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CIE Automotive: The Quiet Basque Giant of Global Auto Parts
I. Introduction & Episode Roadmap
Picture this: It's 1961 in the tiny town of ZaldĂvar, nestled deep in Spain's Basque Country. A young entrepreneur named Javier Egaña starts a modest metal stamping shop with just 100 employees, making brake components for the country's nascent automotive industry. Fast forward six decades, and that humble beginning has transformed into something few could have imagined—a leading full-service automotive supplier operating 111 production facilities and 10 R&D centers across 16 countries on four continents, employing over 24,000 professionals worldwide.
In 2024, CIE Automotive managed to lift its revenue to €3.96 billion and post a record profit of €325.7 million—making it a company that rivals household names like BorgWarner and Denso in the global auto parts hierarchy, yet remains virtually unknown outside investor circles.
How does a company from a region most Americans couldn't find on a map become a $3.52 billion market cap player with trailing twelve-month revenue of $4.29 billion? The answer lies in one of the most disciplined roll-up strategies ever executed in the automotive supply chain—a playbook that reads like a master class in capital allocation, geographic diversification, and countercyclical aggression.
This is the story of CIE Automotive: a company that turned fragmentation into opportunity, transformed joint ventures into beachheads, and built a seven-technology platform that makes it nearly impossible for OEMs to look elsewhere. It's a story of Basque engineering pride meeting financial discipline, of knowing when to acquire and when to divest, and of building a business model so resilient that it actually gained market share during the worst automotive downturn in decades.
The company excels in seven core technologies, including aluminum die-casting, forging, metal stamping, machining, plastics injection, iron casting, and roof systems. This multi-technology approach isn't just a buzzword—it's the company's competitive moat, creating switching costs that keep customers loyal and acquisitions accretive.
The themes we'll explore tell a compelling story: consolidation in a fragmented industry before it became fashionable, the JV-first approach to international expansion, technology diversification as customer stickiness, and capital-light M&A discipline that has delivered consistently through cycles. This is the "roll-up" strategy that actually works.
II. The Basque Country Context & Founding Vision (1961-1996)
The Basque Industrial Heritage
To understand CIE Automotive, you must first understand where it comes from. The Basque Country—straddling the border between Spain and France along the Bay of Biscay—has been Spain's industrial heartland since the 19th century. It's a region where precision manufacturing isn't just a job; it's a cultural identity. The mountainous terrain forged a people known for stubbornness, self-reliance, and an almost obsessive attention to detail.
The Basque industrial tradition runs deep. When Spain industrialized in the late 1800s, it was Basque ironworks and shipyards that led the way. By the mid-20th century, the region had developed a dense network of small and medium-sized enterprises, many family-owned, specializing in metalworking, machinery, and components. This was the soil from which CIE would eventually grow.
The story begins with Basque businessman Javier Egaña, owner of Egaña, SA, a small and medium-sized company with 100 employees based in ZaldĂvar, Biscay. Since 1961, it had been engaged in metal stamping for the manufacture of components for brake boosters, brake drum plates, and filters for the automotive sector.
There's something beautifully simple about those early years. Egaña was founded in 1961 in Zaldibar/Vizcaya by Javier Egaña. In 1966, Egaña started to produce die-cast and formed components. The company wasn't trying to change the world—it was simply making reliable parts for Spain's growing automotive industry, building capabilities one technology at a time.
The INSSEC Vision: Consolidation Before It Was Cool
The transformation from local supplier to global powerhouse began in 1996, when a group of Spanish financiers saw what few others did: the automotive auxiliary sector was ripe for consolidation.
The origins of Corporación Industrial Egaña (CIE) date back to 1996, when INSSEC was created. It was an investment group whose most well-known figures included businessmen Juan Abelló and Abel Matutes, who would become Spain's Foreign Minister. The INSSEC project aimed to create a large Spanish business group in the automotive auxiliary sector, a traditionally highly fragmented sector.
This wasn't just about financial engineering. Juan AbellĂł was already known as one of Spain's savviest investors, having built fortunes in pharmaceuticals and banking. Abel Matutes would go on to serve as Spain's Foreign Minister from 1996 to 2000. These were serious people with serious capital, and they recognized a structural opportunity that others had missed.
As a result of this agreement, Corporación Industrial Egaña was born, in which INSSEC was the majority shareholder, while the Egaña family held a minority but significant stake. This structure—professional investors providing growth capital while founder families retained meaningful ownership—would become a template for CIE's future acquisitions.
"As CIE Automotive we are almost 30 years old, but the project has to be framed in the territory of the Basque Country, with a very strong industrial fabric and, moreover, characterised by a family business profile, small and medium-sized enterprises. It was in this context that something as simple as 'together we are stronger' came about, and that is how CIE was born."
The growth was immediate and dramatic. In the following years, Corporación Industrial Egaña grew at a dizzying pace and within five years had become a multinational group with more than 2,000 employees, 11 manufacturing plants, and a presence in five countries.
