Bloomberg had an article on Street Smart saying how the US economy was seeing a recovery powered by consumers.
To cut a long story short they concluded that BorgWarner’s increasing revenues were down to the fact that people do not need turbos so the reason BorgWarner’s shares were increasing was that people were buying luxury items. Like turbochargers.
This analysis could only come from an American.
Just to summarise why BorgWarner revenues are increasing.
EU regulations on emissions are forcing car manufacturers to fit most of their new vehicles with turbos.
This is trend is only going to gain momentum.
Also, turbos are a consumable item. Diesel cars are the most popular now in Europe. This has been the case for around 10-15years.
These turbocharged cars are now starting entering the phase where their turbos are needing renewal.
So not only has the amount of turbos being supplied by car manufacturers set to increase for the forseeable future there is also a burgeoning market for replacement turbos which is also set to increase for the forseeable future.
In short, the market for turbos are only going to increase and this is why BorgWarner are seeing their earnings increase.
Nothing to do with turbos being a luxury item like say Prada.
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