Gasoline at $4 a gallon and government-mandated fuel economy targets are creating vast opportunities for many big global suppliers.
In North America, those suppliers are selling turbochargers, direct injection, stop-start equipment, eight-speed transmissions and many other systems that save fuel.
"If you bring a real idea to an OEM to improve fuel economy or lower emissions, they will seriously listen," says Tim Manganello, CEO of BorgWarner Inc., a top maker of turbochargers.
The trend is particularly beneficial for large global suppliers with major operations in Europe, such as Robert Bosch GmbH and ZF Friedrichshafen AG. In Europe, home of $8 a gallon gasoline, those companies have been developing fuel-saving technology for decades.
While top European suppliers are thriving in North America, nearly all top suppliers enjoyed a good year in 2011. Most posted solid increases in revenue last year as vehicle sales continued to bounce back from the recession, according to the annual Automotive News ranking of top suppliers of original-equipment parts to automakers in North America.
Demand for fuel-efficient parts is a boon to ZF, a German supplier that produces transmissions and other parts.
The company's North American arm, ZF Group NAO, posted sales of original-equipment parts last year in North America of $2.68 billion, up 47 percent from 2010. The company is No. 17 on the list of suppliers to the North American auto industry.
ZF is supplying fuel-saving eight-speed transmissions to Chrysler Group from plants in Kokomo, Ind., and Germany. The transmissions are available in the Chrysler 300 and Dodge Charger. In the fall, they will be installed in the re-engineered Ram 1500 pickup.
The eight-speed transmission boosts fuel economy at least 6 percent vs. ZF's six-speed automatic, ZF says.
Meanwhile, ZF is spending 300 million euros, or about $386 million at current exchange rates, to build a transmission plant in Greenville, S.C. The factory will produce eight-speed transmissions along with nine-speed automatic transmissions for front-wheel-drive vehicles typically powered by a V-6. Deliveries start in 2013 from the plant.
The plant's production capacity is spoken for, the company says, and expansion plans are under way. The company expects the nine-speed will boost fuel economy by at least 10 percent vs. a six-speed fwd transmission, ZF says.
ZF says demand for its electric power steering also is strong. Electric power steering eliminates the hydraulic power-steering pump, which reduces weight and drag on the engine.
ZF's electric power steering plant in Florence, Ky., supplies General Motors vehicles such as the GMC Terrain and Chevrolet Equinox, Cruze, Volt and Malibu. ZF says it is expanding the plant to meet growing demand.