Think about that trajectory: from 100 employees to 2,000, from one plant to eleven, from Spain to five countries—all in five years. The consolidation thesis was working.
The foundation was being laid for something much bigger, but first, CIE needed to find a partner to take the next step in scale.
III. The Birth of CIE Automotive: The 2002 Merger
Creating Scale Through Combination
If 1996 marked CIE's conception, 2002 was its birth as a true industrial force. The project started out in 1996 with the creation of INSSEC and its role in Corporación Industrial Egaña, and the CIE Automotive group as such emerged in 2002 as a result of the merger between the Egaña group and the Aforasa group.
The merger with Aforasa was more than a financial transaction—it was a strategic combination that created meaningful scale in a business where scale matters enormously. This integration laid the foundation for the company's international growth strategy, enabling it to consolidate resources and expand beyond its Spanish origins.
The timing was no accident. By 2002, the European automotive industry was entering a new phase of globalization. OEMs were demanding suppliers that could follow them around the world, deliver consistent quality across multiple plants, and handle increasingly complex assemblies. Small, family-run component makers simply couldn't compete for this business—but a consolidated player with multiple technologies and geographic reach could.
The Multi-Technology Strategy
What set CIE apart from other roll-up plays wasn't just scale—it was the deliberate construction of a multi-technology platform. The company excels in seven core technologies, including aluminum die-casting, forging, metal stamping, machining, plastics injection, iron casting, and roof systems.
This wasn't accidental diversification. Each technology was chosen because it addressed a different set of customer needs:
- Aluminum die-casting: Essential for lightweighting as fuel efficiency regulations tightened
- Forging: Critical for high-strength components in engines and transmissions
- Metal stamping: The bread-and-butter of automotive bodywork
- Machining: For precision components requiring tight tolerances
- Plastics injection: Growing importance as interiors became more sophisticated
- Iron casting: Heavy-duty components for commercial vehicles
- Roof systems: Later addition that moved CIE higher up the value chain
The genius of this approach lies in customer stickiness. An OEM designing a new vehicle platform needs dozens of different components across multiple technologies. If CIE can supply ten of those components while a single-technology competitor can only supply two, CIE becomes the preferred partner for the entire program. The sales process becomes collaborative rather than competitive.
"We believe in our business model, which 30 years ago was not so common, oriented towards commercial, geographic and technological diversification to compensate and balance. For us, diversification is a defensive and risk mitigation tool that is working very well."
This "one-stop shop" vision for OEMs wasn't just marketing—it fundamentally changed CIE's competitive position in the market.
The company emerged from 2002 with a clear strategic identity: not just a component supplier, but a technology platform company that happened to serve the automotive industry. This framing would guide every major decision for the next two decades.
IV. The Growth Playbook: Latin America & Early International Expansion (2003-2012)
NAFTA & Brazil: The Geographic Expansion Template
With the domestic consolidation phase largely complete, CIE's leadership turned their attention abroad. Their approach would become a case study in smart international expansion: enter new markets through joint ventures with local partners, learn the business environment, build relationships, then scale.
Mexico came first. CIE Celaya starts operations in 2003 and is the first CIE Automotive plant established in NAFTA. With manufacturing capabilities in Transfer Stamping, assemblies and e-coat; steering tube forming; and Aluminium High Pressure Die Casting with machining and Assemblies.
The choice of Celaya was strategic brilliance. Located in the state of Guanajuato in central Mexico, Celaya sits at the heart of what has become Mexico's automotive manufacturing corridor. When CIE planted its flag there in 2003, they were among the early movers. Currently, CIE's operations in Mexico include a total of nine operational facilities, majority of which are located around the automobile cluster of Celaya and Queretaro in Central Mexico.
The JV-First Approach
CIE's international strategy was distinctly different from the "build-it-and-they-will-come" approach that had burned so many multinational companies in emerging markets. Instead, CIE consistently partnered with local companies who understood the terrain.
As had happened before in other geographies such as Brazil, Mexico, Russia or the US, CIE Automotive entered into a joint venture with a local partner to open ways in a new country with a new culture.
In Mexico, the key partnership was with DESC Automotriz. DESC-CIE Automotive SA de CV was a joint venture between publicly owned companies DESC Automotriz SA de CV, of Celaya in central Mexico, and CIE Automotive SA, of Bilbao, Spain. The venture aims to become a major Tier 2 supplier of molded and forged products for the North American Free Trade Agreement zone and Central America.
This JV structure offered several advantages:
- Reduced risk: Local partners understood regulatory environments, labor markets, and business customs
- Accelerated learning: CIE could observe how successful local companies operated before applying their own methodologies
- Built-in customer relationships: Local partners often came with existing OEM relationships that could be leveraged
- Capital efficiency: Shared investment meant CIE could expand faster without straining its balance sheet
Brazil followed a similar pattern. The country's massive internal automotive market—one of the world's top ten—demanded local presence. COFIDES and CIE Automotive have collaborated since 2004 in various projects to support the group's international strategy in Mexico, as well as in the Czech Republic, Lithuania and Romania.
