Auto parts supplier sales and R&D investment rebound

In March 2010, Bosch invested 600 million euros to expand a factory in Reutlingen that produces integrated circuits and related components. This is the largest single investment in Bosch's history.

This investment, together with other Bosch investments in electronics research and development, is paying off. In 2010, Bosch's global auto parts sales revenue increased by 35%, ranking first in the Automotive News global auto parts supplier top 100 list.

Last year, these 100 leading global parts and components companies recovered from the economic crisis - of which 96 completed higher sales than in 2009, and 85 had even reached double-digit growth. R & D investment is difficult to measure because of the difference in statistical methods, but from the examples of several giants can see that R & D investment is also rebounding.

The increasing sophistication of automotive parts provides parts companies with the opportunity to gain market returns through innovation.

For example, Eaton, Eaton mainly produces engine valves, superchargers and other powertrain components. Eaton Chairman Alexander Cutler set goals and required each department to grow at an annual rate 50% faster than the market. Ken Davis, president of Eaton Motor Group, said that this means that Eaton is targeting R&D budgets for high-growth technologies. "We are investigating how to invest funds to grow the market."

The increasingly demanding requirements of smart components for fuel economy have spurred a great demand for intelligent components. For example, 8-speed or even 9-speed automatic transmissions, start-stop equipment and batteries for electric vehicles and hybrid vehicles. The requirements of vehicle manufacturers for security systems and infotainment systems are also increasing.

All parts suppliers are not short of orders, but world-class companies like Bosch are leading the R&D competition. They have top-level R&D teams and have deep relationships with vehicle manufacturers.

Bernd Bohr, Chairman of Bosch Automotive Group, is confident of plug-in hybrid and electric vehicles, thanks to Bosch's expertise in automotive electronics and powertrains. He said: "Before 2013, we will start nearly 20 series of electronic transportation products with 12 vehicle manufacturers."

Ranked 11th in the list, TRW Automotive Group revealed that it will hire engineering and technical personnel in the field of high-growth products. Electric power steering is one of them. It is combined with radar, cameras and other auxiliary equipment. The electric steering system can help drive Avoid traffic accidents. The company invested 669 million U.S. dollars in research and development last year, an increase of 2 percentage points over 2009.

In 2009, Lancia’s Delta model used TRW's system in Europe to monitor lane lines through cameras. If the vehicle leaves the lane, the system will send instructions to the automatic steering system and the vehicle will return to the lane. TRW is looking for more customers for this system.

IHS iSuppli Research, a company that tracks suppliers and parts trends over the long-term, predicts that in 2015, the average value of electronic products per car in the United States will reach $1,645. In 2010, this figure was $1,560. This also reflects the vehicle manufacturers have to pay more and more money to buy parts and components.

The rise of the infotainment system HIS also pointed out that by 2015, the United States will be able to increase the number of cars connected to the Internet from the current 1.5 million to 29.5 million. Most of the software needs to be sent via the mobile phone to operate the software. The software will be displayed on the LCD screen of the center console when the software is running.

Ranked 60th on the list, Harman is a manufacturer of other audio equipment such as Harman Kardon speakers, which supplies a series of components for car entertainment information systems: internet and mobile phone connections, 3D navigation, music players and more. Harman said it will continue to invest 10% of its sales in R&D, compared with 5% for most parts manufacturers.

Customers of the infotainment system include Audi, BMW, Rolls-Royce, Chrysler, Citroen, Dodge, Ferrari, Hyundai, Jeep, Mercedes-Benz, Peugeot and Porsche.

Bosch's chip factory fully demonstrates the huge investment needed to produce advanced components. Workers with neat uniforms operate millions of dollars worth of equipment to process semiconductor silicon into computer chips. The location of the processing plant avoids the slight vibration that the traffic may bring, and engineers and technicians operate various instruments to test the performance of the chip. The new plant can make about 300 silicon materials into chips one day. Each piece of silicon can make about 2,500 chips. Bosch hopes to process 800 pieces of silicon one day in 2016. The manufacturing cost for each chip is a minimum of 50 cents, and for smart airbag chips it is 4 dollars. Tim Frasier, Bosch North American automotive vice president, believes that demand for computer chips in cars will continue to grow at a healthy rate. The high-end luxury models represented by the Mercedes-Benz S-Class have approximately 700 chips on components such as brake systems, airbags, engine control systems, and start-stop systems.

Bosch plans to invest 11% of its sales revenue in the automotive sector into R&D this year. Bosch plans to invest US$4.58 billion in automotive-related research and development, and this year's sales target is set at US$43.91 billion. Last year, the two figures were US$4.39 billion and US$41.13 billion, respectively.