On August 18th, 2014 Sensata Technologies NV (ST) announced that it would acquire, in its entirety, for about $1 billion, the operating assets of Schrader. Netherlands-based Sensata, with significant operations and US headquarters in Attleboro, MA, is the leader in onboard automobile sensors. Applications include oil pressure sensors, occupant weight sensing, fuel system sensors, and anti-lock brake systems among others. The acquisition of Schrader adds to Sensata’s portfolio with their tire pressure monitoring sensors (TPMS).

                TPMS, along with many of the sensors that Sensata offers, first appeared in high-end vehicles from manufacturers such as BMW, Mercedes, and GM’s Cadillac. The sensors were helpful, but broke often and were sometimes costly to replace. In recent years these sensors have become less of a nuisance and are now standard in mid-priced as well as entry level automobiles. Recent US legislation has mandated these sensors because of their benefits, and the total addressable market is now in the range of $2 billion according to ST’s CEO. Tire pressure sensors are useful not only as a safety mechanism to alert drivers that their tires are low, but properly inflated tires also increase fuel economy and the lifetime of a rubber tire.

                Going beyond the tire pressure sensor, Sensata has made great strides in recent years to lead the way towards a fully automatic car. While still somewhat of a futuristic dream, driverless automobiles will eventually be a reality and ST’s sensors will play an important role. Automobile sensors are vitally important in ensuring the safety of the driver as well as others on the road because the sensors are able to alert the operator of impending system failure. Along with peace of mind, automobile sensors embedded in critical systems can also cue the owner of the vehicle to perform preventative maintenance. These benefits help to avoid the types of breakdowns that can lead to massive traffic jams which burn millions of productive man hours annually.

                While the acquisition of Schrader by Sensata will be dilutive in 2014, the business move will turn accreditive in 2015 and significantly add to the earnings potential of ST’s product portfolio.  As the research and technology surrounding driverless cars matures, leading tech and auto companies like Google and Nissan will look to use more of Sensata’s sensors on-board the vehicle. The automobile industry is one of the largest globally, and sensor manufacturers should continue to focus on this platform for their sensor products as the industry rapidly moves towards fully automated and driverless cars.