Building the Acquisition Muscle
Throughout this period, CIE was also developing its M&A capabilities. The joint venture recently spent $27.5 million to acquire two plants with plastic injection-molding operations for car doors and instrument panels from Mexico's Grupo Duroplast, of Naucalpan near Mexico City. In March, DESC-CIE paid $75 million for Nugar SA de CV, headquartered in Tultitlan in the state of Mexico. Nugar's stamped products are sold to automakers such as Volkswagen AG, Ford Motor Co., General Motors and Chrysler LLC.
Each acquisition taught CIE something new about integration, about which companies made good targets, and about how to extract synergies without destroying the cultural elements that made acquired companies successful in the first place.
By 2012, CIE had established meaningful presence in Europe, NAFTA, and Brazil. But the next phase of growth would require a much bolder move—one that would transform the company from a regional player into a truly global one.
V. Key Inflection Point #1: The Mahindra Alliance (2013-2014)
The India Play: A Game-Changing Partnership
Every great company has defining moments—decisions that fundamentally alter its trajectory. For CIE, that moment came on June 15, 2013, when they announced a deal that industry observers immediately recognized as transformational.
The crucial turning point was the 'Global Alliance Agreement' forged on June 15, 2013, between the Mahindra Group's automotive component businesses, operating under its Systech Sector, and the Spanish firm CIE Automotive S.A. This alliance was a direct response to the increasing globalization within the automotive sector.
To understand why this mattered so much, you need to understand both parties. Mahindra & Mahindra was already one of India's industrial giants—a conglomerate spanning tractors, utility vehicles, IT services, and defense. But their automotive components division, operating under the Systech Sector umbrella, had hit a ceiling. They had the technical capabilities and the manufacturing assets, but lacked the global relationships and operational expertise to compete at the highest level.
"Eight years ago, we at Mahindra set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us. We have been listening closely to our customers who have asked to step up our globalisation efforts and follow them around the world. This Grand Alliance with CIE enables us to 'Rise' above competition, quickly extend our reach into new geographies, and grow our collective product portfolio in the coming years," said Anand Mahindra, Chairman of the Mahindra Group.
The Deal Structure: A Masterclass in Aligned Incentives
What made this deal remarkable wasn't just its scale—it was the elegance of its structure. The transaction created aligned incentives for both parties while minimizing cash requirements.
CIE will buy 51% of the new company for about $116 million. Mahindra will take a 20.2% stake. Public shareholders will own the balance.
But here's where it gets clever: Mahindra and Mahindra will own a stake of 13.5 percent in CIE Automotive, making it the second biggest shareholder in CIE. Two directors from M&M will be nominated to join the CIE board.
This cross-shareholding structure meant both companies had skin in each other's game. When CIE succeeded, Mahindra benefited. When the Indian operations grew, CIE's shareholders won. It was a true partnership, not just a transaction.
The agreement will see the formation of a global automotive component supply network with combined annual sales of approximately Rs 15000 crore or $3 billion with operations in North America, South America, Europe and Asia held through listed businesses in Spain, Brazil and India. CIE Automotive will contribute its forging businesses in Spain and Lithuania and together consolidate all companies under Mahindra Forgings.
Strategic Rationale: Why This Was Brilliant for Both Sides
In 2013, the agreement with Mahindra & Mahindra for the creation of the Mahindra CIE Automotive project meant a great step for CIE Automotive, both for entering into the Indian market and for the creation of a worldwide forging unit, within the world top 5.
For CIE, the benefits were clear: - Entry to India: One of the world's fastest-growing automotive markets, with local manufacturing capability - Global forging leadership: By combining European and Indian forging operations, CIE became a top-5 global player in this technology - Customer relationships: Mahindra's domestic relationships opened doors across the Indian OEM landscape
For Mahindra, the calculation was equally compelling. CIE also merged its forging business in Europe into MCIE. MCIE successfully leveraged CIE's existing relationships with US and European clients (GM, Ford, Renault, VW) and made inroads vis-Ă -vis their requirements in India.
After the acquisition, CIE came out with a two-fold strategy. The first phase was focused on the consolidation of the businesses to improve the cost structure and then the second phase was to take the advantage of earning accretive inorganic opportunities for growth.
The entity was renamed Mahindra CIE Automotive, and it would become CIE's vehicle for all things India—and eventually, a separate publicly listed company that created enormous value for shareholders of both parent entities.
VI. The Strategic Plan Era & Dominion Spinoff (2016-2018)
The 2016-2020 Strategic Plan: Setting Ambitious Targets
With the Mahindra alliance bedded down and international operations humming, CIE's leadership took a step back to map out the next phase of growth. On May 26, 2016, they unveiled what would become a defining document: the Strategic Plan 2016-2020.
CIE Automotive has presented today its Strategic Plan 2016-2020 with the commitment of doubling its net profit in five years' time via organic growth, achieving over EUR 250 million and allowing a shareholders' remuneration of over EUR 300 million during this period of time.
