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Knorr-Bremse: The Hidden Giant That Stops Every Train and Truck
I. Introduction: The Invisible Infrastructure Behind Global Transportation
Picture any scene from modern transportation: an ICE high-speed train gliding through Bavaria at 300 kilometers per hour, an 18-wheeler hauling freight across the American heartland, or a metro car smoothly braking into a Beijing station during rush hour. In each scenario, there is a near-certainty that the brakes making it all possible—the components that convert kinetic energy into heat, that prevent a 500-ton locomotive from overshooting a platform, that allow a semi-truck to avoid catastrophe on a rain-slicked highway—were engineered and manufactured by a company most people have never heard of.
Today the Knorr-Bremse Group, based in Munich, is the global market and technology leader for braking systems and a leading supplier of safety-relevant sub-systems for rail and commercial vehicles. More than 32,000 employees at over 100 locations in 30 countries develop and produce innovative solutions and services that meet the highest technological standards. In 2024, Knorr-Bremse's two divisions together generated revenues of approximately €7.9 billion. For 120 years, the company has been at the cutting edge of its industries, driving innovation in mobility and transportation technologies with a leading edge in connected system solutions.
The central question this article seeks to answer is deceptively simple: How did a 120-year-old German brake company become the invisible infrastructure behind global transportation safety—and what does its extraordinary journey tell us about building enduring industrial champions?
The answer involves a founding engineer with a revolutionary brake design, a company nearly destroyed by world wars and Cold War division, a transformative management buyout orchestrated by a patent lawyer who didn't even have his house mortgage paid off, one of Germany's most significant IPOs ever, the death of a billionaire patriarch, and an ongoing strategic transformation designed to secure another century of market leadership.
Knorr-Bremse's continued strong global market position, with its Commercial Vehicle Systems products having 30% market share and its braking systems in the Rail Vehicle Systems division having 50% market share, provides the company with the best foundation for reacting to new market conditions and driving innovation successfully as a global industry leader.
What makes this story particularly compelling for investors is that Knorr-Bremse occupies one of those rare industrial niches where safety regulations, certification requirements, and deep customer relationships create nearly impenetrable moats. When you're the company that stops the train, being "good enough" isn't an option—and that standard has profound implications for competitive dynamics.
II. The Founding Era: Georg Knorr's Vision (1905-1930s)
In the early twentieth century, stopping a train was an exercise in hope as much as engineering. Train guards still had to operate brakes by hand from so-called "brake vans," racing along running boards in all weather conditions to manually apply pressure when a locomotive's whistle signaled a stop ahead. Fatal accidents were commonplace. The pneumatic brakes that existed were primitive, unreliable, and inconsistent.
The German engineer Georg Knorr established Knorr-Bremse GmbH in 1905 in Boxhagen-Rummelsburg, outside Berlin. From the onset, the company benefitted heavily from Knorr's prior experience working on railway braking systems at Carpenter & Schulze, a separate company that he owned. Knorr promptly put into production an innovative rapid release brake that could bring passenger trains to a halt faster, more safely and consistently.
The genius of Knorr's approach lay not merely in better engineering, but in understanding the system. His indirect automatic systems using control valves represented a fundamental rethinking of how pneumatic force could be harnessed, distributed, and released across an entire train consist. The "Knorr Druckluft-Einkammerschnellbremse" (K1) compressed-air brake, along with its derivatives, offered considerably enhanced safety performance compared to traditional approaches.
An early cornerstone of Knorr's commercial success was provided by an agreement with the Prussian State Railways, which at that time had formed the Prussian-Hessian Railway Company, to supply single-chamber express braking systems, first for passenger and later on for freight trains. This contract established a pattern that would define Knorr-Bremse for the next century: become the trusted partner of national rail systems, prove reliability through millions of stopping cycles, and use that installed base to expand.
In 1911, the company merged with "Continentale Bremsen-GmbH" to found Knorr-Bremse Aktiengesellschaft (AG). The consolidation brought together complementary technologies and manufacturing capabilities.
The Curious BMW Connection
Perhaps the most delightful footnote in Knorr-Bremse's history involves another Bavarian industrial icon. In 1920, the manufacturing plant of the first Bayerische Motoren-Werke AG (BMW, established in 1917/1918) located in Munich became a subsidiary of Knorr-Bremse, delivering brake systems as SĂĽddeutsche Bremsen-AG for the Bavarian Group Administration, the former "Royal Bavarian State Railways." There was no further interest in motor engines for aircraft and automobiles. The engine construction and the company name "BMW" were sold in 1922 to financier Camillo Castiglioni.
