Magna International on Thursday said it has agreed to acquire majority ownership of Honglizhixin (HLZX), a major seat supplier to Chinese automakers, expanding the Canadian supplier’s seating capabilities across China.
Terms of the purchase were not disclosed.
Magna also announced that it will acquire a majority stake in its existing seating joint venture with HLZX. The two companies currently operate a 50/50 venture formed in 2015.
The current Magna-HLZX partnership includes two manufacturing plants. Under the new ownership agreement, 10 plants will be added to Magna’s manufacturing footprint, adding what the supplier calls “critical mass and scale” to its seating operations in 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 startups in the area of mobility,” Magna Seating President John Wyskiel said in a statement. “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.”
Magna said HLZX’s plants offer just-in-time seat assembly and delivery, structures, foam, and trim capabilities “that enable an optimal sourcing solution for automakers versus sourcing 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,” Jim Chen, vice-president and managing director of Magna Seating Asia, said in the same statement.
Magna’s seating business already includes six r&d centres and 66 manufacturing operations around the globe.
In August, Magna was the top supplier in the the J.D. Power 2020 U.S. Seat Quality and Satisfaction Study. It finished an industry-leading first in three of seven categories, and second in a fourth. Lear Corporation and Bridgewater Interiors each won a pair of categories.
Magna is No. 3 on the Automotive News Top 100 Global Suppliers with US$39.43 billion in sales in 2019.