Magna, Lear seek suppliers with the scale to handle global projects

Article by Christian A., on August 13, 2011

It’s likely that those who would make acquisitions this year are the manufacturers of car seats and dashboards, such as Magna International Inc. and Lear Corp. This is because automakers are looking for suppliers that have the scale to take on global projects.

As suppliers have over $5 billion in cash, they add assets that aid automakers in the development of interior features that are intended for emerging markets like Brazil and China.

PRTM, a global consulting firm based in Waltham, Mass., said that the companies that would be aggressive in acquiring include Magna, Lear and Johnson Controls Inc. When consumers check out competing vehicles, they look at interiors in the same way that house shoppers assess kitchens and bathrooms.

The supplier firms that boast of having specialties in seats, dashboards and related parts are evaluating troubled companies in Europe since they want to enhance their services for automakers like General Motors Co. and Volkswagen AG in local markets worldwide.

In an interview, Dietmar Ostermann, director of PRTM's automotive practice, said that the average global customer decides on the purchase by looking at “exterior looks and interior experience." He explained that more automakers are revising the appearance of their cars to “appeal to local markets."

It’s estimated that there may be as many as 250 acquisitions throughout the world by auto-parts companies this year. In comparison, there were 268 recorded last year, the second-highest total. He added that this figure could be lowered by 12% if Standard & Poor's downgrade of U.S. debt raises interest rates and caution among investors.

Topics: magna, lear

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