In one of history's great counterfactuals, the company that today makes some of the world's most coveted automobiles was essentially spun out of a brake manufacturer. Knorr-Bremse kept the factory and brake business; BMW kept the name and engines.
The Road Beckons
A second major sector of activity emerged during 1922 when Knorr-Bremse secured a patent for the use of pneumatic braking systems for commercial road vehicles. One year later, the company became the first in Europe to develop a system that applied the brakes simultaneously to all four wheels of a truck as well as its trailer; the resultant reduction in braking distances made a significant contribution to improving road safety. By the end of the 1930s, around 90 percent of all trucks in Germany between 7 and 16 tonnes in weight had been equipped with Knorr-Bremse systems.
This diversification into commercial vehicles would prove prescient. By establishing itself in both rail and road transportation during its first three decades, Knorr-Bremse created the two-pillar business model that persists today. The rail and truck businesses operate in different cycles, serve different customers, and face different competitive dynamics—yet share fundamental pneumatic and mechanical engineering expertise. This portfolio approach would help the company survive what came next.
III. Destruction, Survival, and Rebuilding (1940s-1970s)
The Second World War proved devastating for Knorr-Bremse, both physically and morally. During the conflict, the company manufactured machine guns on behalf of the Wehrmacht—a dark chapter shared by most German industrial concerns of the era. When the war ended, Germany was split, and Knorr-Bremse's facilities in the eastern part of Berlin were quickly expropriated and dismantled by the Soviets as part of war reparations.
The company's pre-war headquarters and primary manufacturing capacity suddenly sat on the wrong side of an ideological divide. Everything had to be rebuilt from scratch.
During 1946, Knorr-Bremse was re-established in Volmarstein, West Germany. Three years later, its reconstruction was aided by the United States' Marshall Plan, which financed the Deutsche Bundesbahn's building of 18,000 new freight cars equipped with Knorr-Bremse brake units. American generosity and German rail rebuilding needs aligned perfectly: the Marshall Plan provided capital, West German reconstruction created demand, and Knorr-Bremse possessed the engineering expertise.
During 1953, its new headquarters were completed at the Süddeutsche Bremsen-AG plant in Munich—the very BMW facility acquired three decades earlier. This Munich location would become the company's spiritual and operational home for the next seven decades.
The KE Brake and International Expansion
Key domestic contracts with West German rail and truck manufacturers, alongside exports to neutral markets like Switzerland and Sweden, drove revenue growth. The latter received International Union of Railways (UIC) approval and led to sales across 40 different countries, totaling almost 1.3 million units. The 1953 KE train brake became an industry standard—a testament to how safety-critical components, once approved and deployed, create decades-long relationships.
During the 1960s, Knorr-Bremse started offering a newly-developed air compressor program to customers; it also made greater use of compressed air to perform various functions, including air suspension, level regulation, pneumatic gearshifts, and door actuation. In 1969, it presented its first disc brake for heavy trucks at the IAA trade fair in Frankfurt.
Cracking the American Market
In 1973, Knorr-Bremse established the Knorr Brake Corporation with the purpose of developing a presence in the lucrative North American market. This would prove to be one of the most consequential strategic decisions in company history. The American rail and trucking markets operated under different standards (particularly the Association of American Railroads specifications), used different technologies, and were dominated by established players. Breaking in would take decades of patient investment.
By the mid-1970s, Knorr-Bremse had survived war, division, and reconstruction. It had rebuilt its manufacturing base, established international distribution, entered the world's largest market, and diversified across rail and road. But internally, the company was a mess—a constellation of family interests, underperforming subsidiaries, and strategic confusion. The next decade would bring it to the brink of bankruptcy and into the hands of the man who would transform it.
IV. The Leadership Crisis and the Thiele Era Begins (1985-1990s)
By 1985, Knorr-Bremse had become a company drifting without clear direction. Family disputes among the descendants of Georg Knorr had created governance paralysis. Subsidiaries proliferated without strategic logic. Industrial pneumatics, hydraulics, and various unrelated businesses diluted management attention. The company that had pioneered railway safety was facing potential bankruptcy.
Thiele began to work for Knorr-Bremse in 1969 as a patent lawyer. He joined the company's executive board in 1985. That year, when the grandson of founder Georg Knorr wanted to sell his shares and the company was facing bankruptcy, Thiele was commissioned to find a buyer. During the process, Deutsche Bank told him that if he bought it himself, the bank would act as guarantor. He purchased a controlling stake and later became sole owner.
