It isn’t easy—or inexpensive—to be an automotive supplier

By Gary S. Vasilash

One of the things that doesn’t get a whole lot of attention but should is how there is a slow but certain transition of the automotive supply base.

On the one hand there are companies that seemed as though they were fixtures that shifted. Like Continental Automotive being spun out of Continental last April and becoming Aumovio.

Previously Continental spun off its Powertrain division. It became Vitesco. Vitesco was acquired in the fall of 2024 by Schaeffler and that name is now gone.

Today ZF announced it sold its advanced driver assistance systems (ADAS) business to Harman International.

In the case of Vitesco to Schaeffler, it is a fairly understandable shift, as Schaeffler has a Powertrain & Chassis Div., as well as others that are in that sphere (E-Mobility, Vehicle Lifetime Solutions (a fancy way of saying “aftermarket”), and Bearings and Industrial Solutions).

At first blush the ZF sale of its ADAS business to a company that may be more well known for its automotive audio brands—Harman Kardon, Infinity, JBL, Lexicon, Mark Levinson, etc.–Harman International.

But Harman, which was acquired by Samsung in 2017, has been more deeply involved in automotive tech than might be expected. It has been developing various systems that provide a wide array of driver information, taking advantage of its screens, software, and connectivity.

All of those are nicely complimented by the ZF ADAS acquisition.

But ZF?

This brings up something else that doesn’t get a whole lot of attention.

Given things ranging from the tariffs to the consumer demand for electric vehicles that didn’t grow as anticipated, automotive suppliers are under significant economic pressure.

In making the announcement, Mathias Miedreich, CEO of ZF, said, in part, “the transaction will help to significantly reduce ZF’s financial liabilities. The sale enables us to focus our resources on those core ZF technologies such as chassis, powertrain, commercial vehicles, and industrial applications in which we are global leaders.“

It wasn’t that long ago that ADAS was one of “those core ZF technologies.”

Realize that there will be more demand for ADAS going forward, not less.

But there is an on-going need to advance capabilities in that space, and that takes large, consistent investment.

Evidently the ZF board recognizes that for the good of the company at large those investments are not something that it can sustain. So the sale.

As for Harman, this is a great opportunity.

And let’s face it: with a corporate parent like Samsung, which has a market cap on the order of $499 billion, access to development funds is probably not going to be a significant issue.