BASF aims for 6%/year auto-related growth to 2020

05 September 2012 17:55  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--BASF expects its automobile-related businesses to grow faster than the industry they serve out to 2020, the Germany-headquartered company said on Wednesday.

Showcasing its €10bn ($12.5bn) automobile related activity to investors, BASF said it expects global annual car production growth to be close to 5% over the next five years, compared to the earlier 3% 30-year average.

It expects automobile-related business  growth to be higher than that and remain profitable. The businesses include polyurethanes, plastics, coatings, catalysts and new battery materials.

"We have outgrown the automotive supply market over the past five years," BASF CEO Kurt Bock said. "[This] is a business we want to [continue to] grow."

OEM (own equipment manufacture) production in emerging markets will double between 2011 and 2020, BASF said, but established OEM's such as Volkswagen, Toyota, Hyundai and Daimler will maintain their lead.

The chemical company has aimed to work closely with manufacturers in a solutions-led rather than a product-led approach to tie its products into longer-term contracts with auto makers.

"We think we can grow our business quite nicely over the next few years, " Bock told journalists in London. Long-term trends in the auto sector - towards regulatory driven change, lighter weight and further safety enhancement, fit well with BASF's strategy to provide customer driven chemical solutions, he suggested. “It is about collaboration and cooperation with customers," he said.

Bock added: "It is a demanding but prifitable business for BASF."

BASF believes there is a pent-up demand for replacing cars in the US which will help drive auto output growth. It is placing great emphasis, however, on auto-demand growth in emerging markets such as China, Brazil and India.

The chemical market for automotive will almost double between 2011 and 2012, to be worth close to €111bn, the company believes, an average growth rate of about 6%/year.

BASF claims to be the number one chemical supplier to the automotive sector - number one in mobile emission catalysts - acquired through its purchase of catalysts maker Engelhard - number one in topcoats for exterior coatings and number one in various plastics used to make vehicles lighter.

The company spent approximately €200m on automotive-related research and development (R&D) in 2011.

It is targeting annual sales to automotive of €17bn in 2020, including €5bn of catalyst and precious metal-related trading and production.

($1 = €0.80)

By: Nigel Davis
+44 20 8652 3214

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