Doubling net profit in five years is an ambitious target for any company. For one operating in the cyclical, capital-intensive automotive supply chain, it was audacious. But CIE's management had learned something important: in a fragmented industry, the winner is the one who keeps playing while others retreat.
This organic growth will be based on an accumulated increase of revenues of around 7% during these five years, associated both to its growing presence in strategic markets and customers and to the development of high value added components. On the other hand, this organic growth will be accompanied by a new level of return on net assets (RONA) between 20% and 25%, on account of an EBIT margin that will rise to a 12% over sales.
The plan combined organic growth with disciplined M&A. CIE Automotive will integrate during the next five years new companies that will consolidate the Group as one of the most important global players, new companies that will contribute with around EUR 1,000 million additional revenues, always with a healthy balance sheet and with the objective of a net financial debt / EBITDA ratio not exceeding 2 times at the end of the period.
That 2x debt/EBITDA ceiling became a sacred commitment—one that would guide capital allocation decisions throughout the period and beyond.
The Dominion Spinoff: Capital Allocation Discipline
CIE had built more than just an automotive components business. Through the years, it had also developed a technology services division called Global Dominion Access—a company providing multi-technical services and specialized engineering solutions to industries ranging from telecommunications to renewable energy.
By 2016, management recognized that Dominion deserved to be valued on its own merits. Global Dominion Access, S.A. announced the flotation of its shares. The company is pleased to announce that its share offering, aimed at qualified investors, has been fully subscribed, having set a price of €2.74 per share.
Dominion, founded in 1999, has grown to become a global provider of multi-technical services and specialized engineering solutions. Dominion conducts business through two operating segments: multi-technical services "Services" and specialized engineering solutions "Solutions"; and focuses on serving customers in three principal fields of activity: Telecommunications and Technology, Industry and Renewable Energy.
The initial IPO in 2016 was just the first step. CIE Automotive, S.A. announced the spin-off of 50.1% stake in Global Dominion Access, S.A. for approximately 380 million on March 21, 2018. As part of the transaction, 84.76 million Dominion shares that CIE Automotive owns will be distributed at a rate of 0.65709 Dominion shares for each CIE Automotive share held.
This wasn't just a financial transaction—it was a statement about corporate focus. By distributing Dominion shares directly to CIE shareholders, management was saying: "We're automotive components people. If you want exposure to tech services, here it is—but we're going to concentrate on what we do best."
Post-Spin, CIE (Parent ex-Spin) will operate its core auto parts business. The Spinoff will improve CIE's margin profile by separating out the non-core operations and allow it to focus on its core business.
The strategic plan's early results exceeded expectations. CIE Automotive held its General Shareholders' Meeting in Bilbao in May 2019, during which the company announced the upcoming launch of a new Strategic Plan 2020-2025, due to it reaching in 2019 - one year ahead of schedule - the current targets of the 2016-2020 Strategic Plan.
Delivering strategic plan targets a year early is the kind of execution that builds credibility with investors—and that credibility would prove valuable when CIE needed to finance its largest acquisition ever.
VII. Key Inflection Point #2: The Inteva Roof Systems Acquisition (2018-2019)
The Largest Deal in Company History
In September 2018, CIE announced a deal that would fundamentally transform the company. The transaction, upon its closing and execution, shall entail an investment by CIE Automotive of 755 million US dollars (approximately 650 million Euros). With more than 4,400 employees and estimated 2018 sales of approximately 1,000 million US dollars.
CIE Automotive SA is in talks to acquire the roof systems business of U.S. car-parts and equipment maker Inteva Products LLC in what could be its largest acquisition ever.
This wasn't just another tuck-in acquisition. Inteva Roof Systems has sixteen production plants and six R&D centres in seven countries (United States, Mexico, Germany, Slovakia, Romania, China and India).
The geographic footprint alone was worth the price. With a single transaction, CIE could dramatically expand its presence in the United States and China—two markets where it had been relatively underweight. But the strategic rationale went deeper.
Strategic Rationale: Moving Up the Value Chain
According to JesĂşs MarĂa Herrera, CIE Automotive CEO, "INTEVA ROOF SYSTEMS contributes to strengthening our style-aesthetics-and-comfort-oriented products portfolio, a segment with important growth perspectives, as well as to prove once more our bet and commitment to design, high technological level engineering and processes and products with high complexity."
This quote reveals something important about CIE's thinking. The company wasn't just buying capacity or customers—it was buying complexity. Roof systems are among the most technically demanding components in a vehicle, requiring integration of structural, aesthetic, and functional elements. By acquiring this capability, CIE was moving up the value chain, from commodity components toward higher-margin systems work.
This transaction fits into the growth and diversification strategy of CIE Automotive, as outlined in the Strategic Plan 2016-2020, and fortifies CIE's global position as a referent supplier in the sector.
In May 2019, we announced the integration of the roof systems division of Inteva Products (now renamed CIE Golde Roof Systems), which significantly expanded our geographical footprint, particularly in China. Today, CIE Automotive is the world's number three in the roof systems business.
