Bosch Targets Growth in Down Market
Preliminary results show Bosch’s earnings before interest and taxes plunged 44% last year to €3 billion ($3.3 billion), despite flat sales of about €77.9 billion ($85.8 billion).
The supplier giant blames the decline on falling global automotive production (particularly in China and India), less demand for diesel engines, high restructuring costs and increasing investments in new technologies.
And CEO Volkmar Denner doesn’t expect conditions to improve anytime soon. But he says there will be opportunities for growth.
Bosch forecasts a 2.6% dip in global production this year to 89 million vehicles. This would mark the third straight annual decline and drop output of nearly 10 million units from 2017 levels.
Reiterating earlier predictions, Denner says the lower volume likely will hold steady for the next several years. He doesn’t anticipate an upturn until 2025.
As a result, Denner says the supplier will adapt its cost structures and workforce to the “dramatic changes and overcapacity in the industry.” The company already trimmed nearly 2% of its headcount last year, with most of the cuts coming in Asia and Germany.
Silver Linings Playbook
Bosch’s Mobility Solutions unit outperformed the overall auto market with sales holding at €47 billion ($51.8 billion) in 2019.
The company’s size, product breadth, recent investments and focus on emerging technologies also position it for success as the industry transitions to autonomous, connected, electrified (including fuel cells) and shared vehicles, Denner notes. He expects such a “fundamental upheaval” to provide “great opportunities.”
The strategy includes investing €600 million in automated driving technologies this year. Another €500 million and €100 million are earmarked for electrification and connectivity, respectively.
To know that 3,000 cars have been delivered since October 2015 would undoubtedly result in a shrug: in 2017 Toyota delivered 387,081 Camrys, so that 3,000 is less than one percent, and this is in one year, not just over two.
Often when there are vehicles that have ceased production and are in the process of being completely moved out of the system there are sales numbers that look like this: Honda Insight: June 2016, 9; June 2015, 126; % change: 93.1% Sometimes there is a vehicle that has just gone into production and it catches the sales at just the right time so that there are numbers that look like this: Honda Ridgeline: June 2016, 2,472; June 2015, 7; % change: 33,856% OK.
It’s the fifth generation of a vehicle that has been increasing in sales year after year since its introduction in 1997.