Cliff cliffs press people to climb, the dark valley collapse under the collapse of a thunderous sound.
Delphi, once one of the four big mountains of the automobile industry Tier 1, reached its development peak in 2004, forcing Bosch to dominate the automobile parts industry with an annual income of $28.7 billion, and then it was impossible to make further progress. Delphi technology, which was split up and held the traditional business, is now sold to Borg Warner for $3.3 billion. It is somewhat embarrassing that ABCD in the automotive industry has lost its D.
Kong Shangren’s famous sentence in Qing Dynasty is in season again. Seeing him build a tall building, seeing him entertain guests, and seeing his building collapse.
Behind the incident, on the one hand, Borgwarner’s ambition to turn from internal combustion engine to electrification, on the other hand, the traditional automobile industry is gradually depressed, and it is urgent to reshuffle and reshape the pattern.
Under the change, Borgwarner is determined to move towards electrification.
As the initiator of the acquisition, Borg Warner has taken an extremely important step in enterprise reform.
In 2008, Ma Bende, then the global president of Borg Warner, said this:
"For us, the challenge is to come up with a new generation of products before our competitors catch up with our old products."
At that time, he mentioned the idea of integrating the hybrid motor into the transmission. Since then, we have been seeing that Borgwarner has made positive progress in the direction of vehicle electrification.
In 2009, Borgwarner announced that the company and UQM jointly developed the powertrain system of electric vehicles. The detail of the project is to integrate UQM’s PowerPhase(R) electric propulsion system into Borgwarner’s 31-03 Geerdrive (TM) electronic drive transmission bridge.
In 2010, the project was successfully launched. Ford’s first mass-produced pure electric vehicle, the 2011 Transit Connect Electric Vehicle, was equipped with a 31-03 eGearDrive(TM) electronically driven transmission bridge.
In July 2010, Borgwarner announced that it had acquired Eichenauer Heizelemente GmbH & Co, a former joint venture partner. The shares held by KG completed the acquisition of BERU-Eichenauer g Company. Thomas, then President and General Manager of Beru Systems Division of Borg Warner. Dr. Vodesil said: "The development trend of miniaturization and electronization of internal combustion engines will continue to push the market demand for electric cockpit heaters to increase."
In 2011, in the new energy vehicle hall of China National Industry Expo, Borgwarner showed a variety of solutions for new energy vehicles, including electronic drive axle, electronic water pump (ATCP) and High-Voltage PTC AIR Heater for electric vehicles.
In 2015, Borg Warner acquired Remy International for 951 million US dollars. Remy’s products mainly include alternators, starters, power transmission, etc., which helps enrich Borgwarner’s electrification product line and product technology.
In 2016, Borg Warner went further on the basis of eGearDrive, creating an integrated solution of eGearDrive(R) variable speed system and motor, which can be applied to different types of motors with different energy efficiency ratios. This year, James Verrier, then CEO of Gewarner, pointed out that in addition to continuing to exert efforts in the turbocharged business, the company also developed and designed power systems and gearbox parts for hybrid vehicles and electric vehicles. And the latter will become a new profit growth point for the company.
In July 2017, Borg Warner acquired Sevcon for about 200 million US dollars. This transaction brings more electric vehicle technology to Borgwarner’s automotive drive engineering and product portfolio, helping the company to better enter the electric drive market in the United States and Europe.
Also in 2017, Christopher P, Chief Technology Officer of Borg Warner. Thomas said that the company is developing new electric turbine equipment by itself and jointly with customers, including ORC (Organic Rankine Cycle) expander supporting power output, turbine generator and extended gasoline turbine for electric commercial vehicles.
Also in 2017, Borgwarner introduced high-end solutions designed for 48-volt hybrid and pure electric applications.
In 2018, at the Beijing Auto Show, the new crossover pure electric SUV Euler iQ of Great Wall equipped with Borgwarner TZ242XS002 permanent magnet synchronous motor was unveiled. In the same year, Borg Warner said that its products are suitable for all mainstream hybrid powertrain designs, including P0, P1, P2, P3, P4 and PS(Power-split). These advanced, high-performance solutions can be integrated into existing architectures or new technology platforms.
At the beginning of 2019, Borg Warner made positive progress in the "iDM" integrated driver module, which is expected to be mass-produced. This solution can be used for pure electric vehicles and P4 hybrid vehicles.
At the Shanghai Auto Show in 2019, Borg Warner launched a number of new energy vehicle solutions that attracted the attention of the industry, including eAxle iDM integrated drive module, vehicle-mounted charging piles and coaxial and offset P2 systems.
