Autoliv to Open 6th Webbing Plant - Analyst Blog

Autoliv Inc. (ALV) began the construction of its sixth seatbelt webbing plant in Mysore, near Bangalore in India, with a capacity to produce 100 million meters of webbing per year. It will be the first plant for this seatbelt component in India.

Currently, Autoliv has five webbing plants, located in The Netherlands, Romania, Canada, China and Brazil. These plants account for more than 40% of the annual global seatbelt webbing production as, apart from its own plants, the company supplies to seatbelt assembly plants owned by other manufacturers.

The new plant will enhance Autoliv's global weaving capacity for seatbelt webbing by 20% to more than 500 million meters. In the initial phase, the plant will employ 65 employees to 180 employees, requiring an investment of $10 million.

Autoliv has a stable market share in both airbag modules and seat belts in North America, Europe and Asia. For airbags, the European market share is 65% and the North American market share is 38%. For seat belts, market share in Europe is 62% and in North America it is 28%. The company's market share in Asia is 40% for both airbags and seat belts.

Autoliv has continuously expanded in low-cost countries (LCCs), including India and China, to meet local demand and to consolidate manufacturing from high-cost countries. The rise in light vehicle production (LVP) in LCCs raised demand for automobile protection products. Furthermore, expenditure in LCCs is about 55% of that in higher-cost countries. The company increased its headcount in LCCs to 60% in 2009 from 55% in 2008.

Presently, Autoliv has four facilities in India, located in Bangalore, Chennai, Delhi and Uttaranchal. Among these, the plants in Chennai and Uttaranchal manufacture seatbelts while those in Delhi and Bangalore produce airbags.

Autoliv has been manufacturing and supplying its products for the Indian automotive industry for 16 years. In the first quarter of the year, LVP in India went up 40% on a year-over-year basis. The company's organic sales in the country grew an impressive 44% due to the strong growth in LVP.

In 2010, LVP in India is expected to grow 31% to 3.2 million units, making it the sixth largest vehicle producing country in the world. Consequently, the company anticipates its sales in the country to go up 36% to over $100 million during the year.