BorgWarner (BWA) Bank of America Global Automotive Summit summary

Market outlook and industry trends

• Global auto production is expected to be flat to down 3% in 2024, with demand holding steady despite oil shocks and affordability concerns.

• Regionalization is shaping market dynamics, with China leading in EV and hybrid adoption, Europe progressing steadily, and North America lagging.

• Hybrids are experiencing rapid growth, while BEV growth is slower than anticipated; foundational products remain important, especially in North America.

• Regulatory changes are driving technology adaptation, with flexibility in product offerings to meet diverse regional requirements.

• Capacity optimization and capital allocation are key focuses, with CapEx managed globally and recovery sought for underutilized assets.

Competitive landscape and business strategy

• Market share is strong in foundational products, typically ranking first or second, with consolidation favoring larger suppliers.

• E-products are targeting top-three positions globally, with share consolidation underway and significant wins in China influencing Western markets.

• Speed to market, technology leadership, and deep local relationships drive success in China, especially with top local OEMs.

• The company leverages a decentralized operating model, enabling plant-level decision-making and adaptability.

• Expansion into power generation and data centers leverages core competencies, with a $300 million revenue target in 2027 for data center solutions.

Financial performance and growth initiatives

• Record wins and increased margins (up 60 bps), with 14% EPS growth and $1.2 billion in free cash flow last year.

• Battery business restructured to match demand, with revenue down but income up; bullish long-term outlook for energy storage.

• Hybrid vehicles offer the highest content per vehicle ($2,300), with margins and ROIC targets consistent across product lines.

• Award activity is accelerating, with new business wins expected to drive growth from 2027 onward.

• Capital allocation prioritizes a healthy balance sheet, investment grade rating, balanced M&A, dividends, and share repurchases.