With Beda Bolzenius as its auto industry point man, KKR has scooped up two far-flung global parts companies, Nissan-controlled Calsonic Kansei of Japan and Fiat Chrysler Automobiles-controlled Magneti Marelli of Italy, spending $11 billion in less than 24 months to create an auto-parts powerhouse with combined annual sales of $16.4 billion.
The new company goes by the name Marelli.
The Magneti Marelli part already had a wide-ranging product portfolio, with plastics for lighting under its Automotive Lighting joint venture, instrument clusters, interior parts — including dashboards — and major exterior systems such as bumpers and fenders.
In 2016, the company said it produced more than 21 million headlamps, 29 million rear lighting units and 4.7 million instrument clusters.
In North America, Calsonic Kansei currently has two injection molding plants, with estimated sales of $130 million, according to Plastics News data. Globally is reported 998.6 billion yen ($8.9 billion) in sales in its 2017 fiscal year.
Now Marelli's CEO, Bolzenius, is a 63-year-old German who spent the first half of his career moving up through the management of Johnson Controls Inc., of Glendale, Wis., including nearly eight years working in Detroit.
He now finds himself in an office in Tokyo, working to blend a storied Japanese management team with an equally accomplished group in Italy, under the umbrella of KKR, with its expectations for return on investment. He must stitch them into a seamless enterprise for a future in which automakers are seeking new technologies and are looking beyond components and supplier relationships that worked in the past.
But there is more to come, Bolzenius revealed.
"There will be a need for two or three more technologies," Bolzenius said. "We are covering most parts of electrical powertrains, but we've identified our technology gaps and we are actively screening the market for certain options and we are ready for a couple of acquisitions."
What KKR and the executive team have in mind, Bolzenius indicated, is the creation of a new player — probably to be spun off as a publicly traded entity — that will be able to deliver vehicle systems. Speaking of KKR's vision, Bolzenius used the industry term "Tier 0.5" for a supplier that's big and diverse enough to produce most of a vehicle if an automaker requests it.
"They are now talking more about the Tier 0.5 supplier, sitting on the systems side and the component side, and we are targeting to get there," he said.
The plan is to move further into automated driving, with the Italian part of the company poised to grow in the critical area of object detection through its headlamp business. KKR, which controls nearly $200 billion in assets of 107 companies, sees electrification as a logical play. The combined suppliers' electronics businesses will evolve deeper into areas of human-machine interface.
"We already have good cooperation with sensor companies, as well as great technology on the camera side," he said. "We'll work with companies that do the algorithm development so that we can move from the pure detection part into more of the recognition part and make the whole detection and recognition part more efficient.
"Further acquisitions are in discussion," he said. "At this point, we are finalizing our five-year business plan and cannot disclose any more precise investment numbers."