U.S. car demand growth fuels Brembo's high-end brake business

DETROIT Fri Dec 6, 2013 4:36pm EST

DETROIT Dec 6 (Reuters) - When the redesigned 2015 Ford Mustang sports car arrives next fall at U.S. dealers, it will share something with the BMW X5 utility vehicle and the Tesla Model S electric sedan: High-performance brakes supplied by Italy's Brembo SpA.

Those three vehicles do not appear to have much else in common, other than the fact that all appeal to discerning buyers and all are built in the United States.

Both elements, it turns out, are fueling growth for Brembo North America, based in suburban Detroit.

When the parent company reported third-quarter earnings last month, it revealed that North America accounted for more than 25 percent of global sales, "thus becoming our main market."

Revenues in the quarter rose 14 percent to $534 million, with North American growth more than twice that rate, and sales up nearly 29 percent. If it continues at the current pace, the region should contribute $500 million or more this year to the parent's top line.

Offering branded accessories is growing in the U.S. auto industry, especially on luxury and sports models. It is helping boost demand for such top of the line products as Recaro seats, BBS wheels, Bose audio systems, and Brembo brakes.

The Italian company's long involvement with Formula One racing, which began in the mid-Seventies with Ferrari, also has driven its name recognition among enthusiasts.

Dan Sandberg, president and CEO of Brembo North America, says the company's focus on innovation and design has boosted its brand image among U.S. customers.

"The things we do just look cool," Sandberg said.

An innovative design, combining lightweight aluminum calipers with carbon-ceramic discs, helped Brembo land a high-profile application earlier this year on the limited-edition LaFerrari, the Italian automaker's $1.4 million car.

But U.S. consumers can purchase Brembo brakes as an option on the tiny Chevrolet Sonic, which starts at about $15,000, as well as a wide range of vehicles from the Cadillac ATS to the Jeep Grand Cherokee SRT-8.

"The Brembo brand is recognized because of our performance history," Sandberg said. "But people are also seeing Jay Leno talk about Brembo brakes on 'Jay's Garage.'"

The vehicle manufacturers, he added, understand they can leverage Brembo's brand to enhance and extend the appeal of their products, and not just top-of-the-line models.

"The Chevy Sonic is a low-cost vehicle, but they can pump that thing up with accessories and turn it into a performance vehicle," Sandberg said. "Will Brembo be on that? Absolutely."

Brembo has tripled its production capacity and sales in North America since the 2007 acquisition of wheel and brake manufacturer Hayes Lemmerz, where Sandberg was president of the automotive components group.

Brembo North America supplies General Motors Co, Ford Motor Co and Fiat SpA unit Chrysler Group LLC, as well as the U.S. operations of BMW AG, Daimler AG's Mercedes-Benz, Volkswagen AG and Honda Motor Co Ltd.

It is also negotiating to provide brakes for Tesla's new $35,000 compact sedan that is due in 2017, Sandberg said.

The next U.S. frontier for Brembo and its distinctive red brake calipers could be high-end pickups.

"We now supply the Jeep Grand Cherokee SRT-8 and the BMW X5 utility vehicles, but no trucks," said Sandberg. "That's a potential market as (the manufacturers) move into premium and performance versions."

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