Falling production volumes pose sales risks in volume and monetary terms, as well as earnings. Such risks arise because although automotive manufacturers normally nominate a supplier for a certain vehicle, they do not commit to a minimum purchase. We reduce these risks, for example, by making our production capacities more flexible and taking action to cut our fixed costs. Growing installation rates for some of the Corporation’s key products in the automotive area compensate for these risks to some extent. Furthermore, part of our strategy relies on generating a substantial percentage of sales outside the automotive original equipment industry in order to spread our risk across industries with different cycles. However, after our acquisition of the Siemens VDO, the share of sales attributable to the automotive industry has risen significantly. Our goal is to return to a share of 40% of sales from outside the automotive industry.

Automobile manufacturers are increasingly being impacted by a simultaneous mixture of innovation, cost-cutting pressure, and ever shorter product development cycles, and are passing this pressure on to their suppliers. In particular, they expect lower prices for the same, in some cases even enhanced functionality, plus consistently high product quality. Sustained cost management and the broad-based structure of our Corporation put us in a position to handle these risks.