Delphi acquired by Borg Warner this time, although its parent company’s superior business has been operated under the name of Aptiv after the business split in December 2017, Delphi Technology after the split (that is, Delphi now acquired) still has traditional business support, namely powertrain and new energy business. Moreover, even after the split, Delphi’s net sales in fiscal year 2019 reached $4.36 billion.
"In the past few years, Borg Warner has been transforming into more advanced drive systems and electrification. However, we need stronger electrification capability and scale, which is why Borg Warner chose to acquire Delphi Technology. After all, technology is an important driving engine for transformation. "
Frederic Lissalde, the current global president and CEO of Borgwarner, said that the acquisition of Delphi was of great strategic value in the company’s transformation process, which showed Borgwarner’s determination to transform.
With the continuous development of new energy technology, the traditional internal combustion engine technology is slowly withdrawing from the historical stage, and the battery, motor and electronic control technology have become important driving points for the transformation of traditional parts giants. At present, Borg Warner’s three main businesses "CHE" are Combustion, Hybrid and Electric, but the company’s traditional business, internal combustion engine, still accounts for a high proportion of revenue. Under the background that many countries around the world have announced the time node of fuel vehicle ban, Borgwarner urgently needs to increase the proportion of hybrid and electrification business.
At the same time, this acquisition has extremely high financial significance. After the acquisition, Borg Warner’s consolidated revenue in 2019 reached $14.5 billion, which is expected to become the top 20 auto parts suppliers. At the same time, the company has a more reasonable global business distribution, with Europe, North America and Asia-Pacific accounting for 39%, 32% and 27% respectively.
Winter has arrived, and auto parts companies are holding a group to keep warm.
From the point of view of comprehensive industry analysts, Borgwarner’s acquisition of Delphi has another important significance, that is, holding a group to keep warm.
In the past 2019, we saw a lot of news about the automobile industry, but few were positive. Most of the industry news is: the automobile industry is cold and the material industry is under pressure; The automobile industry is depressed, and the machinery enterprises are under pressure … and the parts are directly linked to the automobile sales, so the pressure to bear can be imagined. Large-scale adjustment of enterprises has been shown since 2018. In 2018, in the financial reports of more than 100 auto parts companies counted by analysis institutions, more than 50% of the corporate profits fell sharply. In this environment, the merger, split and reorganization of parts enterprises have become the norm.
According to the statistics of overseas media, global automobile sales hit the biggest decline in 2019, and it was also the second consecutive year of continuous decline. The sales volume of 90.3 million vehicles was much lower than that of 94.4 million vehicles in 2018 and 95.2 million vehicles in 2017. As one of the two major automobile markets in the world, the recession in China and the United States, especially in China, is the main reason.
According to data released by Edmunds, an automotive research and forecasting company, the US light vehicle market showed a slight decline in 2019, with sales volume falling by 1.6% year-on-year to less than 17.1 million vehicles.
However, the sales volume of narrow passenger cars in China market dropped by 7.4% year-on-year, further increasing compared with the decline of 3% in 2018, and the sales volume was only 20.7 million.
What makes the industry feel a sense of urgency is that the Chinese auto industry, which has a large number of tilted policies, is also difficult to achieve good results in the case of subsidies retreating in the second half of 2019. According to the data released by China Association of Automobile Manufacturers, from January to December 2019, the production and sales of new energy vehicles were 1.242 million and 1.206 million, down 2.3% and 4.0% year-on-year.
In the cold winter, only the real giant enterprises have the ability and confidence to survive, while the remaining auto parts suppliers are struggling. In August, 2019, some media broke the news that a large automobile supplier in Zhejiang, China was facing bankruptcy due to the problem of enterprise capital turnover. Follow-up reports later pointed out that this enterprise is Guowei Technology. Due to the lack of payment from some car companies, the company applied for bankruptcy protection and sold its assets.
The market is depressed, and the inventory backlog of car companies is inevitable, which leads to the delay of many accounts receivable, and even the risk of bad debts, which is life-saving money for most enterprises. Relatively speaking, head enterprises have more buffer space.
At the same time, in the cold winter, head enterprises also have a broader adjustment space.
According to the 2019 financial report released by Bosch, the total sales of Bosch in 2019 was 77.9 billion euros, which was the same as the previous year. Digging deep into Bosch’s financial data, you will find that the company’s approach is nothing more than sacrificing profits to protect the market. In 2019, Bosch earnings before interest and tax was 3 billion euros, a decrease of 2.3 billion euros compared with 2018.
