Coachbuilder Karmann faces challenging times as it shuts down its contract assembly business and opts instead to focus on high-growth niche areas such as roof systems. Matthew Beecham talked exclusively to Karmann's Karsten Huelsemann about developments in convertible roofs and Karmann's unfolding new business strategy.

just-auto: Could we start by asking for your perception about the popularity of retractable hard-tops (RHT) versus the soft-top (ST)?

Karsten Huelsemann: We see a balance between the two roof systems. The RHT boom is partly rooted in the classical coupé segment and not in the convertible segment. To many RHT owners, the perception is that their car effectively is a coupé with the ability to open the top. Besides, RHT drivers are emotionally convinced that an RHT is less prone to attracting vandalism.

The soft-top has remained - or been revived - especially in the premium brands. Drivers of soft-top convertibles often like to showcase what they drive as an open-top vehicle, deliberately choosing the roof in a colour different from the vehicle paint.

In North America, the balance is very different: RHTs are still relatively new to the market with only 26% penetration. [To date,] US OEMs have not replaced any current soft-top model with [a] RHT model. That is one reason why Europe has seen RHT growth. Only the Chrysler Sebring did this in a partial way by offering both options, and the initial demand of 60% RHT penetration has since been reduced to 30%. The Pontiac G6 RHT was a completely new nameplate, and sales of this vehicle have fallen far short of expectations.

Next, US consumers tend to have more than one vehicle, and may choose to have a convertible as a second car for fun or weekend excursions in the summer. The proposition of lost utility or lost trunk space of the RHT doesn't sit well with the active American lifestyle.

Also, a general lack of public transportation use means Americans tend to live out of their car more. That means the golf clubs stay in the trunk, etc. Bigger is better in many ways in the US (cars, highways, houses) and the loss of a functional trunk due to RHT may be an issue.

Furthermore, many US consumers still buy their vehicle based on a visit to the dealership. It may be that the consumer is not even aware that an RHT vehicle is actually a convertible due to the seamless execution. Lack of advertising and marketing promotions of RHTs have not helped the overall awareness of this USP.

In the end, the higher cost premium and perception of higher weight/lower fuel economy will challenge RHTs in the US. Insurance data in the US indicates that there is no tangible increase in theft due to soft-top ownership. Many of these vehicles are parked in garages rather than on the streets.

just-auto: Over the past few years, we've seen the emergence of two-, three- and four-part retractable hard-tops. Could this trend render the coupé obsolete?

Karsten Huelsemann: The classical coupé will remain on the market and not be made extinct by RHTs. In fact, there seems to be a renaissance of coupés, even in non-premium brands, these days. With regard to the complexity of RHTs, there clearly is a need for further technical improvements. A five-piece RHT is a highly sophisticated system. The challenge is the simplification of the system in order to secure the long-term or lifetime stability.

just-auto: How fast is the retractable hard-top market growing in Europe and North America?

Karsten Huelsemann: The RHT segment - in terms of vehicles sold, not vehicles built - in Europe is a little more than half of the market size. The global market size (for convertibles with RHTs and STs) is currently about 1m units. We think it will grow to 1.3m units by 2015.

In North America, there is a somewhat different picture. The RHT market will grow from 1% share in 2003 to an estimated 28% by 2010. However, this growth prediction is set within an overall downturn in the automotive market in which the total convertible market is falling from 257,000 units in 2003 to 223,000 units by 2010. That means RHT is not contributing to increased convertible sales, but rather substitutional sales which indicate an overall indifference by the American consumer to RHTs.

just-auto: How do you see the further development of convertible design?

Karsten Huelsemann: The focus of today's research is on improving styling and design aspects. Challenges are also coming from growing customer demands with regard to the haptic and acoustic performance of a convertible. Also, you can expect further improvements in the field of comfort and temperature insulation. Increased functionality - as shown in Karmann's concept car, the Polo Convertible, presented at the 2007 Frankfurt auto show - will make a difference especially for those potential buyers of a subcompact or compact convertible where this vehicle is their only vehicle.

just-auto: To what extent has the quality of soft-tops improved over the past decade?

Karsten Huelsemann: The technological progress in STs has outpaced that in RHTs. Examples like the Bentley GT or the Audi A4 are evidence of remarkable innovations relating to acoustic and comfort levels that match the (non-convertible) base vehicle. Today, experts are testing different fabrics which meet requirements known from the fashion industry. For example, the new BMW 1 Series convertible is offered with an optional top that has woven-in shiny fibres. High-end ST vehicles have long become all-weather cars with a far better ability to keep the cabin temperature.

just-auto: What other developments do you see in the European market for convertibles and open-top vehicles?

Karsten Huelsemann: Most innovations will likely revolve around styling, haptic and acoustic feel, comfort, fashion, and safety. Higher practicality (e.g. better or more versatile trunk space) will be an issue for the lower segments where the convertible has to double as an everyday, year-round car. Finally, weight optimisation, i.e. reducing the extra weight a convertible carries over its base vehicle, will be an issue, partly driven by CO2 concerns.

just-auto: How is Karmann's roof system business (convertibles, hard-tops and soft-tops) shaping-up in North America? What is your strategy for growth in the North American market?

Karsten Huelsemann: Karmann USA has a solid footing in North America with 48% share of the total market of the combined soft-top and RHT segment in terms of vehicles produced there. Karmann USA will maintain this leadership via our current 'big three' automakers, and expand to meet demand by European and Asian OEMs producing in North America as the opportunities arise. Karmann USA has the best resources, people and facilities to provide complete support for convertible development and manufacturing, with equal expertise in soft-tops and RHTs, and our customers recognise this. Outside of convertibles, Karmann USA will look to other automotive and non-automotive opportunities which utilise the global strength of Karmann and/or take advantage of our core competencies.

See also: RESEARCH ANALYSIS: Review of roof systems

Karsten Huelsemann is executive director, New Business Development, Marketing and Communications, Karmann.

Headquartered in Osnabruck, Germany, Karmann employs 7,518 people, of whom 6,300 are based in Germany. The company operates sites in Germany, Poland, Portugal, UK, Mexico, US, Brazil and Japan. All in all, 16 different roof systems, ranging from compact cars to the luxury segment, are currently being manufactured at the company's sites.