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Honeywell Sees U.S. as ‘Emerging’ Market for Car Turbochargers

Honeywell International Inc., the world’s largest maker of turbochargers, expects use of the devices to double in new U.S. automobiles by 2015 as tighter fuel economy standards foster an emerging market.

About 20 percent of engines built in the U.S., Canada and Mexico will include turbochargers, up from an estimated 9 percent this year, the Morris Township, New Jersey-based company said. The U.S. figure lags behind a projected 67 percent this year in Europe, 28 percent in India and 13 percent in China.

The U.S. has among the lowest turbo use in the world, making it an “emerging region from a turbo standpoint,” Alex Ismail, head of the transportation systems division, said in an interview yesterday in New York. “If you think about the U.S. just mirroring what’s happening in Europe and/or the rest of the world, Honeywell has a long story of growth ahead of us.”

Honeywell’s turbochargers work with gas- or diesel-burning engines in vehicles from Tata Motors Ltd.’s Nano, with its 0.8-liter engine, to a Caterpillar Inc. mining truck with a 100-liter engine.

Honeywell’s projection for the portion of new U.S. automobiles with turbochargers is predicated on continued acceptance of gas and diesel turbos as well as sales growth in the auto industry, Deane Dray, a Citigroup Inc. analyst in New York, said in an interview.

“We think it’s a very realistic goal,” said Dray, who has a “hold” rating on the shares.

Turbos are more popular in Europe because of higher oil prices and stricter carbon-emission standards, Ismail said. In the U.S., automakers are promoting turbochargers as they work to meet a government mandate that manufacturers’ automobile fleets run an average 35.5 miles per gallon of gasoline by 2016 from 25 miles per gallon now.

Cruze, EcoBoost

General Motors Co.’s Chevrolet Cruze Eco uses a 1.4-liter turbocharged engine that provides power comparable to a 1.8-liter engine, only with better fuel economy. The Cruze Eco gets as much as 42 miles per gallon on the highway.

Ford Motor Co., the second-largest U.S. automaker, plans to equip 90 percent of its North American models with turbocharged EcoBoost engines by 2013, the company has said. The automaker has said in two years it plans to have annual production of 1.5 million of the engines, which use turbochargers to add power while feeding precise amounts of fuel to the cylinders to improve efficiency. Ford has said the engine can improve fuel economy as much as 20 percent.

Honeywell sells turbochargers through its transportation systems division, which posted $4.21 billion in revenue last year, or about 13 percent of company sales.

The turbocharger operations represent about 60 percent of the transportation unit’s revenue. The company doesn’t provide financial data for businesses within the transportation unit, said Joe Toubes, a Honeywell spokesman.

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