Honeywell Transportation Systems, the leading turbocharger supplier with an estimated 34 percent share of the global market, foresees big gains for the performance-boosting, carbon-emissions-reducing technology, especially in the U.S. and China. Terrence Hahn, 48, CEO of the Switzerland-based business unit of Honeywell International Inc., shared his views on the sector with Automotive News Europe Managing Editor Douglas A. Bolduc.
Q: What is Honeywell's 2015 vehicle production outlook for Europe, the U.S. and China?
A: In Europe, the overall market growth has been muted, but there have been some positive signs from some of the countries that have led to modest growth. We expect that to continue in 2015. In the U.S. and China, there will be significant growth.
What about the forecast for sales of vehicles with turbo-chargers?
This year, there will modest growth in Europe and big increases in the U.S. and China. Our forecast is for double-digit growth in the U.S. and China.
And beyond that?
By 2019, we foresee 49 million turbocharged new vehicles sold globally each year, representing 43 percent of the market [up from 31 percent in 2013]. In North America, sales of turbocharged vehicles are expected to reach 38 percent of the market in 2019, up from 21 percent in 2014. In China, the market is forecast to grow to 41 percent in 2019 from 23 percent last year.
And we don't see it stopping after that because emissions standards will keep getting tougher. The growth will be across many different segments and include both diesel and gasoline turbos.
In 2019, 69 percent of the vehicles will be turbocharged, up from 67 percent last year.
These are all overall figures. How is Honeywell going to maintain its large chunk of this growing market?
We believe we bring so much to the marketplace via three key areas: our technology, our global footprint and the Honeywell Operating System.
From a technology standpoint, Honeywell invented turbochargers. We've been an innovator in this industry since its inception, and we've continued to move it forward because we have access to a much broader r&d pipeline than anyone in the auto industry.
Footprint is another key. We have design capability, engineering resources and manufacturing in the seven main areas where our customers' powertrain infrastructure is: Europe, North America, China, Korea, Japan, India and Brazil.
And, third, all our plants operate under the Honeywell Operating System. This ensures that wherever our customers want to place their volumes, they get the same capability.
How do these help close deals?
We've seen that each of these is unique to Honeywell. The proof points are our above-industry customer-win rate, our above-industry growth rate and how we are expanding the business. We can only do that if we bring value to the customer.
Can anyone match Honeywell's global footprint?
We haven't seen anyone with the capability in each geography that is better than Honeywell's. The key is being local. We have 13 manufacturing sites and seven facilities that handle things such as engineering, r&d, applications and prototypes.
Does Honeywell need to grow or contract its European footprint?
We are pleased with our European footprint.
Are you already meeting with automakers regarding European Union CO2 targets that will come after the 95 grams per kilometer in 2020?
Yes, we are working with automakers on developing technology and demonstrators that help them meet those longer-term goals. We are optimistic from a technology standpoint about being able to find breakthroughs.
Will the future breakthroughs come less often from mechanical upgrades and more from electrical and software solutions?
That combination of mechanical, electrical and thermal energy management will need to be enhanced and integrated. We have expertise inside Honeywell in all these areas, and we are actively working with automakers on this. Our aerospace business handles mechanical, electric and overall systems integration. We are also a leader in auxiliary power units in commercial aircraft. When it comes to software and controls, Honeywell is involved in aircraft cockpits.
Which customers are asking for this?
I am not saying that any of our customers are heading in these directions yet, but they appreciate it's not just a turbo provider coming into these conversations -- it is an integrated technology provider. We see the need for all of these energy systems to be integrated. We see Honeywell being a part of that.
How well-known is this expertise?
It's becoming increasingly more recognized.
Is the megasupplier trend good for Honeywell?
Our goal is to be an enabler of their global platform strategy.
How does Honeywell protect against recalls?
We benefit because with powertrains, there is a high degree of integrated activity. We're usually closely involved with the customer 18 months to two years ahead of launch. The testing and proving of the product is rigorous.
Is Honeywell profitable in Europe?
We don't provide regional figures.
What is the base cost of a turbocharger?
It is roughly in the hundreds rather than the thousands of dollars.
We're seeing dual and tri-turbos. Is that an advantage?
It depends on the performance requirement the automaker has set for the powertrain. We have an entire portfolio, so we don't advocate one technology versus another. We start by asking how we can help customers reach their desired level of performance and efficiency.