Our Corporate Strategy.
Here at Knorr-Bremse, we aim to shape the future of rail and commercial vehicle transportation by improving safety, reliability and efficiency. At the same time, we seek to add value for our customers, employees and shareholders, as well as society at large. We intend to defend our leading position in multiple markets and continue our profitable long-term growth trajectory.
We also intend to devote equal attention to our social and environmental responsibilities, however. By providing sustainable system solutions for mobility, our innovations are making a significant contribution to overcoming social challenges and driving social progress. Every day – around the world.
Knorr-Bremse has achieved above-average growth for many years now. Thanks to focused acquisitions, strong organic growth in our business segments and targeted expansion of our product and services portfolio, revenues have risen by an average of 7.5% a year. We intend to maintain this dynamic momentum into the future, and to do so, have defined strategic growth targets both for our business units and for any potential M&A opportunities. Knorr-Bremse will continue to pursue advantageous acquisitions, joint ventures and investments in startups, primarily with the aim of expanding our existing product and services portfolio, boosting international growth and strengthening our systems competence.
The five most important elements of our strategy for pursuing and achieving our goals are:
1) Capturing Megatrend Opportunities
Knorr-Bremse is focusing its offering on the global societal megatrends of urbanization, sustainability, digitalization and mobility. As a result of regulatory requirements, government investment programs and the increasing demand for new technological solutions, these megatrends are driving our business globally. Knorr-Bremse is ideally placed to play a significant role in shaping these global trends.
Urbanization: Growing urban populations are causing inner-city traffic volumes to rise, boosting the demand for local public transit services. This in turn is intensifying the need for Knorr-Bremse’s efficient, reliable, safe solutions. For example, our Blind Spot Assistant for retrofitting to trucks is helping to improve road safety in cities. Similarly, our efficient, safe entrance systems for rail vehicles are speeding up the flow of passengers boarding and changing trains, helping to ensure that light rail vehicles, metro services and commuter trains operate more efficiently and reliably.
Sustainability: Sustainability and climate protection are playing an increasingly important role in society. This calls for effective, efficient and long-term solutions for both the rail and commercial vehicle industries. End-to-end eco-design is helping to reduce the carbon footprint of our products and make transportation and logistics more energy-efficient as a result.
Digitalization: Increasingly, we are deploying digital technologies to interconnect and automate both our products and our internal business processes. By doing so, we are helping to improve traffic safety and streamline vehicle operation and maintenance with our products.
Mobility: An increasingly mobile and interconnected global population is continuing to drive up the demand for safer and more efficient mobility and logistics solutions. Our product range across both divisions is making a decisive contribution in these fields.
To address and influence these global megatrends, development efforts in our two divisions are centered on these trends as they affect our respective target industries. Accordingly, in the rail vehicle industry we are focusing on improving the transportation capacity, availability, eco-friendliness and life cycle management of our products. And in the commercial vehicle industry, as well as improving traffic safety and reducing emissions, we are concentrating our efforts on e-mobility, automated driving and connectivity.
2) Expanding Technology Leadership
Knorr-Bremse is a global technology leader. We implement innovative solutions that deliver clear customer benefits; we set industry-wide standards for safety, efficiency and reliability; we guarantee top levels of quality.
To continually strengthen our position, we invest an above-average percentage of our revenues – around 6% – in innovation, and we constantly expand the scope of our research and development activities. Development partnerships enable us to work closely with our customers to identify solutions that add significant value.
Knorr-Bremse’s ability to deliver innovative solutions that address the industry trends in our two major target markets is further underpinned by some 3,600 R&D employees and by the 12,000 or so separate patents we have registered or filed.
In our Rail Vehicle Systems division, we are developing solutions that meet the need for increasing transportation capacity on existing rail infrastructures. These include system modules for automated train operation (ATO), as well as brake control technology that guarantees consistently exact braking distances to reduce the gaps between trains.
For our customers, rail vehicle availability is crucial to ensure that investments are both efficient and effective. Our solutions and systems for automatic condition monitoring and associated maintenance services, for example, also create significant additional benefits for our customers.
At the same time, in line with the trend toward end-to-end life cycle management of our systems, we are extending our range of products and services to provide customers with optimal support over the entire product life cycle. Finally, we are taking the trend for environmentally responsible rail transportation into account in our product design – by using eco-friendly refrigerants in our HVAC systems, for instance – and consequently making an important contribution to a more efficient and sustainable rail industry.
