Spain's Grupo Antolin to buy Magna's interiors business

Canadian auto supply giant Magna International Inc. has agreed to sell its interiors operations to Grupo Antolin, a Spanish supplier with global operations, in a deal valued at about $525 million, Magna said today in a statement.

The Magna sale includes 36 manufacturing operations and about 12,000 employees in Europe, North America and Asia. In 2014 the operations posted sales of $2.4 billion.

Reports about the negotiations for the deal began emerging last month.

Aurora, Ontario-based Magna's seating operations are not part of the deal. The transaction is expected to close in the third quarter, pending various conditions including anti-trust approvals, Magna said.

New world order

A new world order has arisen in the chaotic automotive interiors market.

Twenty years ago, Johnson Controls Inc. and Lear Corp. were the top dogs in North America — beyond the automakers' in-house parts suppliers — with Magna playing the role of aggressive spoiler.

Now, those three companies have been replaced by a new generation of mega-suppliers: Grupo Antolin, Yanfeng Automotive Trim Systems, Faurecia SA and International Automotive Components Group.

One-time General Motors supply arm Delphi Corp. sold off its interiors group to the private equity-backed Inteva Products LLC while Ford spun off its interiors business into Visteon Corp. Visteon later gave back one of its biggest plants, in Saline, Mich., to Ford — who in turn sold it to Faurecia — and sold off the bulk of its other interior operations to Yanfeng.

Lear, meanwhile, transferred its hard trim interior business to the growing IAC.

To be sure, Lear, JCI and Magna each have retained their seat operations, a segment that has consolidated into a smallish coterie of profitable global suppliers. The rest of the cockpit — headliners, consoles, instrument panels, carpeting and door panels — has been up for grabs.

Big suppliers like Magna struggled to make money from interior components because smaller rivals could easily jump in. Automakers happily exploited the price wars that inevitably ensued. But Grupo Antolin's deal may mark a turning point.

Major expansion

Today's deal, if completed, would double Grupo Antolin's global sales to $5.5 billion, and its work force will swell to 27,000 employees.

Based in Burgos, Spain, Grupo Antolin is the world's largest producer of headliners, and it also produces lighting, seats, trim and door panels.

Even before the Magna acquisition, the company had a growing presence in North America — a region that generated 26 percent of Grupo Antolin's global sales last year.

The company's top customer, Volkswagen AG, will use its interior components for the Mexican-produced Audi Q5. Grupo Antolin also produces headliners in Missouri for Ford, its No. 2 global customer.

More competition

In an interview last summer, company Vice Chairman Ernesto Antolin told Automotive News Europe that the company's long-term goal is to become the world's largest supplier of automotive interiors.

If so, he will have some rivals. The newly formed Yanfeng Automotive Interiors boasts annual revenues of $8.5 billion, with enough orders to boost revenues to $10 billion in a few years.

Based in Shanghai, the company is a 70-30 joint venture between Yanfeng Automotive Trim Systems Co. and Johnson Controls Inc. Assuming that regulators approve the deal, the venture will launch operations in July.

Yanfeng's corporate parent, Shanghai Automotive Industry Corp., has a large — and profitable — joint venture with General Motors. With its ties to Johnson Controls and GM, Yanfeng Automotive is likely to be a formidable competitor.

In his interview with Automotive News Europe, Ernesto Antolin predicted that three or four interior suppliers would dominate the global segment. Barring any future surprises, that group already has taken shape.