The responsibility for identifying and utilizing opportunities lies with operating management. Their objective is to identify these opportunities on a timely basis and to take appropriate action to utilize them. Opportunities identified are discussed with the Board of Managing Directors as part of the Strategy Dialog and strategies are then derived based on these discussions. During this process, the relevant opportunities for growth are prioritized, specific targets are derived, and actions and resources required to achieve operating targets for the future direction of the Schaeffler Group are determined.
An aggregated overview of the opportunities identified in the Strategy Dialog is included in the reports regularly provided to the Board of Managing Directors and the Supervisory Board of Schaeffler AG. Opportunities are documented in the risk management tool.
The Schaeffler Group’s most significant opportunities lie in strategic trends and in changes to the legal environment that may lead to increased demand for Schaeffler products.
The Schaeffler Group with its range of products and services and its global presence is in a good position to participate in the expected megatrends of the future.
The Schaeffler Group’s strategic and operational opportunities specifically result from the following factors:
Shifting activities to local markets could enable the Schaeffler Group to tap opportunities for reducing cost and to improve proximity to the customer. The company also identifies and realizes additional potential worldwide. This also bolsters the company’s competitive position vis-à-vis competitors from low-wage countries.
Potential in emerging countries
Increasing affluence in the emerging countries results in the development of a growing middle class there. The newly emerging group of buyers can lead to increasing demand for automobiles and industrial goods. The Schaeffler Group is a supplier to all well-known manufacturers and suppliers, which provides a general opportunity to participate in increased demand. The company has invested in significant additional resources in order to increase its local presence in the emerging countries and plans to continue to pursue this growth strategy.
Increasing demands on automobile manufacturers to reduce fuel consumption and emissions as well as increased safety requirements provide the Schaeffler Group with an opportunity to increase its revenue per vehicle. Reducing emissions by improving the technology of conventional internal combustion engines offers further opportunities to the Schaeffler Group, as do the plug-in hybrids currently being developed, which consist of a highly efficient internal combustion engine and an electric drive. Hybridized vehicles require expertise in the classic field of engine/transmission as well as in newer product fields such as hybrid modules and electric axles. The E-Mobility business division coordinates its wide range of activities relating to alternative types of drives, allowing the Schaeffler Group to benefit from comprehensive systems know-how.
The increasing number of people living in mega-cities is making public transportation within cities, such as metros, rapid transit systems, and streetcars, as well as between cities, e.g. by high-speed train, more and more attractive and important. Especially rail vehicles represent an extremely interesting growing market for the Schaeffler Group. Reliable and innovative rolling bearing solutions for applications ranging from bogie to the drive train are key to modern rail vehicles – and also promise growth for mechatronic products in the age of digitalization in mobility. In addition, the high stresses and resulting wear and tear as well as safety regulations make this market a market of the future with respect not only to original equipment but also to the Aftermarket business.
Increasing globalization is inherently associated with an increase in the volume of air traffic. As a result, growth in the aerospace sector is forecasted to be steady. In this sector, issues such as reducing CO2 and weight as well as optimizing fuel consumption are increasingly gaining in importance. The Schaeffler Group is already actively participating in these developments.
People are increasingly moving to larger cities and metropolises, whether for their job, cultural events, or consumer spending. As a result, energy and water consumption is expected to continue to rise in these central locations in the future. In addition, the increasing electrification of automobiles will drive a growing need for energy. The rising demand for energy and the beginning transition to renewable energy both lead to an inevitable demand for energy from renewable sources. Especially in the wind business, the Schaeffler Group is already successfully operating in the market. Continually expanding the existing expertise in these business fields offers additional future opportunities for growth.
Trends related to automobile manufacturers
In the last few years, automobile manufacturers have increasingly created global platforms aimed at standardizing components and vehicle systems in order to save costs by increasing efficiency. Consequently, automobile manufacturers are looking for suppliers who can supply standardized components worldwide. In return, they reduce the number of suppliers and concentrate on a few global suppliers. Suppliers such as the Schaeffler Group benefit from this trend due to their global presence and their ability to supply products to the same technological and quality standards worldwide.
Development of vehicle population
The absolute vehicle population is one of the key drivers of growth in the Automotive Aftermarket. Growth depends on various factors, such as demand (determined by kilometers driven and the composition of the vehicle population), services offered, as well as products offered. Besides the vehicle population, increasing content per vehicle provides additional opportunities.
The internet of things finding its way into factories has started a fourth industrial revolution. Future scenarios in practice often referred to under the heading “Industry 4.0” are characterized by highly individualized products in very flexible manufacturing conditions. In the future, companies will network their machinery, warehousing systems, and equipment around the world. The accompanying global digitalization is progressing at an enormous speed everywhere. Highly interconnected machines and plants can facilitate progress in manufacturing, including by employing this type of machine in the company’s own production. Along with production technology, Industry 4.0 also comprises digitally connecting components and machines. The Schaeffler Group’s products can be found wherever something is turning and primary data can be obtained. This allows bearings to be monitored continually and their operation to be improved based on the results.
The topic of “Digitalization” connects all divisions. It will significantly transform the entire economy and its traditional processes. The convergence of the real world and the digital world will produce new business models and a lasting increase in value creation. The Schaeffler Group’s “Digital Agenda” comprises four key elements: Products & Services, Machines & Processes, Analyses & Simulation, and User Experience and Customer Value. With its “Digital Agenda”, the Schaeffler Group is concentrating both on internal processes and on products and solutions for its customers. It is not only internally that the company aims to increase the efficiency of its processes, use available data more intensively, and more effectively link production locations, machines, and buildings. It also aims to expand on its customers’ existing business models and help them develop new ones.
The Schaeffler Group’s legal opportunities specifically result from the following factors:
Constantly tightening exhaust emission standards (Euronorm, CAFE standard) are putting increased pressure on automobile manufacturers to use energy efficient solutions in their vehicle drives, consisting of the internal combustion engine and the transmission. The Schaeffler Group as their development partner can support the search for solutions with its innovative strength, creating innovations that automobile manufacturers can turn into a competitive edge.
Average fleet consumption
Besides emission standards, government pressure on automobile manufacturers is also increasing with respect to the fuel consumption of the vehicles they produce: Governments are prescribing certain limits for fleet consumption, to be achieved via their model mix. This also helps drive developments needed to reduce emissions, benefitting primarily technology-oriented suppliers like the Schaeffler Group, since the requirements established by the market and the law make a strong development partnership between the automobile manufacturer and its suppliers a necessity.
Favorable trends in interest and foreign exchange rates can positively impact the Schaeffler Group’s financial result and earnings. The company constantly monitors the financial markets in order to detect any possible impact on the Schaeffler Group on a timely basis and identify any potential need for action.