What happened next belongs to the pantheon of management buyout legends. He had famously told an interview with the Frankfurter Allgemeine Zeitung that at the time of buying-out the company, he had not even repaid the mortgage on his house. He spoke of how he had gone against the advice of a management consulting firm that had recommended that the company leave industrial brakes and pursue industrial pneumatics instead. He went on to transform the company to be a market leader in railway and heavy-truck brakes.
Consider the audacity of this decision. A patent attorney, with no personal wealth to speak of, no manufacturing experience, and no independent means, betting his family's financial security on a troubled company whose consultants were recommending exit from its core business. The management consultants—likely prestigious, expensive, and wrong—saw commodity pneumatics as the future. Thiele saw that safety-critical brakes were a fundamentally different business than commodity industrial equipment.
The Strategic Refocusing
After becoming the company's chief executive in 1987, Thiele initiated structural changes and narrowed the group's focus to braking technology. He joined the company's supervisory board in 2007.
This focus was ruthless and total. Holdings and subsidiaries not related to brake production were sold or spun off. An exception was Hasse & Wrede, which continued to produce diesel engine vibration dampers—a business that shared engineering DNA with brake systems and served the same commercial vehicle customers.
The structure was clarified with the founding of two new product-oriented subsidiaries: Knorr-Bremse Systeme fĂĽr Nutzfahrzeuge GmbH (commercial vehicles) and Knorr-Bremse Systeme fĂĽr Schienenfahrzeuge GmbH (rail vehicles). This dual-division structure, separating the businesses while maintaining shared corporate functions and technology transfer, remains the organizational architecture today.
By 1988, the Thiele family had acquired 100 percent of the shares in Knorr-Bremse AG. Total control enabled total transformation. Without public market pressures or family compromise requirements, Thiele could invest for the long term, withstand cyclical downturns, and make strategic bets that might take decades to pay off.
The timing was impeccable. German reunification in 1990 opened Eastern European rail markets desperate for modern equipment. The European Union's harmonization of rail standards created demand for safety systems that met stringent new requirements. Environmental regulations made truck fleets replace older equipment. In each case, Knorr-Bremse's refocused capabilities aligned perfectly with market demand.
V. The Transformation: Building a Global Leader (1990s-2000s)
If the 1985-1990 period was about survival and focus, the subsequent two decades were about transformation into a true global champion. Thiele's strategy combined organic innovation with aggressive acquisitions, patient market development with opportunistic deal-making.
Conquering America
Four years later, the company secured approval from the Association of American Railroads (AAR) for its recently developed DB 60 direct-release control valve for freight trains; via its US subsidiary, the DB 60 entered use in North America in 1985, where it was commonly used on exceptionally long freight trains hauled by multiple locomotives. This AAR approval was the key that unlocked the American market—a regulatory badge of acceptance that took years to obtain and that competitors couldn't easily replicate.
The Bendix Acquisition
Knorr-Bremse has been cooperating with Bendix Corporation in a joint venture since 1993. Bendix is one of the leading manufacturers of air brakes and ABS anti-lock braking systems for commercial vehicles in North America. In 2002, Bendix is taken over entirely. Knorr-Bremse thereby decisively strengthens its position on this market and continues to consistently deploy its system strategy worldwide.
The Bendix acquisition deserves special attention because it exemplifies Thiele's approach: patience, partnership, then ownership. Nine years of joint venture operation allowed both companies to understand each other's capabilities, cultures, and customer relationships. When the full acquisition occurred, integration risks were minimized because the organizations had already been working together.
Bendix brought not just market access but technological leadership in electronic braking systems and what would become advanced driver assistance systems (ADAS). Bendix Commercial Vehicle Systems, a member of Knorr-Bremse, develops and supplies leading-edge active safety technologies, energy management solutions, and air brake charging and control systems and components for medium- and heavy-duty trucks, tractors, trailers, buses, and other commercial vehicles.
The Westinghouse Acquisitions
Knorr-Bremse consistently pursues the aims of consolidating its brake business and strengthening its position as a systems supplier. For this purpose the rail technology division of Mannesmann Rexroth Pneumatik KG is taken over, along with the brake and platform door divisions of Westinghouse, a company rich in tradition and active in the United Kingdom and Australia.
The Westinghouse acquisitions brought instant market positions in the UK, Australia, and Commonwealth markets. More importantly, they brought the Westinghouse name—in rail circles, almost synonymous with braking technology given the Westinghouse Air Brake Company's 19th century pioneering role.