The heritage of the acquired business added credibility. Inteva acquired the Roof Systems business in 2011, when it purchased Arvin Meritor's Light Vehicle Systems Business. Since then, Inteva improved the product line's quality, efficiency, delivery and innovation leading to increased customer satisfaction and growth. The company also achieved industry recognition such as the International Innovation Award for its structurally integrated large panoramic sliding roof, presented by the European Association of Automotive Suppliers (CLEPA) in 2017.
The deal closed in May 2019, and the business was renamed CIE Golde—a nod to the historical Golde brand that traced back to Traugott Golde, who had begun supplying sunroof components in 1907.
VIII. Building in India: The Bill Forge Acquisition & Beyond (2016-2023)
Doubling Down on India
Even as CIE was executing the Inteva acquisition, it was simultaneously deepening its commitment to India. The Mahindra alliance had provided the beachhead; now it was time to build a fortress.
Founded in 1982, BFPL is a market-leading precision forging company based in Bangalore, India with 6 manufacturing facilities in India across Bangalore, Coimbatore and Haridwar. It manufactures a variety of cold, warm, hot forged and machined components primarily for steering, transmission and wheel-related assemblies. This acquisition increases MCIE's operations in the high growth Asian markets and reinforces CIE group's position as a leading global forgings player.
The Board of Directors of Mahindra CIE Automotive Ltd at its meeting held on 12 September 2016 resolved to acquire 100% of equity shares of Bill Forge Private Limited (BFPL) for Rs 1331.2 crore.
Bill Forge wasn't just any company. Mr. Anil Haridass has more than thirty-five years of experience in the automotive segment and have set up Bill Forge Private Limited in 1982 and has been with Bill Forge from its very inception. Under his leadership, Bill Forge witnessed sustained growth to become an important player in the Indian forgings market.
BFPL is a crucial supplier to a number of domestic and global two-wheeler and passenger car OEMs and Tier 1 auto component companies. The two-wheeler segment was particularly important—India has one of the world's largest motorcycle markets, and Bill Forge was already a key supplier.
Consolidating Control
CIE's India story continued to evolve. CIE Automotive has released the acquisition of an additional 5% in Mahindra CIE Automotive Ltd from Mahindra & Mahindra for an amount of approximately 60 million euros. Its stake in the company increases to above 56%.
Then came the aluminum push. In April 2019, the company completed the acquisition of Aurangabad Electricals Limited (AEL), which helped it to enter the aluminium die-casting business in the Indian market.
The Entity Evolution
The relationship between CIE and Mahindra evolved over time. What started as a partnership gradually became more clearly a CIE-controlled operation.
Mahindra & Mahindra Ltd on Wednesday sold its entire stake -- 3.20 per cent -- in Spain's CIE Automotive subsidiary. "We would like to inform you that the company has today sold its entire stake comprising of 1,21,22,068 Equity Shares representing 3.195 per cent of the paid-up share capital of CIE."
The entity was subsequently renamed as CIE Automotive India Limited, following a stake sale by the Mahindra Group in May 2023.
The company was formerly known as Mahindra CIE Automotive Limited and changed its name to CIE Automotive India Limited in June 2023. The company was incorporated in 1999 and is based in Pune, India.
The renaming symbolized the completion of a decade-long transition. What had begun as a joint venture was now unambiguously part of the CIE family—a publicly listed subsidiary that remained a vehicle for CIE's Asian ambitions.
IX. Navigating Disruption: COVID, Supply Chain Chaos & EV Transition (2020-Present)
Countercyclical Excellence
The automotive industry faced an unprecedented series of disruptions starting in 2020: the COVID-19 pandemic, semiconductor shortages, supply chain chaos, energy price spikes, and the accelerating shift to electric vehicles. Many suppliers struggled. CIE thrived.
CIE Automotive ends 2022 with record revenues and profitability despite the unfavorable macroeconomic situation, with revenues of €3,838.6 million, 24.1% higher than in 2021, and net profit of €300.1 million, up 12.2%.
How does a company post record results during industry turmoil? We turned obstacles into challenges, eking out growth of 24%, outperforming the market by 9.7 points.
According to JesĂşs MarĂa Herrera, CEO of CIE Automotive, "I must highlight the more than 400 million euro of operating cash generated in 2022, which enabled us to return to leverage ratios below 2 times debt/EBITDA, while we continued to invest in corporate transactions to generate shareholder value."
The secret sauce was the same diversification strategy CIE had been building for two decades. Thanks to our strategic diversification, we are capable of offsetting lower demand across some regions, technologies or customers with healthier dynamics across others. By decentralising management, we give the various factories and regions greater autonomy so that they can make the best decisions in the prevailing circumstances.
The EV Pivot
Perhaps no industry challenge looms larger than electrification. Traditional auto suppliers face genuine existential questions: What happens to your crankshaft business when half the vehicles don't have engines? CIE's response has been pragmatic rather than panicked.
The BEV market accounted for over 40% of the new orders that the automotive forgings vertical received in CY22.
