The ZF Corporate Strategy

We need to increase our resilience to external influences in order to successfully master the transformation. To achieve this, we will further reduce our debt and improve our operational performance. The aim is to increase our structural profitability and cash flow while securing investments for the future. We have initiated appropriate measures.

As early as 2023, we launched the performance programs for the passenger car business, the commercial vehicle business and for making our German locations more competitive. Especially in our domestic market, we identify significant potential for improvement due to the low profitability of individual plants. Due to the major acquisitions of TRW and WABCO in recent years, the German location structure has gradually increased and led to considerable inefficiencies. Therefore, we will change the production and development locations in Germany to ensure that they are competitive in the medium to long term. They will be consolidated and transferred to a future-oriented and streamlined network of locations. In this new structure, they will become much more agile and effective, allowing them to respond more quickly to changing customer requirements and market conditions.

Another important measure to strengthen our financial base is the spin-off and sale of parts of the company where we are not among the strongest players in the market or where there are few synergies with other areas of the company. When they are independent, the respective business units are more flexible in terms of further growth opportunities and targeted investments. In 2024, we successfully established our Passive Safety Systems Division as an independent entity under the name ZF Lifetec and launched the ZF Foxconn Chassis Modules GmbH joint venture for our axle assembly business. Both newly established companies have already developed very well in their first fiscal year.

We also lead the field in subsegments of electric mobility for passenger cars and in components for automated driving. To strengthen and further expand these, however, we need to respond even faster and more flexibly to market conditions and trends. In this context, we are opening these two businesses to partnerships and creating what we call ecosystems.

If, on the other hand, the prospects for earnings, sustainable growth and successful partnerships are non-existent, we act consistently and exit from technologies or sell participations. For example, last year we ended the development of an autonomous shuttle vehicle.

For ZF, strengthening strengths means continuing to grow in those market segments where we have a strong market position and see further potential. We are therefore focusing our resources and spending on the core business areas where we are globally already among the top 3 players. In 2024, we once again made significant development and investment decisions in the areas of commercial vehicle technology, industrial technology, car chassis technology and the aftermarket business. With innovative, sustainable product and technology solutions, we were able to unlock additional growth potential. As a result, we will grow significantly faster in these segments than the respective markets.

As a supplier, we lead the commercial vehicle segment worldwide. Our key to success is that we have the broadest product and technology portfolio in the market, paired with the ability not only to deliver products, but also to integrate them into system landscapes and our customers’ vehicle environment. In industrial technology, we also rank among the leading suppliers and are one of the top 3 in the key segments – such as construction and agricultural machinery, special vehicles and marine applications. Our Aftermarket Division is the global number 2 in the spare parts and service business for passenger cars, trucks, busses and coaches as well as construction and agricultural machinery. In the spare parts market for commercial vehicles, we are even number 1.

In addition to the commercial vehicle segment, we are also the number 1 in car chassis components and a leader with by-wire technologies. The passenger car business will remain an important segment for ZF in the future, with good development opportunities, and a driver of innovation for technology transfer to other segments. We assume, however, that the share of passenger cars in our total sales, currently around 75 percent, will decrease in the next decade. We will therefore focus even more on high-yield future technologies

We want our business units to develop optimally and achieve a leading competitive position. Therefore, we are evaluating the development potential of each individual division to determine in which configuration they have the best future prospects. This also includes a change in the corporate culture. We need more agile divisions with flatter hierarchies that can make decisions independently – allowing them to better meet the demands of their market segments and customers.

This includes our strategic approach “local for local.” In growth regions such as Asia-Pacific, India and North America, we are further expanding our local production and development activities to respond quickly and efficiently to local market trends and customer requirements. We want to make the individual regions even more independent. The aim is to further increase their share of sales and achieve sustainable growth. Various projects have already started. China, for example, is now a particularly strong and independent region with a total of around 20 locations and its own raw material suppliers.