Auto Industry Facing 3 Big Changes
By Kim Yoo-chul
Staff Reporter
YONGIN, Gyeonggi Province ― A senior executive of German-based engineering giant Robert Bosch GmbH said the global automotive industry will see "three big changes" ― a new age of electric vehicles, a manufacturing transition to Asia and market realignment to compact cars from bigger models.
Krister Mellve, CEO and president of Bosch Korea Ltd., also said leading auto parts makers will be more aggressive in acquisitions at a time when carmakers are moving toward more eco-friendly electric vehicles.
"The new trend will hurt smaller companies. I can say the global car industry has been undergoing the three changes. Also, new businesses are growing in the auto parts industries," the executive said in an interview with The Korea Times at the company's main sales office in Yongin, on the outskirts of Seoul, Monday.
"The awareness of auto parts safety will further be boosted. Credit for car components will come based on the whole system not just a single part, pushing parts makers for more acquisition chances."
Mellve's remarks came a week after the world's biggest auto parts maker has been known as a revenue target for its car unit of $62 billion by 2019 driven by growth from China, India, Russia and Brazil as well as emerging Asian markets.
"Among electric vehicle-related technologies, batteries are the top consideration," said the CEO.
Last year, rechargeable battery maker Samsung SDI teamed up with Bosch to operate a joint venture ― SB LiMotive.
SB LiMotive will supply lithium-ion battery cells for BMW's Megacity project. The venture also plans to build a plant for car batteries in South Korea for production in 2011.
"On Bosch predictions, the portion of electric vehicles out of the total will reach 10 percent by 2020. The partnership with Samsung will help us expand our positions in auto parts-related sectors," Mellve said.
But he said internal combustion engines will still take up most of the market despite the intensifying attacks by lithium-ion batteries. Thanks to technology developments for combustion processes, over 90 percent of cars will still use that engines by 2020.
"Producing more eco-friendly energy packs would be the top task amid the industry's paradigm shift. But making cars that reduce greenhouse gases is another way toward that path."
Eyeing More Partners
The executive said the giant's South Korean unit has revised up this year's sales targets as signs of a global economic recovery are lifting the demand for combustion engines and auto parts systems, pressure sensors, electro-mechanics as well as other consumer electronics.
When asked about financial figures, he refused to give any of such details.
"We've started better than planned. We are still waiting for the 2009 results. But Bosch has set an upbeat sales target for 2010," Mellve said.
Referring to the flurry of orders from the BMW project, the executive has opened the possibility of expanding its client bases.
The executive said he will strengthen research and development here at two of its manufacturing facilities.
As a corporate citizen, Bosch is moving to hire more employees and show more attention to corporate social responsibility activities, Mellve said.
Bosch Korea reaped 1.8 trillion won in net sales in 2008 and the 2009 sales results should not be much different.
"This improved capacity encompasses our bundled strengths in sales, applications and services, and at the same time provides room for further growth," he said.
Since 2000, the Bosch Group has invested more than 370 billion won in South Korea. Besides the Yongin headquarters, it has provided ultramodern manufacturing capacity and technical equipment.
Bosch Korea has eight facilities here including five major manufacturing locations ― Daejeon, Gunpo, Anseong, Buyong and Busan.