Innovation: The Disc Brake and EBS
During 1987, the company revealed its prototype pneumatic disc brake; it would be a sales success, with 20 million Knorr-Bremse disc brakes being in operation across the world by 2024. In 1989, Knorr-Bremse also released its electronic braking system (EBS), which integrated brake control, ABS and traction control into a single electronic-based system, possessing shorter response times and reduced braking distances compared to traditional pneumatic control, and thus greater safety. During the early 1990s, Knorr-Bremse's electro-pneumatic independent brake units were installed into the ICE 1 high speed trainsets operated by DB Fernverkehr.
The ICE 1 installation was a prestigious reference project—Germany's showcase high-speed train equipped with Knorr-Bremse brakes. Every time German railways marketed their technical excellence, Knorr-Bremse benefited.
Between 1993 and 1994, the company was reorganised; the rail and commercial vehicles were separated into independent companies; thereafter, management pursued a strategy orientated around international expansion.
The Bosch Partnership
The company can now draw on the electronics expertise of the commercial vehicle brakes division of Robert Bosch. As a result, Knorr-Bremse AG and Robert Bosch GmbH, formerly competitors, become joint stockholders of Knorr-Bremse Commercial Vehicle Systems and cooperate in the field of air brakes for commercial vehicles. This alliance strengthens the two partners' competence as suppliers of complete systems on the global market.
The Bosch partnership demonstrated that even world-class competitors could find mutual benefit through collaboration. Bosch brought electronics expertise; Knorr-Bremse brought pneumatics mastery and customer relationships. Together, they accelerated the industry transition from purely mechanical to electronically-controlled braking systems.
By the early 2000s, Knorr-Bremse had transformed from a troubled German manufacturer into a genuine global leader. It held dominant positions in both rail and commercial vehicle braking across Europe, North America, and increasingly Asia. The question became: what next?
VI. Professionalization and the Historic IPO (2007-2018)
He joined the company's supervisory board in 2007. After leading the company for more than two decades as Chairman of the Executive Board, Thiele relinquished operational management and moved to the Supervisory Board as Chairman—a transition from entrepreneur-operator to entrepreneur-overseer.
This was succession planning in action. Thiele recognized that for Knorr-Bremse to outlast him, it needed professional management independent of family control in day-to-day operations. The strategic direction would remain aligned with the family's interests, but operational execution would be professionalized.
As a visionary entrepreneur, Heinz Hermann Thiele had already placed the management of the company in the hands of external managers almost 15 years before the IPO. A further step towards securing the future viability was the IPO in 2018, when he opened the company to the capital market and other investors.
October 12, 2018: The Frankfurt Debut
80.10 euro – that was the price of the first trade on October 12, 2018, set at 09.25 CET for Knorr-Bremse (WKN: KBX100) on the Frankfurt Stock Exchange. This was the second-largest German IPO in 2018, the sixth-largest ever in Germany, the largest-ever IPO of a German family-owned business and third-largest European Industrials IPO of all time.
The transaction was priced at 80 euros a share, valuing the Munich-based company at 12.9 billion euros. Thiele, 77, and his family were set to sell a stake of 30 percent.
Proceeds from the sale of a 30 percent stake in Knorr-Bremse went to Heinz Hermann Thiele and his daughter, handing them 3.9 billion euros ($4.53 billion).
Cravath, alongside Hengeler Mueller, represented Knorr‑Bremse AG in connection with its €3.87 billion initial public offering of bearer shares. The shares were listed on the Frankfurt Stock Exchange. The transaction closed on October 16, 2018.
Bankers and investors said the IPO was well supported because family-owned Knorr is viewed as an industry leader with a history of consistent profitability, differentiating it from other recent debutants that are trading below their offer price. Deutsche Bank, JP Morgan and Morgan Stanley acted as joint global coordinators and bookrunners on the Knorr-Bremse deal.
The Philosophy Behind Going Public
The IPO's stated rationale was characteristically Thiele: pragmatic, long-term, and focused on institutional continuity rather than personal liquidity needs. According to reports at the time, "The fortunes of the Company have always been more important to me than personal or family interests" was Thiele's message. It was time to secure the company's independence with new shareholders who had a long-term interest in the company and wanted to invest in its future. "The company needs to become less dependent on me, and I have an interest in other investors helping to keep the company on track."
This wasn't a private equity flip or a founder cashing out at peak valuation. The Thiele family retained 59%—controlling interest. The public float brought institutional discipline, analyst scrutiny, and currency for future acquisitions. Knorr-Bremse received recognition including the second-best IPO of the Year as well as the best "Deal of the year in Germany, Austria and Switzerland" by GlobalCapital. Knorr-Bremse also received the prize for the best IPO of 2018 from Börsen-Zeitung.