Development efforts in our Commercial Vehicle Systems division track specific trends in the commercial vehicle industry. One ongoing trend is traffic safety. Here Knorr-Bremse’s solutions expertise and global presence mean that advanced safety technologies such as electronic braking systems (EBS), disk brakes and automatic emergency braking systems (AEBS) are gaining traction all over the world.
In the field of automated driving, we have developed a structured product roadmap for systems all the way from advanced driver assistance (ADAS) through to fully automated (autonomous) driving. In 2018, we entered into a close partnership with Continental; more recently, we made acquisitions in Japan and the USA which added steering system technologies to our product portfolio. These additions to our product portfolio complements our existing brake systems expertise and means that we can now offer superior automated driving systems.
Sustainability in road transportation is also a key trend in the commercial vehicle industry: e-mobility and reduced emissions are expected to make a valuable contribution to environmentally responsible transportation. To our customers all over the world, we offer solutions that ensure compliance with the increasing number of regulatory requirements in the various markets and advance the cause of e-mobility in commercial vehicles. We are also continuing to work on the connectivity of our products.
In addition to driving technological advances within our two divisions, we also leverage the synergies between them. Over the next few years, we will systematically expand these synergies by, for example, using shared research centers and facilitating technology transfer between the divisions. We believe there is considerable potential for synergistic developments in digitalization, for instance, in the form of applications such as predictive maintenance. Any innovative product solutions developed as a result will then generate additional benefits for manufacturers, operators and users alike.
3) Leveraging Global Presence
With 100+ operating locations in over 30 countries, Knorr-Bremse has a very strong local presence in all relevant markets worldwide.
Thanks to our market share and all-round systems competence, we are therefore well placed to grasp the opportunities emerging from developments and trends in local markets to increase content per vehicle. As a partner of all major customers worldwide, we can offer local market presence and expertise coupled with global product and systems excellence.
Further penetration of growth regions is a key element of our strategy.
Along with other regions, Asia continues to be an important growth market for our Rail Vehicle Systems division. High government spending on infrastructure and a strong urbanization trend are major drivers here. Following the launch of new climate protection programs and associated investment in rail transportation, we are also expecting to experience substantial growth in Europe.
In our Commercial Vehicle Systems division, we intend to leverage the current trend toward increased content per vehicle to further expand our OE business worldwide. New regulationson safety and emissions reduction are helping to drive technology upgrades for trucks and buses. In regions such as North America, China and India in particular, where vehicle equipment levels have historically been lower than in Europe, we are expecting content per vehicle to rise as disk brakes and modern driver assistance systems are gradually introduced. This, combined with our systems competence and existing solutions, should enable us to significantly increase our share of vehicle content.
4) Growing a Profitable Aftermarket
Thanks to the large installed base of vehicles equipped with Knorr-Bremse products, along with our global presence and proximity to customers, our two divisions are both well placed to take advantage of attractive aftermarket opportunities based on stable demand to further expand their service offerings.
In our experience, over its entire life cycle, the aftermarket potential of a rail vehicle system could be two to three times higher than the value of the actual equipment supplied. More and more regulatory bodies worldwide are prescribing regular inspections and fleet modernization, both of which directly impact our business volume. We will also offer aftermarket services based on new data-driven business models that support condition-based maintenance and remote diagnostics, for example. As they become increasingly established as market standards, these will both drive further growth.
We are also seeking to leverage our large installed base in the aftermarket segment for commercial vehicles. The aftermarket offers attractive opportunities for selling specific replacement and spare parts which need replacing multiple times over a commercial vehicle’s lifetime. In addition, our global aftermarket platform TruckServices and in particular, our AllTrucks service network with its extensive customer base, comprehensive inventories and numerous service facilities, both enable us to maintain a strong local presence. Thanks to this, we can supply independent aftermarket solutions that also fit our competitors’ systems.
5) Continuous Efficiency and Excellence
In a market increasingly driven by consolidation among our OEM customers and an unremitting pressure to cut costs, constant cost discipline, rigorous profitability initiatives, efficient processes and sustainable business management are more important than ever.
To ensure that we continue to growth, we have prioritized the sustainable and ongoing improvement of our productivity, the streamlining of our process efficiency (including the implementation of global process standards such as our Knorr-Bremse Production System, optimized supply chains, harmonized procurement standards and further automation), and the leveraging of our robust balance sheet. In our efforts to optimize costs, we always take care to achieve a balance between our global manufacturing footprint and our R&D activities.
To implement our strategy and achieve the objectives we have set ourselves, we concentrate on constantly optimizing our managerial and organizational structures, and on further developing Knorr-Bremse’s corporate culture.