"There were no go-to-market synergies with the other businesses," Olivier Rabiller, CEO of Honeywell Transportation Systems, said in a December interview with Automotive News Europe. He said the unit would benefit from making its own investment decisions.
"The spinoff is a recognition that Transportation Systems is a successful business and it is in the best interest of Honeywell to position this business to be even more successful in the future," he said.
French supplier Faurecia sold its exteriors division to a onetime competitor, Plastic Omnium, for $753 million in 2016. The sale let Faurecia, in which PSA Group holds a controlling stake, retire outstanding debt, but it also gave Faurecia a war chest to acquire companies that are better aligned with its areas of strategic future competence: seating, interiors and clean mobility.
The exteriors division was not sufficiently international and was relatively low-tech, a Faurecia spokesman said.
"The money offered the group new investment capabilities that allow us to complete our technology road map," he said, citing its investments last year in Parrot Automotive and Jiangxi Coagent Electronics for connectivity and infotainment systems, and Hug Engineering, which develops exhaust gas purification components.
The move is paying off for Plastic Omnium as well, said Jean-Michel Szczerba, the company's co-CEO. Plastic Omnium wanted to win bumper contracts in the lucrative German market, and that is now happening.
"We wanted to create a relationship for bumpers with Daimler, with Audi and with Ford," he said. Last year, Plastic Omnium agreed to provide bumpers for the Mercedes S class.
Plastic Omnium is now seeking to sell its environmental division, which makes waste bins and playground equipment, and was one of the group's original businesses. Instead, the supplier hopes to devote its resources to research into composites and hydrogen fuel cell storage.
Some suppliers are still following the conglomerate model. Robert Bosch, No. 1 on the Automotive News list of the top 100 global suppliers with worldwide automotive sales of $46.5 billion in 2016, also sells home appliances, security systems, business logistics software and even garden tools. The largest Japanese suppliers, including Denso Corp., at No. 4 on the list, and Aisin Seiki Co., at No. 6, have not announced plans to spin off or sell major divisions.
But the biggest breakup could be coming this year. Continental, with a market cap of $43 billion, said it was in talks about a possible restructuring to reach its growth targets. Potential changes reportedly include a spinoff of its tire division.
"The suppliers who choose to consolidate and scale up will be the only player standing in some segments. That's a viable strategy," said Neal Ganguli, a managing director at Deloitte Consulting. "Then we've seen suppliers who say, 'We're going to shut these businesses and focus on becoming more of a profit seeker.'?"
Not every bid to divest or spin off divisions succeeds. The British supplier GKN, facing a hostile takeover by the London investment group Melrose Industries, had been working on divesting its automotive division to focus on aerospace and defense. GKN cited the "strategic optionality" in having "separate companies with distinct investment profiles and capital allocation policies." It was nearing a deal to sell its automotive operations to Dana, but shareholders late in March voted for Melrose—which had the opposite views on the split.
In wooing GKN shareholders, Melrose said that "any actions to immediately separate the businesses in preparation for a sale of one or the other would be value-destructive."