Keeping a close eye on the trends that are shaping the sector, in 2024, we acquired AKT Plásticos, a firm specialised in thermoplastic injection moulding that reinforces our position in plastic injection technology, essential for electric vehicles by facilitating the manufacture of lighter parts.
We're also already supplying components for electric vehicles to Tesla, Rivian, Volkswagen, Renault, Nissan and other OEMs.
And then there's Basquevolt—CIE's stake in the future of battery technology. The founding consortium of investors in the project, promoted by the Basque Government, includes Iberdrola, CIE Automotive, Enagás, EIT InnoEnergy, and CIC energiGUNE.
BASQUEVOLT, the Basque solid-state battery initiative, will begin production of battery cells in 2027 with the aim of reaching a capacity of 10GWh. BASQUEVOLT plans to launch the first production line within 4 years, supported by an investment of more than 700 million euros.
In parallel, we sought to position ourselves at the forefront of the transport decarbonisation thrust by participating in Basquevolt, the Basque solid-state battery initiative.
Current Financial Position
Despite the macroeconomic, regulatory and geopolitical uncertainty, which led to a 1% contraction in global sector production, CIE Automotive managed to lift its revenue to €3.96 billion and post a record profit of €325.7 million, underpinned by margin expansion (specifically an EBITDA margin of 18.4%), disciplined investments and our sound financial and tax policies.
In terms of operating margins, an EBITDA – gross operating profit – of 728 million has been reached, and an EBIT – net operating profit – of 538 million euros, which represents margins of 18.4% and 13.6% respectively, significantly higher than the average margins of the sector.
Under this model, our priority in 2024 was to convert two-thirds (66%) of our EBITDA into cash, allowing us to reduce our adjusted net debt to €987.5 million, 1.34 times our EBITDA, a record low for us.
"We continue growing above the market, improving our results, and above all, we continue with an extremely high cash generation that has brought our leverage to historic lows, which, in the current sectoral context, highlights the value of our management model and our positioning as a reference supplier in the global Automotive industry."
X. Playbook: Business & Investing Lessons
The CIE Operating Model
CIE Automotive's success isn't built on any single brilliant decision—it's the accumulation of consistent strategic discipline over three decades. Several principles stand out:
1. Multi-technology diversification creates defensibility. By mastering seven distinct manufacturing technologies, CIE has made itself nearly indispensable to OEM customers. Switching away means fragmenting your supply chain across multiple vendors, each with their own qualification requirements, quality systems, and relationship management overhead. The switching costs aren't explicit—they're embedded in complexity.
2. Geographic diversification is risk management. When Europe suffers, Asia might boom. When NAFTA automotive production dips, Brazil might strengthen. Looking ahead to 2025, CIE Automotive expects growth in India (6%) and China (2%), while anticipating declines in North America (2%) and Europe (5%). This isn't prediction—it's portfolio construction.
3. Customer diversification prevents dependency. The company's clients include: Renault, Magna, Chrysler, Daimler, Schaeffler, Ford, Nexteer, Volkswagen, and Faurecia. No single customer concentration means no single point of failure. When one OEM struggles, others typically compensate.
4. JV-first international expansion reduces risk while accelerating learning. Rather than building greenfield operations in unfamiliar markets, CIE consistently partnered with local experts, learned from them, then scaled.
Capital Allocation Philosophy
The 2x debt/EBITDA ceiling isn't just a financial ratio—it's a discipline mechanism that prevents management from getting too aggressive during good times. "I must highlight the more than 400 million euro of operating cash generated in 2022, which enabled us to return to leverage ratios below 2 times debt/EBITDA."
The cash conversion obsession deserves special attention. And more importantly, we were able to convert 65% of that EBITDA into operating cash flow, which is of the utmost importance to us here at CIE Automotive. Many companies report impressive EBITDA but struggle to convert it to actual cash. CIE's focus on cash conversion means working capital is managed tightly, capital expenditures are disciplined, and profits actually become deployable resources.
The Dominion spinoff demonstrated another important principle: knowing when to let go. Sometimes the best capital allocation decision is recognizing that an asset would be worth more in someone else's hands—or as a standalone entity.
The Roll-Up Playbook That Works
Most roll-up strategies fail. They often destroy value through over-leveraging, integration failures, or the simple mathematics of paying acquisition premiums for average businesses. CIE's version worked because:
- They started with fragmented markets where scale genuinely matters
- They thought in terms of technology platforms, not just asset accumulation
- Management continuity post-acquisition preserved the knowledge that made targets valuable
- Local-for-local manufacturing satisfied OEM demands while building political goodwill
XI. Porter's 5 Forces Analysis
1. Threat of New Entrants: LOW
Building a multi-technology automotive supplier from scratch would require billions in capital expenditure, years of OEM qualification, and the patient construction of global manufacturing capability. The barriers are formidable:
- High capital requirements for sophisticated manufacturing equipment
- Long OEM qualification cycles (typically 2-5 years for new suppliers)
- Scale economics in forging, casting, and tooling
- Geographic presence requirements (plants must be near OEM assembly facilities)
2. Bargaining Power of Suppliers: MODERATE
CIE's key inputs—steel, aluminum, specialty metals—are largely commoditized and available from multiple sources. Our suppliers (92% of whom are local), who were likewise key in enabling delivery of our corporate objectives, benefited from over €2,800 million of purchases. The commitment to local suppliers reduces transport costs and logistics complexity, while multiple sourcing options prevent dependency.
