced technology to distinguish themselves in the marketplace, said Mahesh Lunaniall, another partner in Roland Berger's global automotive practice.
European regulations and high gasoline prices forced many of the European suppliers' technological advances. Analysts consider European suppliers ahead of North American suppliers in several products because of their advanced technology. Those include powertrains, fuel systems, fuel controller technology, emission controls, safety systems, heating and cooling systems, electronic brake controls and weight reduction methods.
One analyst pointed to Behr's heating, ventilation and cooling expertise. Other examples: Webasto's sunroof business and Brose Fahrzeugteile & Co.'s window regulator systems.
KPMG's Steventon said it's clear that North American suppliers' margins are shrinking.
"And when there's low profitability, it's difficult to put the funds aside for the next round of development costs," he said of North American r&d budgets.
Regardless of the Europeans' recent and planned success, van Acker said, "US automakers will not have their US suppliers slaughtered in their home market."
North American suppliers should consider niches that European suppliers don't yet fill, the analysts said. That includes hybrid powertrains and fuel cell technology.