The timing, in retrospect, was nearly perfect. The IPO priced before the worst of the US-China trade war disruptions and well before COVID-19 upended global supply chains.
VII. The Failed Haldex Acquisition: Hitting the Antitrust Wall (2016-2022)
Not every strategic initiative succeeded. The attempted acquisition of Haldex—a Swedish brake systems competitor—became a years-long saga that ultimately revealed both the limits of consolidation in concentrated markets and Knorr-Bremse's dominant position.
Knorr-Bremse long held a stake in one of its main European competitors. During the mid-2010s, various parties submitted bids to fully acquire Haldex, including Knorr-Bremse. The company's bid was observed by Haldex's board as having been the most generous, but also to have "done nothing to eliminate or reduce the regulatory risk."
Haldex Board has, following feedback from the European competition authority, made the assessment that the probability for Knorr-Bremse to receive necessary competition clearances is very low, and has as a result decided to withdraw its support for the Knorr-Bremse bid.
Knorr-Bremse won the bidding war, whereas Haldex would have preferred ZF Friedrichshafen in order to conclude an easier deal with limited antitrust concerns. The EC expressed concerns in the markets for electronic braking systems (EBS) and air disc brakes for both trucks and trailers, anti-lock braking systems (ABS) for trailers, valves, and air treatment systems, as these markets were considered to have high entry barriers.
The U.S. Department of Justice had previously also expressed serious concerns regarding the acquisition and initiated an in-depth investigation in December 2016. As a result of the concerns raised by both competition authorities, it was considered unlikely that the deal would obtain the necessary competition clearances within the acceptance period of the bid. Therefore, the Haldex Board withdrew its support for Knorr-Bremse's bid and in September 2017, Knorr-Bremse abandoned the transaction.
During mid 2017, the European Commission launched an anti-trust probe into the acquisition. Knorr-Bremse ultimately chose to discontinue its bid, selling on all of its shares in Haldex by June 2022.
What the Failure Reveals
The Haldex saga offers important lessons. First, it confirmed Knorr-Bremse's dominant market position—so dominant that regulators on two continents viewed even modest consolidation as threatening competition. Second, it showed the limits of Thiele's deal-making prowess; sometimes market structure simply precludes consolidation. Third, the eventual sale of the Haldex stake by June 2022 demonstrated disciplined capital allocation—Knorr-Bremse didn't let a failed deal become a festering strategic distraction.
Haldex has been experiencing a complicated ownership situation ever since 2016, when German manufacturers ZF Group and Knorr-Bremse, both active in the truck components industry, became Haldex's two largest shareholders as a result of takeover attempts. Customers have expressed concerns about this ownership structure as it distorts market conditions. Similarly, potential investors are skeptical about engaging with Haldex due to Knorr-Bremse's shareholding.
VIII. The End of an Era: Thiele's Death and Succession (2021-2023)
Thiele died on 23 February 2021 in Munich at age 79.
At the time of his death, he had a net worth of $20.2 billion, making him the fourth richest person in Germany; he was also the largest shareholder in the German carrier Lufthansa AG. He was a recipient of the Order of Merit of the Federal Republic of Germany and the Bavarian Order of Merit.
The death was unexpected. Though 79, Thiele had remained active—indeed, Having retired from all operational positions in the company in 2016, he returned to the supervisory board as a deputy chairman in 2020 after a management crisis at the company. Later in his career, Thiele had turned an activist investor with Lufthansa, and noted his dissatisfaction with the government's rescue plan for the airline. Thiele was the largest shareholder as of June 2020. When Lufthansa agreed to a state bailout during the COVID-19 recession in 2020, Thiele raised his stake in the company from 10 to 15.5 percent.
Even in his final year, Thiele had been waging a one-man campaign to shape Lufthansa's bailout terms. The image of a 79-year-old billionaire buying more airline stock during a pandemic to influence government negotiations captures something essential about his character: relentless, contrarian, willing to bet against consensus.
A Mixed Legacy
Thiele had a mixed appeal in Germany. German trade unions reportedly called him a "caveman capitalist" whose factory workers worked 42 hours a week while those in the rest of the sector worked 35. The business community considered him a rail industry tycoon and a patriarch of the industry.
His philanthropic investments included Knorr-Bremse Global Care. He sponsored the Bavarian State Opera, the Lenbachhaus art museum and the Deutsches Museum science and technology museum in Munich, as well as the Technical University of Munich.
