A World of Difference for OEMs

Our industry is both globalizing and responding to increasing demand for safer and more efficient vehicles. Commercial vehicle OEMs face intense competitive pressure as they seek to offer differentiated vehicles that are competitive for local and export applications. As a result, in every country, global and local OEMs are increasing their adoption of WABCO’s technologies, furthering WABCO’s market outperformance. These market dynamics provide a rich reservoir of organic growth for us for years to come.

A World of Difference for OEMs

Our industry is both globalizing and responding to increasing demand for safer and more efficient vehicles. Commercial vehicle OEMs face intense competitive pressure as they seek to offer differentiated vehicles that are competitive for local and export applications. As a result, in every country, global and local OEMs are increasing their adoption of WABCO’s technologies, furthering WABCO’s market outperformance. These market dynamics provide a rich reservoir of organic growth for us for years to come.

Reservoir of Organic Growth

In Europe, WABCO’s largest market, the company’s applicable content per vehicle is approximately $3,200, which also reflects adoption of the latest, most advanced technologies.

The United States lags Europe where WABCO’s applicable content per vehicle is around $1,500. This gap foreshadows a clear runway for further technology adoption—such as WABCO air disc brakes, automated manual transmissions and advanced driver assistance systems.

For more than a decade, WABCO has proactively positioned itself in emerging markets, which also represent a major reservoir for growth. In 2015, in China—the world’s largest market for commercial vehicles—WABCO outperformed the market by 25 percentage points. In India, WABCO’s truck and bus sales outgrew the market by 16 percentage points.

What’s more, in these emerging economies, WABCO’s applicable content per vehicle is still roughly $500, a fraction of our technology used elsewhere. This offers another major runway for growth.

Sustained Technology Leadership

Diverse classes of trucks, buses, trailers and off-highway vehicles support the world’s economies in a variety of urban, long-haul and industrial applications. The makers of these vehicles seek advanced technologies and integrated systems that continually improve vehicle safety and transportation efficiency.

WABCO’s global team of nearly 2,000 engineers continues to deliver critical innovations—including 265 new patents granted in 2015—that help to advance our industry’s technological roadmap in support of these goals.

In a step that foreshadows the future of automated driving, the European Union has mandated advanced emergency braking systems (AEBS) on new commercial vehicles as of November 2015. As the first supplier of AEBS—with OnGuardACTIVE™—WABCO continues as the market leader for this advanced driver assistance technology.

Reacting to moving or stopping vehicles ahead, OnGuardACTIVE can autonomously apply the brakes and bring the vehicle to a complete stop, helping to prevent or mitigate impending rear-end collisions.

Our industry also continues to embrace the enhanced value of WABCO’s air disc brakes, which offer shorter stopping distances, lighter weight and easier maintenance versus conventional drum brakes. With our breakthrough MAXX™ air disc brakes (ADB), WABCO is differentiated by offering the industry’s lightest and highest performing single-piston ADB for commercial vehicles.

In 2015, WABCO expanded MAXX ADB penetration on trucks in Europe, China and Japan. We also invested $17 million to build a new factory in Charleston, South Carolina, USA where we will begin to produce air disc brakes to satisfy increased local demand by major OEMs and fleets.

WABCO also continues to extend its well-established leadership in the regionally fragmented global trailer market. By differentiating through product innovation and technical expertise for trailer OEMs, WABCO delivers attractive customized solutions for diverse cargo applications. For example, WABCO’s award-winning Intelligent Trailer Program offers more than 40 different key trailer functions. It represents the industry’s most comprehensive suite of options to help fleet operators to reduce operational costs, save fuel and increase the safety and comfort of drivers. These intelligent modules can be used separately or combined, allowing fleet operators to select those functions that are most relevant for their particular needs.

Continuing to extend its technology leadership in the industry, on February 2, 2016, WABCO announced its acquisition of MICO Incorporated, a market-leading innovator and manufacturer of hydraulic components, controls and brake systems for vehicles in agriculture, construction, mining and similar industries.

Headquartered in North Mankato, Minnesota, USA, MICO serves all leading off-highway vehicle OEMs globally. As a result, WABCO now uniquely offers a portfolio of both hydraulic and pneumatic braking solutions for off-highway vehicles worldwide. This means off-highway customers can access an unprecedented level of product choice, quality and service, alongside WABCO’s global economies of scale.

In 2015, WABCO also continued to contribute to better commercial vehicle operating efficiency and improved environmental compliance. We extended our industry-leading portfolio that helps to lower vehicle weight, optimize energy recovery, improve fuel economy and reduce emissions.

Fuel consumption is one of the vehicle’s single most expensive running costs. Today, a truck equipped with all of WABCO’s efficiency-related technologies can improve fuel economy by more than 15%.

In 2015, WABCO sold its three-millionth automated manual transmission (AMT) system, an enabler of fuel economy through optimized gear-shifting, offering testimony to our global market leadership in this innovative technology.

WABCO AMT penetration also reached record levels in North and South America where AMT still represents less than 25% and 20% of each region’s transmission market respectively. This success taps a reservoir of growth compared with Europe where over 70% of new commercial vehicles already adopt AMT solutions.

