Bosch's 2024 business drags amid weakness in core markets
New Delhi:
The world's leading auto supplier
Robert Bosch
has reported a decline in sales for 2024, falling short of its earlier growth projections. This downturn, coupled with weaker-than-anticipated margins, significantly impacted the company's EBIT margin, highlighting challenges in its performance for the year. The German company has attributed the performance shortfall to ongoing weakness in its core markets, mainly Europe and North America.
At the company's annual press conference, held in Germany, on Thursday, Dr. Markus Forschner, a member of the board of management, highlighted that while automotive production, including heavy commercial vehicles, declined last year, emerging technologies like electromobility, fuel cells, and automated driving are taking longer than anticipated to gain traction. He added that the adoption of these technologies is unfolding at a slower pace and with significant regional variations.
'China is now leading the way in these areas of future importance, and is the world's biggest vehicle producer– which for the first time puts it ahead of Europe and North America combined. Our other two core markets, mechanical engineering and especially the construction industry, are also experiencing difficult times. And the heating market in Europe, Germany in particular, is still suffering from considerable distortions due to changes in government subsidies,' Forschner said at the virtual press conference.
It is worth noting that Europe's automakers have been affected by weakening demand and a slower-than-expected transition to electric vehicles. In Germany, manufacturers are grappling with high costs while facing increasing competition from more affordable Chinese rivals entering the market. Also, global uncertainty amid geopolitical tension and tariff tantrums unleashed by the US President has also been adding to the woes of the auto sector.
In line with the company's long-term objectives, Dr. Stefan Hartung, Chairman of the Board of Management at Robert
Bosch
, emphasised the need for a focused approach on business areas and cost saving measures.
"Regrettably, this means that the number of jobs, particularly in Germany and Europe, will decline," Dr. Hartung said. "We have already announced structural adjustments and job cuts in various areas, and have been in ongoing discussions with employee representatives about these changes."
In December, Deputy Supervisory Board Chairman Frank Sell revealed that staff reduction plans have put between 8,000 and 10,000 jobs at risk in Germany.
Outlook
Bosch's forecasts for the 2025 business year present a tough challenge amid these uncertain and volatile times. The company expects growth this year to be 1 to 2 percentage points higher, while maintaining its target margin of 7 per cent for 2026.
Hartung noted that, unfortunately, a clear turnaround does not seem likely this year.
To navigate these challenges, Bosch emphasised its focus on further expanding its regional strategy globally, which will help strengthen its supply chains.
By 2030, the German auto supplier aims to achieve average annual growth of at least 6 per cent and a margin of at least 7 per cent. 'Given the current turbulence, this goal presents an extremely challenging task, especially with the increasing competition, particularly from Chinese suppliers,' it said.
Looking ahead, Bosch sees the markets in Asia and the Americas as remaining attractive for German companies. In particular, the company plans to accelerate its growth in North America and India, aiming to grow significantly faster in these regions than in previous years.
Investments
Hartung noted that the demand for the latest generation of combustion engines is providing some support during the transitional phase. However, he acknowledged that the company's e-mobility facilities, in which it has invested heavily, are not being used to full capacity.
Despite these challenges, Hartung remains confident that, in the medium and long term, electromobility and hydrogen fuels are the technologies of the future. Additionally, Bosch is placing its bets on software-defined vehicles (SDVs) as another key area for growth and innovation.
In 2024, Bosch made investments totaling approximately €13 billion, with €5.1 billion allocated for capital expenditure and €7.8 billion for research and development.
The company's goal is to "at least maintain" its global market position while further expanding its presence in regions like North America and India, which present 'considerable potential' for additional growth.
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