The Succession Framework
The Thiele family will continue to ensure the continuity and success of Knorr-Bremse through a foundation as its most important anchor shareholder. Under the terms of Heinz Hermann Thiele's will, the majority stake in the company (59%) held via holding companies will in future be transferred to a family foundation. Another major shareholder in the holding companies continues to be Thiele's daughter Julia Thiele-SchĂĽrhoff. The Thiele family will thus continue to be closely associated with Knorr-Bremse.
"The family foundation safeguards my father's life's work and lays the foundation for Knorr-Bremse's future success through continuity and stability," says Julia Thiele-SchĂĽrhoff, who has been a member of the Company since 2002 and of the Supervisory Board since 2016. She also established and managed the company's sustainability division many years ago. Since 2005 she has headed up the non-profit association Knorr-Bremse Global Care e.V.
In accordance with Heinz Hermann Thiele's will, the foundation now controls a 58.99% stake and associated voting rights in Knorr-Bremse AG and 50.09% in Vossloh AG.
New CEO: Marc Llistosella
Marc Llistosella, former top manager at Daimler Truck and current start-up investor, will take up the CEO position at Knorr Bremse AG as of January 1, 2023. Marc Llistosella was most recently active in investor and start-up founder roles, for example at Vaionic, a start-up specializing in the development of electric drive systems, and Einride, a Swedish company that develops electric and self-driving commercial vehicles. He is a member of the advisory or supervisory boards at both companies. Up until 2018, he was CEO of Mitsubishi Fuso Truck & Bus Corporation and Head of Daimler Trucks Asia. Before then, he led the Daimler India Commercial Vehicles subsidiary for multiple years as Chief Executive Officer. This position saw him oversee the launch of Daimler's commercial vehicles in the Indian market.
Marc Llistosella, the CEO, describes himself: "I am 56 years old, married, and a proud father of 6 children. I was born in Cologne, however I have spent most of my career outside Germany. My surname is not German, either, but rather Spanish and Welsh."
Llistosella's profile represents a deliberate choice: someone who understood commercial vehicles from his Daimler Trucks experience, had built businesses in emerging markets (particularly India and Asia), and combined traditional industrial expertise with exposure to electric vehicles and autonomous driving through his startup investments.
IX. Modern Era: Portfolio Optimization and Strategic Pivots (2023-Present)
Under Llistosella's leadership and the framework established by the BOOST 2026 strategy program, Knorr-Bremse has undertaken significant portfolio reshaping.
The BOOST 2026 Strategy
Knorr-Bremse AG is seeking to become significantly faster, more efficient, and more effective. The company published "Next Level KB", an update of its previous corporate strategy to help achieve this objective. It aims to secure its global leadership of markets and technologies and to generate further, profitable growth. The core of the strategy update is the program "BOOST 2026" (Knorr-Bremse Operational Optimization Strategy and Transformation) which provides an array of strategic initiatives in three action areas called "products, people, and processes."
The result will be a significant improvement of profit: The company is planning for revenue to rise to €8 to 9 billion, for an operating EBIT margin of over 14%, and for a cash conversion rate between 80% and 90% by 2026.
Portfolio Divestments
In the past fiscal year, Knorr-Bremse made important progress in actively optimizing its portfolio by focusing on core competencies and performance. Four sales were successfully closed since the beginning of 2024: Kiepe Electric from the RVS Division and Safety Direct, GT Emission Systems, and R.H. Sheppard from the CVS Division. As a result, more than 60% of the revenue volume targeted for sale by 2026 has already been achieved.
KB Signaling: Entering New Markets
With this transaction, Knorr-Bremse has acquired the conventional signaling product portfolio, sales, service, and manufacturing operations of Alstom Signaling North America, primarily in the USA and Canada. The nearly 800 team members will become employees of KB Signaling, a standalone business under the North American rail organization. With two production plants and numerous engineering facilities in the USA, the new business unit operates in six major locations. Over the last financial year ending March 31, 2024, Alstom Signaling North America generated around EUR 300 million in revenues with an EBIT margin of around 16%.
Knorr-Bremse estimates that for the Rail division, the potential size of the global market for CCS rail signaling technology may be as much as EUR 20 billion.
The duagon Acquisition (September 2025)
Knorr-Bremse has acquired the duagon Group, a strategic move set to bolster its global rail division by enhancing its electronics, software, and signaling technology portfolio for future growth.
