Green powertrains drive BorgWarner's forecast

DETROIT--BorgWarner forecasts about $1.8 billion in new powertrain business in the next three years as automakers revamp their engines and transmissions to meet stricter government mandates on emissions and fuel efficiency.

Analysts, who had expected the supplier's plan to take a sharper hit from the global recession, were surprised by the strength of the forecast.

The suburban Detroit company, which last month posted a third-quarter profit after four straight quarters in the red, said half of the new business would come from Europe, the main market for advanced gasoline and diesel engine technology. Asia will account for 30 percent of the new business and the Americas, 20 percent.

When it unveiled its three-year plan a year ago, BorgWarner said it expected to bring in $2.1 billion in new business from 2010 through 2012.

"The size of the drop is somewhat smaller than expected, given the decline in expected global light-vehicle production," David Leiker, an analyst with Robert W. Baird & Co., said in a research note. Last year's projection came in late October, "when the global financial crisis was still in its early stages," Leiker said.

North America soon should bring in more drivetrain and engine air management business, CEO Tim Manganello said last week during a conference call.

For instance, Chrysler Group does not account for any new business in BorgWarner's backlog of orders. That could change because Chrysler's future vehicles with smaller-displacement gasoline engines are to be powered with engines from Fiat S.p.A.

BorgWarner already supplies the control module for Fiat dry-clutch transmissions and turbochargers for diesel and gasoline engines. The supplier's contracts include turbochargers for Fiat's 1.8-liter gasoline engine, which Manganello said could power a number of Chrysler vehicles.

Manganello said he expects that by 2013 or 2014, North American car and truck production will return to rates seen in late 2007 and early 2008. Production then was around 3.5 million vehicles a quarter but has dropped to around 2.5 million now.

Dual-clutch transmissions make up about 13 percent of BorgWarner's 2010-12 backlog of orders. Manganello said he expects dual-clutch transmissions to occupy a larger share of sales in 2013 to 2015, noting a "very strong" development program with a Japanese carmaker for dual-clutch technology.

(Source: Automotive News)