Referring to the situation of the continental group, it is similar. Dr Elmar Degenhart, Chairman and CEO of Continental Group, made a prediction when the company released its Q3 financial report in 2019. It is estimated that the company’s annual sales will be about 44 billion to 45 billion euros, slightly higher than the 44 billion euros in 2017. However, Continental’s profit margin is also declining. In 2017, the adjusted profit margin before interest and tax was 10.9%, while in 2019, the adjusted profit margin before interest and tax was about 7% to 7.5%.
The total market volume does not increase, but decreases. When the giants reduce their profits and keep their revenues, the living space of other enterprises is really limited.
From this point of view, Borgwarner’s acquisition of Delphi can also be regarded as holding a group to keep warm. The higher the ranking of nodes at this time, the safer it is. Industry analysts’ comments on this acquisition also illustrate this point:
"Due to the downturn in the global auto market in recent years, coupled with the rapid development of car companies and new energy vehicles, the business of transmission fuel vehicles of the two companies has declined rapidly. After cooperation, more hybrid and pure electric technologies will be provided for car companies."
At the same time, the way of holding a group to keep warm can also accumulate technical advantages and seize development opportunities in a limited market. In the cold auto market in 2019, some companies have achieved good results with excellent technology. In 2019, Toyota’s global cumulative sales volume was 10.7421 million vehicles, higher than the previous forecast of 10.72 million vehicles, up 1.4% year-on-year. It achieved sales exceeding 10 million for seven consecutive years, and also set a new annual sales record. Among them, the cumulative sales in China market reached 1.62 million vehicles, up 9.0% year-on-year.
In the cold wind, more people are shivering, but some people are running and sweating.
A rising star, China auto parts enterprises have begun to take shape.
In addition to industrial, technical and financial factors, the factors that make Borg Warner determined to acquire Delphi must also include occupying a high position in the new energy vehicle market in China earlier. Borg Warner attaches great importance to the China market. As early as 1993, Borg Warner entered the China market and established a number of joint ventures in line with the trend at that time. In the past ten years, Borg Warner has made frequent moves in the China market.
In April, 2010, Borgwarner China Technology Center opened. This technology center in Shanghai has a total investment of 36 million US dollars and covers an area of nearly 42,600 square meters. So far, Borg Warner has set up factories and offices in Beijing, Shanghai, Ningbo, Dalian, Taicang and Tianjin, and its China coordination center and R&D center are still located in Shanghai.
Since then, Borgwarner has continuously cooperated with China car companies to develop new technologies and continuously expanded its production capacity. In 2014, James Verrier, then CEO of Borg Warner, said in an interview: "In the next three years (2015 -2017), the operating income of new business of Borg Warner in Asia will account for 55% of the global revenue, while the China market alone will account for 38% of the global revenue. The China market is regarded by Borg Warner as the fastest growing market in the world and is expected to continue to accelerate. "
At present, Borg Warner is also quick to respond to the situation of vigorously promoting new energy vehicles in China. At the Frankfurt International Auto Show (IAA) in 2019, the staff of Borgwarner said during the interview that the electrification of the global automobile industry will be more firm, and China will also usher in the great development of the hybrid market.
However, with the continuous development of China’s auto industry and independent brands, China auto parts enterprises have also emerged. In the "Top 100 Global Auto Parts Suppliers in 2018" published by American Automotive News and PricewaterhouseCoopers in 2018, China has eight companies in the list, ranking fourth in the world. Among them, Weichaihe’s revenue has exceeded 100 billion yuan. In addition, with the help of new energy trends, johnson electric has also performed well.
What worries international companies even more is Huawei, which does not build cars. As the most powerful company in the ICT field in China, Huawei is aiming at smart cars and is determined to become a Tier1 supplier in this field. At present, Huawei has a number of competitive products in smart cars and car networking, including ——MDC600, Octopus, an autopilot cloud service, and OceanConnect car networking cloud platform, which can support L4-level autopilot capability.
With the constantly changing automobile power form and driving form, the rapid rise of auto parts enterprises in China has put pressure on established enterprises such as Borgwarner and Delphi.
tag
An industry, the boss eats meat, the second eats soup, the third and fourth pick up leftovers, and the fifth and sixth starve to death … Although it is not so tragic in the field of auto parts supply, it can still be peaceful when the market is good, and it must starve everywhere when the market is bad.
However, although the ship is big, it is bound to be difficult to turn around. The transformation from fuel vehicles to electric vehicles has just begun, and the pattern has not been determined. It is better than Bosch and dare not assert certain safety. In this competition, only innovators are always new, and innovators are always there.