Knorr-Bremse and the previous owner, Deutsche Beteiligungs AG (DBAG), signed a corresponding purchase agreement. The purchase price is approximately EUR 500 million plus a potential earn-out if predefined targets are achieved. In 2026, Knorr-Bremse expects duagon to generate sales of around EUR 175 million and an operating EBIT margin of around 16% (excluding integration costs).
Established in 1995, duagon employs around 750 people across eight countries. The company achieved a compound annual growth rate of 15% between 2022 and 2025, a development Knorr-Bremse expects to be sustained over the coming years.
Financial Performance
The company achieved stable consolidated revenues of €7.9 billion, a record order book of €7.2 billion, and a significant increase in free cash flow to €730 million. The operating EBIT margin grew from 11.3% to 12.3%, reflecting the success of the company's BOOST 2026 strategy.
The Rail Vehicle Systems Division (RVS) again demonstrated its economic strength. Order intake rose significantly to €4,440 million (previous year: €4,043 million). Revenues surpassed the €4 billion mark for the first time, reaching a record level of €4,044 million (previous year: €3,748 million). Operating EBIT improved sharply by 18% to €630 million.
Revenue in the RVS division grew to €1.104 billion in Q2 2025, up from €1.017 billion in Q2 2024, while the EBIT margin expanded to 16.5% from 15.6%. This performance was supported by stable conditions across regions, with particularly strong contributions from aftermarket business, which increased to 59% of segment revenue. CEO Marc Llistosella highlighted that the RVS division had "reached its mid-term target margin ahead of time."
X. Technology & Innovation Deep Dive
Knorr-Bremse's competitive position rests fundamentally on technological leadership accumulated over 120 years. The company holds approximately 12,000 patents—a testament to sustained R&D investment.
Advanced Driver Assistance Systems (ADAS)
In the USA, the Knorr-Bremse subsidiary Bendix introduces the first Advanced Driver Assistance System (ADAS) for commercial vehicles on the market. Wingman Fusion® integrates the information from the camera, radar, and the brake system to yield a detailed, accurate picture of a vehicle's entire surroundings, thereby also enabling important security features.
Bendix Commercial Vehicle Systems is the North American leader in advanced driver assistance systems (ADAS) for commercial vehicles, focused on next-generation active safety and collision mitigation solutions for Class 8 trucks and beyond. Bendix, whose Bendix® Fusion™ flagship ADAS system is the market leader in collision mitigation and active safety solutions, is available on most major Class 8 OEM platforms.
Digitalization and Software
The acquisition of KB Signaling and duagon reflects a strategic pivot toward software-intensive products. The huge installed base of signaling products in rail operations offers major business opportunities, especially in view of the ongoing digitalization of rail transportation. Apart from the attractive aftermarket share, digital products and services for analyzing and processing infrastructure data are certain to interest many customers. Knorr-Bremse's data solutions and software-as-a-service offerings could provide rail and fleet operators with precise updates on the condition of their infrastructure.
XI. Competitive Landscape and Moat Analysis
Porter's Five Forces Analysis
Threat of New Entrants: LOW These are profitable areas requiring sophisticated technology, with high barriers to market entry and involving longstanding customer relationships. Safety certification requirements (AAR, UIC, EU regulations), extensive testing protocols, liability concerns, and the decades-long qualification processes for safety-critical components create formidable barriers.
Supplier Power: MODERATE Knorr-Bremse sources raw materials (steel, electronics components) from numerous suppliers and has sufficient scale to negotiate favorable terms. Specialized electronics components represent potential bottlenecks during supply shortages.
Buyer Power: MODERATE Customers are large OEMs (train manufacturers, truck makers) and rail operators with substantial negotiating power. However, switching costs are high due to integration requirements, certification, and reliability track records.
Threat of Substitutes: VERY LOW What substitutes for brakes? The fundamental need to stop moving vehicles isn't going away. Electric and hydrogen vehicles still require braking systems. Regenerative braking actually creates opportunities for companies with electronic braking expertise.
Competitive Rivalry: MODERATE The main competitor of the RVS division is Wabtec Corporation, an American company that provides equipment, systems, and services for the freight rail and passenger transit industries worldwide. In the CVS division, Knorr-Bremse's primary competitor is Wabco Holdings Inc., which was acquired in 2020 by ZF Friedrichshafen AG for USD 7 billion. Knorr-Bremse and WABCO are the leading competitors in the CVS market, significantly dominating this space. In Brake Systems & Vehicles, as well as in the Energy Supply Chain market, Knorr-Bremse is ahead of WABCO at a global level.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Present but not overwhelming. Manufacturing scale provides cost advantages, but the differentiated nature of products limits pure cost competition.
Network Economies: Limited. This is a physical product business without strong network effects.
