Magna has signed an agreement to acquire majority ownership of Honglizhixin, a seat supplier to Chinese automakers.
The acquisition will expand the supplier's seating capabilities across China. Magna also will acquire a majority stake in its existing seating joint venture with HLZX.
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The two companies currently operate a 50/50 joint venture formed in 2015. Magna has signed a shareholder agreement and share purchase agreement and intends to finalise the deals by the beginning of 2021, signaling, it said, its strong commitment to China.
"China is an important market for Magna where we are committed to delivering high quality seat technology to both domestic and foreign automakers, as well as non-traditional [mobility] startups,W said John Wyskiel, president, Magna Seating. "HLZX runs an impressive business and we are proud to build upon our existing relationship and strengthen our competitiveness through increased vertical integration, additional manufacturing sites, and full engineering and testing."
The current Magna-HLZX JV includes two manufacturing plants. Under the new ownership agreement, 10 plants will be added to Magna's infrastructure, adding critical mass and scale. The majority of HLZX plants are also vertically integrated with just in time seat assembly and delivery, structures, foam, and trim capabilities that enable single sourcing for automakers versus purchasing from multiple suppliers.
"In addition to HLZX's expansive presence, they have a highly capable and competitive engineering team in providing turnkey solutions to Chinese automakers," said Jim Chen, VP and MD, Magna Seating Asia. "We believe both of our engineering teams working together will provide unique synergy which will allow us to deliver innovative seats to our customers in China."
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By GlobalDataMagna's seating business includes six R&D centres and 66 manufacturing operations worldwide.
