Brose expected to defy China's slumping sales

In spite of China's sluggish auto market, German automotive supplier Brose expects its sales revenue in the country to almost double by 2025 by winning more local customers and offering new products, its senior executives said.

The family-owned company that specializes in vehicle doors and seats as well as electric motors and drives had a turnover of 1.2 billion euros in China in 2018. The figure is expected to fall to 1.1 billion euros this year but will reach around 2.1 billion euros in 2025, according to company CEO Kurt Sauernheimer.

He made the remarks on Friday in Shanghai, where its China operations are headquartered. Shanghai is also home to one of Brose's four innovation hubs, which mainly focuses on studies related to smart and connected vehicles.

"Some new mobility trends will come earlier here than in other markets," Sauernheimer said.

He added Brose is confident in the growth potential of the Chinese market, which has been the longtime engine of the global auto market, although the downturn starting from the second half of 2018 is expected to extend into 2020.

"But China is far from a saturated market," Sauernheimer said. Although China has been the world's largest car market since 2009, it has far fewer vehicles per 1,000 people compared with European countries and the United States.

Jenny Xiang, president of Brose China, said China is expected to have a 3 to 4 percent growth year-on-year in the long run, and the company is planning to scale up the percentage of Chinese brands in its revenue to over 20 percent by 2025.

It was 5 percent in 2017 and the figure will be around 12 percent this year. She said South Korean and Japanese carmakers are future targets as well.

Currently, its major customers are European and US carmakers.

Xiang said Brose is increasing its investment in China by expanding production capacities and introducing new products, including an electric air conditioning compressor, the demand of which is exploding globally. The compressor will be locally produced in China starting around 2022. "It involves a large amount of investment, from testing to production to personnel. We will continue our investment in the project," Xiang said.

Globally, the company will spend around 1.5 billion euros in three years on the development of new products, technical equipment and the global expansion of locations.

Around 20 percent of that budget is earmarked for China, which accounts for a similar percentage of the group's global sales revenues, Xiang said.

Sauernheimer said Brose is also increasing its focus on partnerships to bring together the expertise of companies and share the costs and risks of new developments.

The company is also responding to the great changes in the automotive industry with its "Future Brose" program, which will change the structure of the company by 2023.

This will also lead to changes in the number of staff throughout the company, with reductions in some areas and new jobs created in others.

"We want to streamline workflows, achieve fast results and sustainably reduce costs. At the same time we are hiring engineers and software specialists to push ahead with the further development and expansion of our product portfolio," Sauernheimer said in a September statement.