Energy costs remain a variable—particularly in Europe where electricity prices spiked in 2022—but CIE's geographic diversification provides some natural hedge.
3. Bargaining Power of Buyers (OEMs): HIGH
Large OEMs wield enormous purchasing power. Multi-year contracts often include price-down clauses, requiring suppliers to improve productivity and pass savings to customers. This is an industry reality CIE cannot escape.
However, several factors mitigate buyer power: - Switching costs are high due to lengthy qualification requirements - Multi-technology capability makes CIE a preferred partner for complex programs - Geographic co-location creates operational dependencies that favor incumbents
4. Threat of Substitutes: MODERATE-HIGH
The EV transition represents a genuine substitution threat for certain product categories. Internal combustion engine components face declining demand as battery-electric vehicles grow. Lightweighting trends favor aluminum over steel in some applications.
CIE's response has been adaptation rather than denial. The BEV market accounted for over 40% of the new orders that the automotive forgings vertical received in CY22. The company is actively repositioning toward EV-compatible products.
5. Competitive Rivalry: HIGH
American Axle & Manufacturing Holdings, Denso, BorgWarner, Forvia Hella, and AISIN are some of the 15 competitors of CIE Automotive.
The industry features intense competition from global players, regional specialists, and price-focused competitors from emerging markets. OEMs actively manage supplier portfolios, playing vendors against each other.
CIE's advantage: multi-technology breadth. Most competitors specialize in one or two technologies. CIE's ability to address multiple component needs from a single relationship creates differentiation that's difficult to replicate.
XII. Hamilton's 7 Powers Analysis
1. Scale Economies: PRESENT âś“
With 111 production facilities, CIE enjoys meaningful cost advantages: - Raw material purchasing power across large volumes - R&D investment amortized across a much larger revenue base - Shared services (IT, finance, legal) spread across multiple operating units - Equipment utilization optimization across regional clusters
2. Network Effects: LIMITED
CIE isn't a platform business—additional customers don't directly make the service more valuable for existing customers. However, global footprint creates indirect network-like benefits: OEMs seeking supplier consolidation prefer partners who can serve them across all regions.
3. Counter-Positioning: PRESENT âś“
CIE's multi-technology approach represents genuine counter-positioning against single-technology specialists. The company excels in seven core technologies, including aluminum die-casting, forging, metal stamping, machining, plastics injection, iron casting, and roof systems.
A forging specialist like Bharat Forge would have to fundamentally reinvent itself to match CIE's breadth. The organizational, cultural, and capital requirements make this prohibitively difficult—incumbents would have to cannibalize their focus to respond.
4. Switching Costs: MODERATE-HIGH âś“
OEM qualification processes take years. Tooling is often supplier-specific. Co-development relationships create institutional knowledge that's difficult to transfer. While OEMs occasionally switch suppliers, the friction is substantial—and CIE's multi-technology position raises switching costs further by creating dependencies across multiple product lines.
5. Branding: LIMITED
As a B2B supplier, CIE has limited consumer visibility. However, reputation for quality and delivery reliability matters enormously in B2B contexts. CIE's track record of meeting commitments—including delivering strategic plan targets ahead of schedule—builds institutional credibility that influences purchasing decisions.
6. Cornered Resource: LIMITED
CIE doesn't have exclusive access to raw materials or proprietary technologies. However, two "soft" cornered resources exist: - Management expertise: The deep bench of experienced executives who've grown up through CIE's system - Basque engineering talent pool: Access to a concentrated regional talent base with multi-generational manufacturing expertise
7. Process Power: PRESENT âś“
Throughout the year, we continued to advance on our key operating lines: electrification, international expansion, industry 4.0 and comfort.
CIE has accumulated process knowledge across seven technologies, dozens of facilities, and thousands of customer programs. This institutional capability—knowing how to manufacture complex components at high quality and reasonable cost—is genuinely difficult to replicate. New entrants would need years of learning-by-doing to match CIE's process sophistication.
Summary: CIE's Durable Advantages
Scale Economies + Process Power + Counter-Positioning + Switching Costs = Defensible moat in a competitive industry. CIE isn't invincible, but it has built multiple layers of competitive advantage that would require years and billions of dollars for competitors to match.
XIII. Bear vs. Bull Case
The Bull Case
The optimistic view on CIE starts with EV transition readiness. The BEV market accounted for over 40% of the new orders that the automotive forgings vertical received in CY22. Far from being a victim of electrification, CIE is actively capturing new business as the industry transforms.
