Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's go to Berlin right now, Bloomberg's Oliver Crooks semi
Speaker 2: blind with an interview with a key player from the
Speaker 2: under pressure auto industry.
Speaker 1: Only that's right, Tom, and listen, it's not just the
Speaker 1: auto industry, because this is the sort of story that
Speaker 1: sits at the very center of the biggest sort of
Speaker 1: stories we've been talking about for the last few months,
Speaker 1: whether it's AI semiconductors, the auto industry, terrorists, and of
Speaker 1: course the German economy. So I'm very pleased to be
Speaker 1: to speak to somebody who really sits at the heart
Speaker 1: of all of all of these stories brought together. It
Speaker 1: is the CEO and chairman of BOSH. Because Bosh, we
Speaker 1: should just say, in addition to being one of the
Speaker 1: biggest companies and employers in Germany, it's technology that it's
Speaker 1: in half of all the smartphones, it's almost in everybody's home,
Speaker 1: and it's in literally almost every single car on the planet. So,
Speaker 1: chefon Hatoon, thank you so much for your time. Today.
Speaker 1: We should start in the auto industry because we have
Speaker 1: more difficult news out of Volkswagen today and probably your
Speaker 1: order book is one of the clearest indications of what
Speaker 1: is to come in terms of demand for the auto sector.
Speaker 1: What are you seeing there.
Speaker 2: We are still growing in the older industry also this year,
Speaker 2: but let's be very honest, the OLO industry didn't grow
Speaker 2: as much as we anticipated. So the overall production of
Speaker 2: vehicles will be pretty much flat.
Speaker 3: It will be a very small growth.
Speaker 2: Just few pockets are left of growth, like India for example,
Speaker 2: or the Chinese export. There's still some growth in the
Speaker 2: better electric vehicles, but we see a big shift actually,
Speaker 2: not only that there is no volume growth, but the
Speaker 2: shift is away actually from the big growth numbers of
Speaker 2: bettery electric cars to plug in hybrids. So that is
Speaker 2: challenging in this industry because if you change production programs
Speaker 2: in this industry, that's a big thing.
Speaker 1: It takes a very long time. So do you see
Speaker 1: any reason to be sort of more optimistic about things
Speaker 1: turning around or do you think we're in this for
Speaker 1: at least another two years or so.
Speaker 2: Well, long term, we know things will change towards a
Speaker 2: better electric vehicles and that's a good thing, but definitely
Speaker 2: the ice technology, so the engines will be needed longer.
Speaker 3: That's what we always thought. So there is a.
Speaker 2: Technology open approach now coming by the consumer, because the
Speaker 2: consumer freely decides what he wants to buy. Our first,
Speaker 2: you see with a flat production line that the consumer
Speaker 2: decides less, so it just waits and takes the car
Speaker 2: a bit longer, which is bad for the industry. On
Speaker 2: the other end, the consumer is deciding to buy more
Speaker 2: pluck in hybrids, which is more to see neutral. But
Speaker 2: in the long run, I'm still optimistic full electricfication will happen.
Speaker 1: And I'd like to also get your broader picture in
Speaker 1: terms of global demand. Because you're in obviously homes, you're
Speaker 1: in consumer goods, you're in obviously cars, you're in smartphones.
Speaker 1: What is the sort of picture of global demand across
Speaker 1: all of your different businesses.
Speaker 2: Well, if you look at consumers, which drive most of it, right,
Speaker 2: which is our home kitchen appliance business, but also a
Speaker 2: power towards consumers are hesitant on spending. You see that
Speaker 2: in China and Europe. You see it less in the US.
Speaker 2: By the way, the US consumers always much more resilient
Speaker 2: in this terms, right, But you see in these two
Speaker 2: sectors are quite strong resilience, so people wait a moment
Speaker 2: to buy.
Speaker 3: Also for cars, so on all the doorables.
Speaker 2: You see that hesitation which comes from unclear regulation or
Speaker 2: unclear view. If this is good, if it's a good
Speaker 2: case for the consumer, they calculate, right, they don't just
Speaker 2: do it.
Speaker 1: More things And one of the things that are obviously
Speaker 1: going to be paying attention to as well as the
Speaker 1: election in the United States, how prepared are you for
Speaker 1: potentially ten twenty percent terrorsts in the event of a
Speaker 1: Trump administration. Does that make you look at your manufacturing
Speaker 1: and production footprint?
Speaker 3: Well, definitely.
Speaker 2: I'm not a big fan of terrorsts, right, that's clear
Speaker 2: because terrors kind of hinder the global collaboration and that's
Speaker 2: important for technology. But you know, the election brings also
Speaker 2: certain clarity. So over the next month some clarity will
Speaker 2: come what the direction is, and then industry will adjust.
Speaker 3: Everybody will be able to adjust. Allo, that's a good thing.
