DETROIT -- German supplier Preh GmbH has opened its first sales office in North America.
Preh Automotive, the group's largest division, is entering the market with four employees in an office in Auburn Hills, Michigan, near Detroit. The location includes a technology lab, which will be ready next spring, and a warehouse.
Preh Automotive, which makes electronic controls and sensors, is the latest European supplier to come to North America.
Preh wants Big 3 business. The company has some contracts with General Motors, but none with Ford Motor Co. or the Chrysler group.
BMW is Preh's largest automaker customer, representing 30 percent of revenue.
Preh had E223 million in global sales last year. It expects E241 million in global sales this year and E372 million by 2008.
Preh Automotive plans at least $12 million (E10 million) in sales as soon as next year. It wants North America to represent 10 percent of the company's global sales in 2008, or $45 million.
Seventy percent of Preh's group sales come from its automotive division. Nick Lontscharitsch, Preh Automotive's vice president of sales for North America, expects that percentage to increase.
Preh is entering a healthy segment for suppliers. Last year, suppliers with portfolios of electronics components grew significantly faster than their non-electronic peers. And the trend is expected to continue.
And European suppliers in general have an advantage over North American suppliers when it comes to several types of electronic controls, says Mahesh Lunani, a partner in the global automotive practice of Roland Berger Strategy Consultants LLC in Troy, Michigan.
European regulations and high gasoline prices forced many of the European suppliers' technological advances, he says.
One big challenge for Preh is pricing pressures it hasn't faced before. "In premium segments with BMW, Mercedes, it was good in the past because they didn't suffer as much as the lower-quality cars," Lontscharitsch says. "We are ready to also supply high volume with lower price."
To support its North American growth, Preh plans to begin manufacturing in the region in a year or so.
"We are looking for different possibilities," Lontscharitsch says, "like acquiring a company or setting up a new manufacturing location."