U.S. Potential

Having won close to 60% penetration of the European diesel turbocharging sector, Honeywell Turbo Technologies says it sees further potential for increasing sales in Europe.

In addition, the supplier says the U.S. could become the world's epicenter of diesel vehicle growth, if the industry can meet complex emissions rules proposed for 2007.

Honeywell Turbo's Garrett brand sales top $2 billion annually, accounting for 45% of annual revenues for its parent, Honeywell Transportation Systems Inc. The supplier says it will continue to achieve annual growth rates of nearly 10% near term, on top of the 17% annually reported during 2001-2003.

Garrett produced 7.9 million turbochargers in 2003, with 64% destined for Europe. Its largest customer is Volkswagen AG, which accounts for $300 million in sales. The supplier has 11 plants worldwide with more than 6,000 employees.

Rob Gillette, president and CEO of Honeywell Transportation Systems, says he expects diesels to continue to proliferate in Europe, albeit at a more modest pace, while the U.S. represents huge potential for diesel penetration.

“Diesels have achieved about a 2% penetration gain for the past five years (in Europe),” Gillette tells Ward's. “This year we expect to see close to a 4-point gain, with diesels accounting for close to 50% of this year's total production (in Europe).

“There is an awful lot of interest in Detroit (for diesel vehicles), and not just in the heavy-duty (truck market) but looking at smaller V-8s and V-6s for the future,” he adds.