WABCO’s industry award-winning OptiDrive™— our modular AMT system that delivers up to 5% in fuel savings—continues to be adopted by major manufacturers of transmissions, trucks and buses, particularly in emerging markets.

We also released the next generation of OptiRide™, our global industry’s best-selling electronically controlled air suspension (ECAS) technology. It delivers fuel savings while providing optimal performance and ride comfort. In China, where WABCO was first to market with ECAS technology for trucks and buses, most major commercial vehicle makers adopted OptiRide as an option in 2015.

WABCO is ensuring that its industry-leading pipeline of technology innovation continues to flow for OEM customers. In 2015, we invested $140 million in global research, development and product engineering, up 13% in local currencies from a year ago.

WABCO also committed in 2015 to invest $27 million to further enhance WABCO’s advanced systems engineering and innovation center, which is located in Hanover, Germany.

Fuel consumption is one of the vehicle’s single most expensive running costs. Today, a truck equipped with all of WABCO’s efficiency-related technologies can improve fuel economy by more than 15%.

In 2015, WABCO sold its three-millionth automated manual transmission (AMT) system, an enabler of fuel economy through optimized gear-shifting, offering testimony to our global market leadership in this innovative technology.

WABCO AMT penetration also reached record levels in North and South America where AMT still represents less than 25% and 20% of each region’s transmission market respectively. This success taps a reservoir of growth compared with Europe where over 70% of new commercial vehicles already adopt AMT solutions.

WABCO’s industry award-winning OptiDrive™—our modular AMT system that delivers up to 5% in fuel savings—continues to be adopted by major manufacturers of transmissions, trucks and buses, particularly in emerging markets.

We also released the next generation of OptiRide™, our global industry’s best-selling electronically controlled air suspension (ECAS) technology. It delivers fuel savings while providing optimal performance and ride comfort. In China, where WABCO was first to market with ECAS technology for trucks and buses, most major commercial vehicle makers adopted OptiRide as an option in 2015.

WABCO is ensuring that its industry-leading pipeline of technology innovation continues to flow for OEM customers. In 2015, we invested $140 million in global research, development and product engineering, up 13% in local currencies from a year ago.

WABCO also committed in 2015 to invest $27 million to further enhance WABCO’s advanced systems engineering and innovation center, which is located in Hanover, Germany.

Driving Globalization

WABCO’s early globalization has enabled outstanding customer connectivity. It fuels growth as we continue to partner with every leading maker of trucks, buses and trailers in every region of the world.

By anticipating our industry’s globalization, WABCO can now firmly furnish OEMs with strategies for global platforms and modularity.

We lead our field in supplying modular solutions that enable WABCO products to be used interchangeably to equip truck and bus platforms across regions. This benefits global OEMs seeking to tailor their platforms per local market requirements and comply with varying regional regulatory standards while reducing development expenditure, production costs and time to market.

Such a technology breakthrough is WABCO’s mBSP™ modular braking system platform, featuring our industry’s highest degree of standardization. Our mBSP offers OEMs flexibility to equip truck and bus platforms with either antilock braking (ABS) or electronic braking (EBS) systems around the world, avoiding the design and production overheads of different configurations.

In 2015, WABCO continued as the market leader across China, India, Brazil and Russia where we successfully connect local OEMs with tailor-made technologies that respect technical and economic specificities in emerging markets.

In China, customers view WABCO as the supplier of choice. They value WABCO’s “design for China” strategy and unique ability to execute there through 4 world-class factories. In 2015, we strengthened partnerships with the country’s largest truck and bus makers as well as leading transmission and trailer axle manufacturers.

In China, customers view WABCO as the supplier of choice. They value WABCO’s “design for China” strategy and unique ability to execute there through 4 world-class factories. In 2015, we strengthened partnerships with the country’s largest truck and bus makers as well as leading transmission and trailer axle manufacturers.

We also help Chinese OEMs to differentiate their export business as demonstrated by major customers such as China National Heavy Truck Corporation and Yutong Bus. They signed new agreements in 2015 to equip their next-generation vehicles for export to Europe with OnGuardACTIVE advanced emergency braking and OnLane™ lane departure warning systems.

In 2015, we further connected with Dongfeng Liuzhou Motor Company (DFLQ), one of the country’s largest truck makers, by entering into a new long-term contract. We began supplying advanced safety and efficiency technologies for DFLQ’s medium- and heavy-duty truck platforms for domestic sales and export to South East Asia, Africa, the Middle East and South America.

In India, WABCO sustained its clear market leadership. All local commercial vehicle makers there relied on WABCO’s test track in Chennai to homologate ABS for heavy trucks and buses to comply with national regulations, effective October 2015. Currently, in India, 8 out of 10 heavy trucks and buses above 5 tons that are fitted with ABS are equipped with WABCO systems.

To support growth in India and globally, we opened a new facility in Chennai where 250 software engineers—doubled in number since 2010—contribute to the development of advanced WABCO technologies.

As a leading global supplier of complex vehicle control systems and sophisticated electronics to OEMs, WABCO has attained a privileged position to connect into the world of fleets. This business enables WABCO to complement cyclical OEM business with recurring revenues and other opportunities for growth.