Counter-Positioning: The key power. Knorr-Bremse's focus on safety-critical systems means competitors would need to fundamentally reorient their business models and risk profiles to compete directly.
Switching Costs: Significant. Once a brake system is certified for a platform, tested, and integrated, switching imposes substantial engineering, certification, and risk costs.
Cornered Resource: The installed base. Millions of Knorr-Bremse components in operation worldwide create a vast aftermarket opportunity. Aftermarket business increased to 59% of segment revenue in Rail—this recurring revenue stream from maintaining installed equipment provides stability.
Branding: Strong in B2B context. The Knorr-Bremse name carries significant weight with OEMs and rail operators.
Process Power: 120 years of accumulated know-how in safety-critical systems engineering represents institutional knowledge that cannot be easily replicated.
XII. Investment Thesis: Bull and Bear Cases
Bull Case
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Structural Growth Drivers: Urbanization drives mass transit investment. Climate policy drives modal shift from road to rail. Safety regulations drive ADAS adoption. All these trends benefit Knorr-Bremse.
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Margin Expansion Runway: BOOST 2026 targets an operating EBIT margin of over 14%. The company is making progress—Q3 2025 achieved 13.3%, the highest profitability in 16 quarters.
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Aftermarket Stickiness: High aftermarket revenue percentages (59% in Rail) provide recurring, less cyclical income.
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Digital Transformation: KB Signaling and duagon acquisitions position Knorr-Bremse for the software-defined train of the future.
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Family Foundation Stability: The Thiele family foundation's 59% stake provides long-term orientation absent in widely-held competitors.
Bear Case
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Commercial Vehicle Cyclicality: The Commercial Vehicle Systems Division's revenues were down 13.9% due to unstable geopolitical and market conditions. 2024 revenues came in at EUR 3.84 billion (2023: EUR 4.18 billion). Truck markets are notoriously cyclical.
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China Risk: Significant China exposure in both divisions exposes Knorr-Bremse to geopolitical tensions and potential technology transfer pressures.
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Electric Vehicle Disruption: While electric vehicles still need brakes, the shift from diesel engines eliminates the vibration damper business and may change customer relationships.
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Acquisition Integration: Multiple acquisitions (KB Signaling, duagon) create integration risk and potential for management distraction.
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Regulatory Ceiling: The Haldex failure demonstrates that organic growth and small tuck-in acquisitions may be the only path forward; transformative M&A may be blocked.
XIII. Key KPIs to Track
For investors monitoring Knorr-Bremse's ongoing performance, three metrics matter most:
1. Operating EBIT Margin The BOOST 2026 target of >14% represents management's credibility. Progress toward this target—or slippage—signals execution quality. Current trajectory shows improvement from 11.3% (2023) to 12.3% (2024) to 13.3% (Q3 2025).
2. Rail Division Aftermarket Revenue Share Currently at 59%, this metric captures the installed base monetization that drives recurring revenue and margin quality. Increasing aftermarket share generally signals growing equipment base and customer loyalty.
3. Order Book-to-Revenue Ratio The order book reached a new all-time high of €7,182 million as of December 31, 2024. With ~€8 billion in annual revenue, this represents approximately 0.9x coverage—providing visibility into future quarters.
XIV. Conclusion: Lessons for Investors
Knorr-Bremse's 120-year journey offers several enduring lessons:
Focus beats diversification in industrial businesses. Thiele's decision to sell everything unrelated to brakes—against consultant advice—enabled the concentration of capital, talent, and management attention that built market leadership.
Safety-critical products create exceptional moats. When failure means catastrophic accidents, customers choose reliability over price. Certification requirements, liability concerns, and proven track records create barriers that deter entry and support pricing power.
Patient capital enables compounding. Family control through the pre-IPO period allowed investment in long-term capabilities—building North American operations for 50 years before they became major profit contributors.
Succession planning matters. Thiele's creation of the family foundation, placement of professional management, and IPO structure all served institutional continuity over personal control.
Even dominant companies face limits. The Haldex failure shows that regulatory constraints can cap consolidation strategies regardless of financial capacity.
Knorr-Bremse remains what it has been since 1905: the hidden giant ensuring that the world's trains and trucks stop when they should. For 120 years, that mission hasn't changed. What's changed is the scale—from Berlin workshops to 100 locations across 30 countries—and the sophistication—from mechanical valves to AI-powered collision mitigation. The brakes may be invisible to passengers and drivers, but to investors seeking exposure to transportation safety megatrends, Knorr-Bremse deserves visibility.
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