Karl-Thomas Neumann sees potential hybrid business in North America and Europe.
What is growing fastest in the comfort and convenience business?
We do ECUs - electronic control units - for body electronics. We do window lift electronics. We do central body computers.
In the past you had one ECU for one function, which was very expensive. Now OEMs are taking a systems approach. They ask if we can combine functionality in fewer ECUs. We supply those ECUs. We also supply smart motors and gateways, which are the hearts where all the CAN (controller area network) buses come together and exchange information.
We are working with some of the leading OEMs on the next-generation body electronics architecture. I see a good business for us there.
But aren't some carmakers using fewer electronic control units in cars?
We are growing at just the right time. If we position ourselves as being a good partner for the next generation, we will win business from other people currently there.
Will r&d move to low-cost countries?
The majority of our r&d is very close to the customers in our big r&d hubs. We have a new electronics factory in Romania where we have put software engineering and testing. We have 120 engineers there, and we are going to grow this further. But don't expect to see a thousand engineers there next year. We need to educate people; we need to work with universities. It needs to grow. It is a trend.
What opportunities do hybrids give?
We are in two GM trucks, the Silverado and Sierra. That is a mild hybrid. We really see future business potential there - full hybrids in North America, mild hybrids for Europe.
We think that with our electric motors, power electronics and control electronics we are well-positioned.
How will hybrids develop in Europe?
Europe is not clear. From a strict engineering perspective, if you set down the costs against the benefits, you will find the mild hybrid offers the biggest payoff. That is why we went for the mild hybrid in the past.
But the mild hybrids are getting very powerful, very close to what you normally define as a full hybrid.
We have also been doing prototypes of components for a full hybrid car. Full hybrids cost the customer more but also offer more benefits than simply just the economics. They give you even more of a green image. They give you the experience of electric driving And they are able to add a lot of torque.
They could become mainstream in North America, so that is where the majority of the volume will be in the next few years.
The r&d share of sales is high for suppliers with a high electronic content. Is there a way you can reorganize to get better synergies across vehicle makers or across products?
We reuse our software/hardware platforms. For example, if you look at our electronic brake system, there are basically only three or four platforms.
We have the software catalog and then we have the application, which is customer-specific. By working with our customers, further progress can be made so that the application part gets even smaller and we can reuse more.
What are you doing with software?
We have a catalog of software functions. Some of our customers think that software is of value and has a growing worth, and that you need to pay for it. We even have been able to sell our software into some competitors' systems. So we think software as a product has a future. On the other hand, compared with some businesses we are in, it is very small. It is in the two-digit-million area.
A few years ago there was talk about co-developing tires and brake systems. Is this still likely?
There is a benefit. One example is the tire monitoring software that runs in the electronic brake system. Based on wheel speeds, it determines the state of the tire.
We are at a stage where we can detect a rapid drop in pressure. That would meet the pending legislation for the North American market.
Only a tire maker and an electronics company working very closely together can get there, because you need to understand the tire and you need to understand the electronics and software. In cooperation with our tire friends, we also have other tire pressure monitoring systems and we have started to put our sensors into the tires. So there is cooperation, but it's not the next new big business.
What other challenges will you face this year?
You have to move really fast to make the necessary changes in the organization and your technology to make sure that you can withstand the price pressure in this market. It's not easy. Another challenge is quality. We are working extremely hard, not only in our own organization but also with our suppliers, to make sure we get the quality that we need.