Diversifying for Growth

The growth strategy for Webasto AG's North American business includes increasing its already dominant share of the U.S. sunroof market during the next three years and expanding into new business sectors, such as convertibles and body systems.

“We're not going to forget roof systems. It's our bread-and-butter,” says Brett Healy, vice president-sales, marketing and strategic development for Webasto subsidiary Webasto Roof Systems Inc. “But we're going to inch our way into other segments.”

During the grand opening ceremony in Lexington, KY, for Webasto's new roof systems assembly plant, the company shows a concept car called Welcome 2. The coupe's capabilities include a large sunroof opening, retractable trunk cover, retractable tailgate, sliding cargo loading system in the trunk area and an electric shoe scraper that emerges underneath each door.

Besides body systems, Webasto is pursuing convertibles and retractable hardtop programs in the U.S. “A big part of our growth strategy are convertibles,” says Franz-Josef Kortum, chairman of the German-based Webasto AG. “We think in the next five years, we will grow this business.”

Counting on convertibles for growth may seem optimistic, considering U.S. ragtop sales have been soft in recent years.

But Webasto is undeterred. “Through the innovations we are generating, we are going to broaden the expectations of the convertible system to intensify the interest in convertibles,” says Healy. “(The convertible tops are) going to do more than they used to do. We're going to have them open while you drive. We're going to have sunroofs integrated into retractable hardtops.”

Webasto's quest for convertible programs has met with mixed success. The company's joint venture with Italian coach builder and design house Pininfarina SpA developed the convertible for the BMW Mini. Production begins this year at Webasto's plant near Birmingham, U.K.

Webasto recently missed out on three notable convertible programs: the Cadillac XLR, Chevy SSR and Pontiac G6. While Webasto tries to develop its convertible business in the U.S., other new products have been flourishing.

It is having considerable success with its large rooftop openings. Demand for Cadillac SRX's “UltraView” option, a 5.6-ft. (1.7-m) sunroof over the first- and second-row seats, has roughly doubled initial forecasts. Other large sunroof programs in Europe include the Mercedes-Benz A-Class, C-Class and E-Class, Renault Megane II and Espace, Fiat Stilo and Seicento and Citroen Berlingo. The G6 midsize sedan, which launches in the U.S. this summer to replace the Grand Am, will offer a Webasto-supplied panorama sunroof.

The new 104,000-sq.-ft. (9,661-sq.-m) plant in Lexington will supply the panorama roof for the Mercedes GST cross/utility vehicle, which begins production later this year at the OEM's Vance, AL, assembly plant.

Webasto expects 50,000-60,000 GSTs will be ordered annually with the roof system. Future programs will fill empty space at the plant within two years, says Mark Williams, Webasto Roof Systems vice president-operations.

Ward's learns the Lexington plant will supply roof systems for Chrysler Group and Hyundai Motor Co. Ltd. vehicles. Additional equipment will be installed for the future programs at the plant later this year.

Webasto officials say SUVs and CUVs represent the biggest growth opportunities for the wide-opening panorama roofs, followed by sedans. “Crossovers are ideal for panorama,” says Fred Olsen, president and CEO-Webasto Roof Systems. “Crossovers are exciting vehicles, and the roof styles are usually flatter.”

Meanwhile, Webasto continues to grow its core sunroof business. Healy predicts Webasto's U.S. market share will increase from 42% in 2004 to 47% in 2007 when the company's current 2 million unit annual capacity will be depleted.

Sales of sunroofs in Europe — where the feature had been popular — are stabilizing, Kortum notes. Sales suffered in recent years as Europeans increasingly opted for air conditioning.

To accommodate its growing U.S. business, Webasto's Lexington roof systems plant is the first of two new facilities in Kentucky. The company announced in April plans to build a sunroof stamping plant in Murray. When operational the 105,000-sq.-ft. (9,754-sq.-m) facility will employ 150.

Webasto Product North America Inc. also opened a new headquarters and technical center in Fenton, MI, in May.