Swedish supplier Autoliv has bought 50 percent of Estonian seatbelt maker Norma Group to give it a low-cost production base and a way into the Russian market.
The acquisition is expected to be completed this month.
'We are trying to reduce our expenses. Norma - being a seatbelt producer situated in a low-cost country - is therefore interesting to us,' Autoliv General Manager Lars Westerberg told a capital markets conference in New York. The move is also seen as part of Autoliv's long-term plans for the Russian market. The company makes airbags and seatbelts.
Norma Chairman Toomas Tamsar said Autoliv will pay between 300 million-400 million Estonian kroons ($20 million-$26 million) for its stake.
The growing consolidation among the vehicle producers is forcing a similar process on the automotive safety equipment suppliers.
'There are several players today, and some are reasonably global,' Westerberg said. 'It is realistic to think that the number of producers will fall.'
In the global category Westerberg counts Autoliv, despite its weak position in Japan, as a key competitor to TRW Inc. of the USA. Japan's Takata Corp. could also be considered a global firm. Takata has a significant presence in North America.
Delphi Automotive Systems is more oriented toward North America and Petri AG is mostly active in Germany, Westerberg said.
Autoliv wants to increase its small market share in Japan, and Westerberg said there are good acquisition possibilities there.
Westerberg said he expects Autoliv to sell more than 40 million airbags in 2001. The company sold about 28 million in 1998.
'Most of this growth will come from side-impact airbags, which command a lower price than frontal airbags,' he said. Autoliv sold close to 8 million side-impact airbags last year. Westerberg said this figure will rise to 20 million in 2001.
Autoliv continues to see an increase in supply value per vehicle. It is developing new safety systems, such as anti-whiplash, roll-over protection and collision warning devices. It is also introducing 'smart' airbags which recognize an empty passenger seat or the fitting of a baby seat.
Westerberg said: 'These systems will reduce fatalities and be the driver for Autoliv's long-term growth.'- Reuters News Service.
Gordon Feller contributed