Just Auto

Daily Newsletter

02 November 2023

Daily Newsletter

BorgWarner forecasts a sales hit on currency movements

China revenue stream hit by stronger US dollar versus the Chinese yuan

Tier-1 automotive supplier BorgWarner has cut its 2023 sales outlook due to adverse currency movements. In particular, income from its China operations will be dented by a stronger dollar and weaker yen.

Net sales for 2023 are now expected to be in the range of $14.1 billion to $14.3 billion (previous range $14.2 billion to $14.6 billion), compared with 2022 sales of approximately $12.6 billion. Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $110 million. The weaking of the Chinese yuan against the US dollar is only partially offset by the strengthening of the euro against the US dollar, the company said.

While the 2023 revenue forecast for the company has been shaved down, there is still a signficant rebound as its OE customers have scheduled more orders as industry supply shortages have eased.

The acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions, Drivetek and SSE are expected to increase year-over-year sales by an aggregate of approximately $63 million, BorgWarner said.

Operating margin for the full year is expected by BorgWarner to be in the range of 8.1% to 8.2%.

High upfront costs could be detrimental towards the growth of the off-highway EV market

The global off-highway electric market is expected to grow at a CAGR of 17.4% by 2030, per GlobalData. Despite the strong growth, high upfront costs may pose a challenge. Due to the high capacity of these vehicles, they consume large amounts of power from a number of battery packs installed on the vehicle, whose high cost in turn adds to the cost of the vehicle, thereby increasing the initial cost. However, governments worldwide are offering subsidies and tax exemptions in order to help customers to counter the initial purchase cost.