Autoliv, Inc. (ALV) announced an in-house textile cushions operation in the Jiading airbag module facility in Shanghai, China. The new operation, with a floor space of 3,000 square meters, will have an annual production capacity of 4.5 million airbag cushions when fully utilized.

The new operation will enable the automotive safety systems manufacturer to enjoy vertical integration in its production, as it would no longer need to depend on external suppliers to provide the textile cushions. Furthermore, the company would be able to take advantage of the cheap labor in China and remain cost competitive.

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 Romania and China, to meet local demand and to consolidate manufacturing from high-cost countries. The rise in light vehicle production 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 nine plants in China that supply to both global as well as domestic automakers in the country. In 2009, the company opened a state-of-the-art technical center in Shanghai, China, which hosts over 200 engineers. Recently, it has also opened a test facility that can crash-test complete cars to support its customers in China.

In 2009, Autoliv’s sales in China zoomed by 67%. The company’s organic sales in the country grew 59% in the year, which was 11 percentage points higher than the Chinese light vehicle production. In 2010, the company’s sales in the country are anticipated to go up by 50% to over $700 million.

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