Speaker 2: By nation of the election, how the policy actually will
Speaker 2: work we have to see. But in general, the US
Speaker 2: is still the strongest figures, i would say, globally, so
Speaker 2: probably the recovery is coming there fastest, The gross is
Speaker 2: coming the most eminent, so you have to be there.
Speaker 2: And that's why we shift and bought big time towards
Speaker 2: US investments. We did the investment for the semiconductor in California.
Speaker 2: We bought JCI and Titachi for the condition business, and
Speaker 2: that's the strategy to go.
Speaker 1: And the other question is, of course the Chinese economy,
Speaker 1: where we've seen a lot of distinct weakness. But I
Speaker 1: have a theory I'd like to test on you, which
Speaker 1: is that when demand comes back within the Chinese economy,
Speaker 1: is it really for the same items that we've been
Speaker 1: talking about historically because it's been demand's been out for
Speaker 1: about four years. Is it for German ices? And is
Speaker 1: it for really the same components because China has really
Speaker 1: been trying to make its own component industry as well.
Speaker 2: Now China is changing from a pure production manufacturing based
Speaker 2: system and a market for importers right towards the technology
Speaker 2: based system, which is driving its own innovation and bringing
Speaker 2: great product in China for.
Speaker 3: The Chinese people.
Speaker 2: The consumer is extremely demanding, very high tech driven, loves
Speaker 2: high tech functions. So you see way more level two
Speaker 2: plus driving, which is full automated driving, but you are
Speaker 2: still responsible. So it's a thing which is much cheaper
Speaker 2: but still very comfortable. And you see these things in China,
Speaker 2: So the most advanced functions are now asked by Chinese
Speaker 2: consumers and customers, and that's actually a change. So we'll
Speaker 2: China be the same when demand comes back.
Speaker 3: Definitely not.
Speaker 1: And then the other question I also for you is
Speaker 1: that you said that this is going to be a
Speaker 1: very challenging year for you the road ahead, and that
Speaker 1: obviously where demand is absent than cost cuts need to happen.
Speaker 1: Are there going to be more cost cuts at BOSH?
Speaker 1: Where are looking to cut costs? Our jobs on the table,
Speaker 1: You're going to have to cut some jobs now.
Speaker 2: Most important for us are not the cost management questions
Speaker 2: of our plan. The real core thing of the plan,
Speaker 2: which includes cost management right is the innovation plans. Because
Speaker 2: we go for new innovation to face with better value
Speaker 2: to the consumer in different areas. So we've forced to
Speaker 2: go more to the US. We forced to go more
Speaker 2: into new product, new innovation and be on the forefront
Speaker 2: on these new trends, also in China, also in Europe,
Speaker 2: but also in the US.
Speaker 1: So let's not be totally pessimistic in terms of those
Speaker 1: new trends. Where is BOSH right now spending the most
Speaker 1: in R and D? Where are you seeing that sort
Speaker 1: of promise.
Speaker 2: Well, still a lot of money is spent for semiconductors
Speaker 2: because that's an investment based approach. Right, you need to
Speaker 2: build these factory first, right, there is one in the
Speaker 2: US and there are some in Germany.
Speaker 3: We still build. And then there.
Speaker 2: Is obviously the electrification story because long term better electric
Speaker 2: this wild be the way to go. And automation of vehicles,
Speaker 2: including full automation, but majorly the trend is now not
Speaker 2: going for full automation, which some players show, but the
Speaker 2: semi automation, so we.
Speaker 3: Are still responsible. The card does most of the work.
Speaker 3: That seems to be the way where the next wave
Speaker 3: is really coming.
Speaker 1: We had a category where you think you could see
Speaker 1: an acquisition, for example in bat because you said sort
Speaker 1: of a number of times that you need to be
Speaker 1: prepared for inorganic growth. Where are you sort of looking
Speaker 1: at inorganic growth?
Speaker 2: Well, I think on the inorganic side we are not
Speaker 2: so much looking at the automotive because the automotive we
Speaker 2: can do from our own We invest heavily on our
Speaker 2: own capacities.
Speaker 3: Right, But inorganic growth.
Speaker 2: We did this now with the air condition because of
Speaker 2: the heat pump business, which is also transforming the industry
Speaker 2: and there in this non automotive side always we are
Speaker 2: quite active. You saw that also with the building integration
Speaker 2: where we acted in Canada and the northern US with Paladine.
Speaker 2: And that's the right way to do it, because this
Speaker 2: is the moves we need to do to shift more
Speaker 2: to North America, to shift more to this non automotive businesses.
Speaker 2: The automotive we are strong enough to shape this ourselves.
Speaker 1: All right, Well, listen to seven Hart and thank you
Speaker 1: so much for your time today. I really appreciate really
Speaker 1: going around the world and around the different industries that
Speaker 1: BASH is involved in, which is again in half of
Speaker 1: the world's smartphones and in literally every single car, so
Speaker 1: a really a very sort of thorough appraisal of sort
Speaker 1: of demand in the global stage.