Turbochargers - European growth driven by spread to small cars
The move by vehicle makers toward engine downsizing to meet the auto industry's targets for lower carbon dioxide emissions by 2008 is spelling out good news for turbocharger suppliers. Although smaller engines are more fuel-efficient, motorists still demand the same performance. A turbocharger fitted to a 1.8-litre engine can deliver the peak power of a 3-litre naturally aspirated unit but use 15% less fuel. Consequently, turbo manufacturers see no abatement in demand for their product, particularly in Europe where direct injection diesel engines are powering more and more passenger cars. This overview is extracted from a new report published by ABOUT Automotive and Auto Research Analysts.
It is predicted that nearly 60% of all new cars in Western Europe will be equipped with a turbocharger in 2006, up from 45% this year. Most market growth in Europe will be in the sub-B category and supermini segments, which include cars such as the Ford Fiesta and Daewoo Matiz.
From a petrol perspective, the position in Japan is very similar to Europe, i.e. legislative pressure is driving demand for lower engine emissions and better fuel economy, thereby creating new opportunities for turbochargers applied to petrol direct injection engines.
Honeywell's Garrett Engine Boosting Systems leads the turbocharger market for passenger car applications by a significant margin, having just over half the world market. BorgWarner, who have a 23% share, is the second most dominant player in the market, followed by Japan's Ishikawajima-Harima Heavy Industries (IHI) with 11% and Mitsubishi Heavy Industries with a 10% share.
European market battleground
The main battleground is Europe, where Garrett dominates the turbocharger market with a 58% share in 2001, followed by BorgWarner with 30% and the two Japanese players, Mitsubishi and IHI with 8% and 4%, respectively. However, competition from the two main Japanese turbo makers, Mitsubishi and IHI, means competition in this market is set to intensify. The players that gain market share through this decade will be those that visualise, accept and adapt to the legislative changes in the market place, further enhancing their product through innovation. As an auto executive of a turbocharger maker said: "it's not a question of us matching whatever the OEMs want us to do, but it is a question of optimising those technologies to match the OEM need."
In 2001, the Japanese turbocharger market was led by IHI with a 41% share, followed by Mitsubishi with 25%, Toyota with 20% and Garrett with a 10% share.
On the commercial vehicle side of the business, the market is more competitive. Garrett is also reckoned to lead the world market in this sector with a 32% share, followed by BorgWarner with 30%.
Garrett posted sales of $1.4 billion last year, of which Europe accounted for $896 million. The company sold more than seven million turbos last year, up from 6.3 million in 2000. It also invested €100 million in increased manufacturing capacity and recruited a further 50 engineers to help develop its diesel and petrol boosting technologies. Petrol boosting has great potential, says Alexandre Ismail, vice president of sales and customer management. "Of the 19.4 million light vehicles produced in Europe every year, 59% are powered by petrol and 41% by diesel. Yet, less than 6% of the petrol engine population is turbocharged whereas almost 100% of diesel engines have a turbocharger. By comparison, 97% of light vehicles in the US are powered by petrol engines and, of these, less than 1% are turbocharged."
A turbocharger is powered by engine exhaust gas that spins a turbine. The turbine then spins a compressor, drawing in air from outside, compresses it and pumps it back into the cylinders, thereby delivering a boost in engine power. A turbocharged engine can generate as much as 40% more power than a non-turbocharged engine. They also cut fuel costs and emissions by up to 15% compared to a naturally aspirated engine.
More sophisticated technology
Turbo technology is becoming increasingly sophisticated with variable nozzle turbos offering increased performance, fuel efficiency and clear burning. Next generation turbochargers will include electronic power boosting. In Europe, variable nozzle technology is fairly well established. Some 25% - 30% of new cars with turbochargers have variable nozzle technology, being most popular in the luxury segment. Manufacturers predict this could reach 40% next year, driven by more applications in the mid-range cars.
Beyond 2003, small diesel engines are likely to feature turbochargers with variable nozzles. Garrett is now applying its knowledge in diesel boosting technologies to petrol boosting. "This is an exciting area of work for Garrett, but with its own distinct challenges. Adapting, for example, our Variable Geometry Turbocharger from diesel to a petrol application is not simply a matter of 'plug and play'. Petrol engines differ markedly from their diesel counterparts. Stresses are greater, engine rpm is higher, catalyst light-off issues are challenging and operating engine temperatures are hotter. However, our technological strength through VGT is a good foundation to build upon for our customers."
In recent years, the turbocharger makers have been strengthening their manufacturing capabilities at home as well as extending their global reach. US-based BorgWarner, for example, acquired the German turbocharger and turbomachinery manufacturer, AG Kühnle, Kopp & Kausch in 1998. A year later, the company acquired Kuhlman Corporation, a manufacturer of vehicle and electrical products.
In July 2001, BorgWarner struck a deal with Hitachi, setting up a 50:50 joint venture in Japan to develop, manufacture and sell turbochargers for the Asian market. The company also opened two new sites in the US and Hungary. Japan's IHI is also aiming to increase its European sales of turbochargers for use in cars within two to three years, supported by its recent tie-up with DaimlerChrysler. The company is aiming for a ten-fold sales increase in Europe, from 30,000 units to about 300,000 units. On reaching its target, this would give IHI a 5% share by the end of this year.
This article has been taken from an exclusive new report from ABOUT Automotive and Auto Research Analysts: The global market for automotive turbochargers for passenger cars and commercial vehicles: 2003 edition.
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