BorgWarner Unveils Business Projection - Analyst Blog


BorgWarner Inc. ( BWA ) expects to generate about $2.9 billion worth of net new powertrain business between 2014 and 2016. This represents a 26% upswing from the previous three-year net new business.

Engine-related products and drivetrain-related products are expected to contribute 80% and 20%, respectively, to BorgWarner's new business. Engine-related products include turbochargers, ignition systems, emissions products, engine timing systems including variable cam timing devices and thermal systems, while drivetrain-related products comprise all-wheel drive systems, fuel-efficient DualTronic transmission technology and traditional automatic transmission products.

The contribution of new business from Europe is projected to decline to 27% of the total new business, compared with 30% in the last three years. Increased demand for BorgWarner's advanced powertrain technology from other parts of the world is expected to result in the decline.

Asia is expected to generate 47% of the new business by 2016, with China alone contributing 32%. Meanwhile, the Americas should drive 26% of BorgWarner's new business in the next three years. Of this, 19% is expected to come from North American domestic original equipment manufacturers (OEMs), up from 11% in the previous three years.

The commercial vehicle market is projected to have a 13% contribution in the expected new business over the next three years. Product-wise, BorgWarner expects 50% of the new business from turbochargers and 7% from its dual-clutch technology. The demand for turbochargers is rising on increasing demand for fuel efficient and low emission vehicles. The production of turbochargers light and commercial vehicle OEMs is expected to surge 50% to 46 million units in 2018 from 31 million in 2013. Meanwhile, the production of dual-clutch transmissions is expected to double over the next five years to 9 million units by 2018.

BorgWarner expects the U.S. Dollar to Euro exchange rate for the three-year period to be about $1.31, compared with $1.25 in the previous three-year period.

BorgWarner currently retains a Zacks Rank #2 (Buy). The company's largest customers include Ford Motor Co. ( F ), Toyota Motor Corp. ( TM ) and Honda Motor Co. ( HMC ).

BORG WARNER INC (BWA): Free Stock Analysis Report

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TOYOTA MOTOR CP (TM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BWA , F , TM

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