The coronavirus pandemic is leading the automotive industry to question long-held assumptions about issues including self-driving cars and globalization, Bosch CEO Volkmar Denner said.
It will take years for the full impact of the crisis to be known, Denner said at Bosch’s annual press conference last week, long after showrooms and factories reopen once coronavirus restrictions are lifted.
For example, forecasts about a market for self-driving “robotaxis” could turn out to be wrong, he said.
“How does COVID-19 affect buyers' behavior?” Denner said. “That's something we don’t know. The application for Level 4 (autonomy) is in robotaxis, but will people want to get into vehicles they don’t own, as they could do even a few months ago?”
Bosch was forced to close 100 plants around the world due to the outbreak, and 27 remained shut as of the end of April, Denner said. But even when all Bosch’s factories are up and running, and typical output of 300 million parts a day is resumed, the coronavirus crisis will have left a mark in other ways, he said.
Internally, the need for safety equipment has led Bosch to devote part of its production capacity to making face masks and sanitizer, which will be needed for the foreseeable future for most of the supplier’s 400,000 employees. Bosch plans to make 500,000 masks a day and 5,000 liters of sanitizer a week to meet its own requirements. It is also working to develop a test for COVID-19 that would shorten the waiting time for results.
Bosch ranks first on the Automotive News Europe list of top 100 global suppliers, with automotive revenues of $49.53 billion in 2018.
Denner warned against curtailing international trade because of the virus. “The pandemic could mean that globalization is in for a sustained setback,” he said. “Across-the-board isolationism of the kind demanded by certain populist politicians cannot be the solution. It would result in even greater losses of prosperity than those already threatened by the pandemic.”
He added that additional tariffs as a result of trade disputes cost Bosch 100 million euros in 2019. “Anyone who wants to retreat to pre-globalization times is undermining what companies like Bosch stand for,” he said. “Our associates come from 150 countries, and even when faced with coronavirus, we see ourselves as a United Nations.”
Anticipating a global recession in 2020, Bosch finance chief Stefan Asenkerschbaumer, said all divisions were under instructions to “exercise extreme restraint” in capital expenditures. Existing projects, such as the construction of a chip factory in Dresden, Germany, will not be put on hold but where possible, expenses will be spread out over a longer period, he said.
Like many other companies, Bosch, which is not publicly traded, has suspended any financial guidance for 2020. Operating margin, at 4.7 percent, was down in 2019, compared with a target range of 7 percent to 7.5 percent.
“Right now, the crush is so immense that a statement about when we might get back to that level would not be realistic,” Denner said.