AUTOSHOW-Green push puts spotlight on suppliers

By James B. Kelleher

FRANKFURT, Sept 12 (Reuters) - As the world's automakers rush to bring environmentally friendly vehicles to market, much of the heavy lifting that's required is being done by the lesser known companies that supply them with components.

"Suppliers are playing a bigger and bigger role in putting forward whole systems for vehicles," said Neil De Koker, the president of the Troy, Michigan-based Original Equipment Suppliers Association.

"So they're doing a lot more of the R&D."

On the second and final day of press previews at the Frankfurt International Motor Show, the spotlight turned on those suppliers, as companies like Delphi Corp DPHIQ.PK and TRW Automotive Holdings Corp (TRW.N) highlighted their new products, many of them in keeping with the show's theme of sustainable mobility.

Rodney O'Neal, the president and chief executive of Delphi, the auto parts maker spun off from General Motors Corp GM.N that is exiting bankruptcy, called the push for green content, one of three "megatrends that serve as the basis for the next wave" of development in the autoparts world.

The Frankfurt show also serves as a reminder that while the auto parts sector, particularly in North America, is still undergoing a painful period of consolidation and retrenchment as struggling automakers pressure suppliers to cut prices, many in the industry are doing great and bringing new products to market.

"Some companies really, truly are innovative," said Erich Merkle, vice president of IRN Inc, a Grand Rapids, Michigan-based auto consulting group, "and that's paying dividends for them."

Hybrid powertrains represent the sexy, easily accessible side of the sustainability trend. But the push is also making its way into hundreds of other components, from recyclable upholstery and interior appointments offered by Johnson Controls Inc (JCI.N) to a green shock absorber produced by Tenneco Inc (TEN.N) that uses air rather than oil.

"We estimate that the equivalent of 40,000 litres of oil leak from shock absorbers a day," said Timothy Jackson, Tenneco's chief technology officer.

In many cases, new features are invisible to consumers. Delphi, which makes controls systems for hybrid engines as well as diesel fuel injectors designed to comply with tough emissions rules, also offers wiring systems that use very little halogen, a flame retardant that can release toxic corrosive and toxic gas.

On Wednesday, Delphi officially unveiled a number of green products, including a gasoline injection system that it said would help reduce CO2 emissions.

"Helping our customers deliver innovations that minimize the impact of the automobile on the environment is one of Delphi's main product strategies," said Guy Hachey, president of Delphi's powertrain systems business.

Even TRW, best known for its safety systems, jumped on the environmental bandwagon, claiming its electro-hydraulic steering systems boost fuel efficiency and reduce CO2 emissions.

European suppliers were banging the eco-drum, too. At the exhibit booth where Valeo (VLOF.PA), the French car-parts maker, showed off its latest wares, there were almost as many pictures of plants as there were of their products.

Siemens VDO, the automotive unit of Siemens (SIEGn.DE) which is being sold to Continental (CONG.DE), debuted a turbocharger that makes existing internal combustion engines even more efficient, and Franz Fehrenbach, the chairman of Bosch [ROBG.UL], said his company was driven by the quest to "reduce carbon dioxide and pollutant emissions."

Koichi Fukaya, the head of top Japanese parts maker Denso Corp (6902.T), said his company was working on improving emissions and fuel economy on powertrains across the spectrum -- conventional gasoline engines, clean diesel, hybrids and plug-ins. Denso also has a joint venture with Bosch to produce diesel filters.

Most of the innovations are being forced on the industry through rules and regulations, like mandatory emission standards in Europe and the United States. "That's created a real opportunity for the innovators," Merkle said.

But Gregg Sherrill, the chief executive officer of Tenneco, which makes emission control systems, insists the companies would be developing the alternatives anyway because it's what car buyers increasingly demand.

"This is being driven by consumer interest," he said. "So it's good business." (Additional reporting by Chang-Ran Kim)