Geographic diversification hedges regional downturns. When Europe struggles with energy costs and regulatory uncertainty, growth continues in India and the Americas. CIE's strategic focus on emerging markets like Mexico and India, along with innovation in forging technologies, contributed to its strong performance.
The proven M&A integration capability provides a growth option that few competitors possess. Over 40 acquisitions have been successfully integrated, building organizational muscle that can be deployed opportunistically.
Cash generation remains exceptional. Our priority in 2024 was to convert two-thirds (66%) of our EBITDA into cash, allowing us to reduce our adjusted net debt to €987.5 million, 1.34 times our EBITDA, a record low. This financial strength enables continued investment in growth while maintaining shareholder returns.
The Bear Case
The pessimistic view acknowledges the structural headwinds facing all auto suppliers. The EV transition, while manageable, still reduces addressable market for powertrain components that have historically been profitable. European automotive production shows structural decline, with the 2024 market down nearly 7%.
China's domestic automotive industry increasingly favors local suppliers, potentially limiting growth opportunities in the world's largest vehicle market. Rising labor costs in emerging markets could pressure the cost advantages that enabled geographic arbitrage.
Customer concentration risk exists at the OEM level—while CIE serves many customers, the automotive industry itself is consolidating around fewer, larger players with increased bargaining power.
Competition from Chinese suppliers poses a long-term threat. As Chinese manufacturers build quality and gain OEM qualifications, they could undercut Western suppliers on price, particularly for less technically demanding components.
Key KPIs to Monitor
For investors tracking CIE Automotive, three metrics deserve particular attention:
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EBITDA-to-Cash Conversion Rate: CIE targets 65-66% conversion. Sustained performance below this level would signal working capital deterioration or unexpected capital requirements.
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Net Debt/EBITDA Ratio: The self-imposed 2x ceiling has been sacred. Movements toward or above this level would indicate strategic discipline erosion.
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Revenue Growth vs. Market: CIE consistently outperforms underlying automotive production growth by 5-10 percentage points. This outperformance reflects market share gains and new customer acquisition. Convergence with or underperformance versus market would warrant concern.
XIV. Leadership Profile: JesĂşs MarĂa Herrera
No examination of CIE Automotive is complete without understanding the man who has led it through its most transformative period. JesĂşs MarĂa Herrera is what's traditionally referred to as a company man. He describes his career path to CEO of CIE Automotive as his "life's project."
He joined CIE Automotive as CFO in 1991, also heading up the HR function for CIE Orbelan. In 1995, he was named Deputy Manager and in 1998 he was promoted to General Manager. In 2000, he took over management of CIE Brazil.
He has been the CEO of Autometal S.A. since 2010 and in 2011 he was named COO for the entire Group; just a year later he would be named general manager of CIE Automotive. Lastly, in 2013, the Board of Directors appointed him CEO of CIE Automotive.
This progression—from CFO of a small subsidiary to CEO of a global operation—took over two decades. During that time, Herrera worked in nearly every part of the organization, learning operations from the factory floor up.
"CIE Automotive is a life's project for me. After graduating from university, I started working as Financial Director for a small plastic injection company called Orbelan, which was one of CIE's first integrations back in 1998."
"This kind of career journey within CIE isn't unique. For example, my close team have a similar professional profile, having spent most of their careers with CIE. It's safe to say that personal commitment is high here."
This cultural emphasis on internal development and long tenure creates institutional knowledge that's difficult for competitors to poach. The executive team knows how CIE integrates acquisitions, manages cyclicality, and maintains quality because they've lived it for decades.
XV. Conclusion: The Quiet Compounder
CIE Automotive represents something increasingly rare in modern capitalism: a company that does what it says, delivers what it promises, and compounds value through operational excellence rather than financial engineering.
The story that began in 1961 with Javier Egaña's metal stamping shop in the Basque Country has evolved into one of the sector's most profitable players, evidencing our ability to generate value in a sustainable manner.
Several factors make CIE worth studying:
The diversification strategy works. Multi-technology, multi-geography, multi-customer—this isn't just corporate speak. It's an actual operating philosophy that has delivered consistent performance through multiple industry cycles.
Cash generation is the real story. Many industrial companies report impressive EBITDA but struggle to convert profits into deployable cash. CIE's 66% conversion rate demonstrates genuine operating quality.
Management has earned credibility. Delivering strategic plan targets ahead of schedule, maintaining leverage discipline through acquisition cycles, and navigating industry disruption successfully—these aren't things that happen by accident.
The EV transition is manageable. While existential risk exists for some auto suppliers, CIE's technology breadth and proactive positioning suggest the transition is an opportunity as much as a threat.
The company trades on the Madrid and Bilbao stock exchanges under the ticker CIE.MC. For investors seeking exposure to global automotive transformation through a disciplined operator with proven execution, CIE Automotive merits serious consideration.
As CEO Herrera told investors: "For all these reasons and due to our expectations for the current year, we are in a position to reconfirm that the commitments of the 2025 Strategic Plan will be fulfilled."
Given CIE's track record, that's a promise worth taking seriously.
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