netrashetty
Netra Shetty
Autoliv is a Swedish-American company with headquarters in Stockholm, Sweden, that in 1997 sprung from the merger of the Swedish company Autoliv AB and Morton Automotive Safety Products, Inc., a division of the American firm Morton International.
Autoliv develops and manufactures automotive safety systems for all major automotive manufacturers in the world. Together with its joint ventures Autoliv has 80 facilities with 40,000 employees in 30 vehicle-producing countries. In addition, the company has development and engineering centers in six countries around the world, including 20 test tracks, more than any other automotive safety supplier. The company's shares are listed on the New York Stock Exchange and its Swedish Depository Receipts on the OMX Stockholm Stock Exchange
Autoliv, Inc. (NYSE: ALV) manufactures protection systems for automobiles, with a product portfolio consisting primarily of safety airbags, seat belts, and steering wheels.[1] Autoliv sells its products to automobile manufacturers such as Ford Motor Company (F), Nissan Motor (NSANY), General Motors (GM), and Volkswagen (VLKAY).[2]
Autoliv is the largest airbag and seat belt producer with 33% of the world market. Despite Autoliv's large size, it is heavily exposed to a few customers as sales to the company's five largest customers comprise nearly 60% of Autoliv's revenues.[3]
Business Overview
Business & Financial Metrics[4]
In 2009, ALV generated a net income of $10 million on revenues of $5.12 billion. This represents a 93.9% decrease in net income and a 20.9% decrease in revenues from 2008, when the company earned $165 million on $6.47 in revenues.
Business Segments
Autoliv's main products are airbags and seat belts, but the company also makes related automobile safety products, including night vision systems, steering wheels, and electronic control systems.[5] The company operates through a single reportable operating segment.[6]
Airbags and Associated Products
Airbags and Associated Products manufactures airbags and related products, such as airbag inflators and modules that control when the airbags deploy.[7] Autoliv's airbags include innovations such as the "Safety-Vent Airbag" which changes size and shape based on the weight and build of the driver or passenger it is protecting. Due to new federal laws in the U.S. requiring that all passenger vehicles in the United States have side curtain airbags by 2012, Autoliv said it expects side curtain airbags to be this segment's strongest growth driver.[8]
Contents
1 Business Overview
1.1 Business & Financial Metrics[4]
1.2 Business Segments
1.2.1 Airbags and Associated Products
1.2.2 Seat Belts and Associated Products
2 Key Trends and Forces
2.1 All passenger cars sold in the U.S. must have side airbags by 2012
2.2 Exchange rates affect ALV's revenues
3 Key Competitors
4 References
Seat Belts and Associated Products
In addition to seat belts, the Seat Belts and Associated Products segment makes related components like pretensioners, which tighten the seat belt right before a crash to help prevent injury, and load limiters, which loosen seat belt tension in a controlled way to decrease pressure on the occupants chest.[9]
Key Trends and Forces
All passenger cars sold in the U.S. must have side airbags by 2012
In 2007, the National Highway Traffic Safety Administration announced a new regulation under which all new cars sold in the United States must have side curtain airbags by 2012.[10] This should correlate to an increased demand for the types of products Autoliv produces.
Exchange rates affect ALV's revenues
Because Autoliv reports its revenue in U.S. dollars but does 75% of its business outside of North America, its revenue is highly exposed to fluctuations in exchange rates. When foreign currencies depreciate, the dollar value of Autoliv's international revenues decreases. On the other hand, when the value of the dollar decreases (foreign currencies appreciate), the dollar value of Autoliv's international revenues increases.
Key Competitors
TRW Automotive Holdings (TRW) provides active safety systems such as braking and steering controls as well as air bags and seat belts to automobile manufacturers.[11]
Takata provides seat belts, airbags and related safety products to automobile manufacturers.[12]
Key Safety Systems is an example private company that manufacturers of airbags, seat belts, and related safety components. The company sells its safety components to automobile manufacturers.[13]
Autoliv and Key Competitors 2007 ($ in millions)[
The company is trying to further increase profitability and has set its sights on gaining market share against industry leaders like Toyota and the floundering US Big Three: (General Motors, Ford and DaimlerChrysler). In order to do this, Nissan has established a plan to develop efficient, alternative-energy and hybrid powered vehicles in order to compete with alternative-energy auto leaders Toyota and Honda for the increasingly important alternative and renewable energy auto market. Despite being a latecomer to the field, Nissan has monetary incentives on its side: the current industry-wide system of federal tax credits given for the sale of hybrid vehicles will cease to apply to Honda and Toyota cars after these companies sell a certain (and rapidly approaching) preset number of hybrid cars.
Nissan's challenges will be many, including rising prices for steel and aluminum and fluctuations in exchange rates. Rising steel and aluminum prices drive up production costs and drag down profits. As a Japanese company, when the Japanese yen appreciates to the US dollar, sales in the US become less valuable to Nissan and it loses profits. Also, an appreciated yen makes Nissans more expensive for American consumers and drives down demand.
Business Overview
Nissan sells cars under two brands:
Contents
1 Business Overview
1.1 Nissan and Renault
2 Trends and Forces
2.1 Rising Incentives Industry-Wide Could Infringe on Profits
2.2 Growing Demand for Alternative-Energy Autos
2.3 Exchange Rates Can Help and Hurt Profits
3 Competition
4 References
The Nissan line is aimed at middle-class Americans and includes popular sedans such as the higher-end Altima and Maxima, and the lower-end Sentra. Nissan's line also includes trucks, sports cars and SUVs.
The Infiniti brand is Nissan's luxury line aimed at higher-income consumers who want high-performance automobiles that come with the best possible features and styling. Like all luxury cars, Infiniti generates higher profits per car than the Nissan brand. However, sales of Infiniti branded cars account for only a small fraction of Nissan's total global sales.
Nissan and Renault
In 1999 Nissan was in a dire situation--steamrollered by the competition, the business was losing billions of dollars. In order to effect a turnaround, Nissan established a formal alliance with the leading French automaker Renault (about 15% of Renault is actually owned by the French government). In the 1999 deal, Renault received a 40% stake in Nissan, and Nissan received 15% of Renault's stock. In the short term, the founding of the alliance provided financial capital to revitalize Nissan and innovative ideas from new management. Today, the two companies continue to work together on research and development, purchasing agreements, manufacturing, and logistics and distribution. In fact, Nissan and Renault even share a CEO in Carlos Ghosn.
Trends and Forces
Rising Incentives Industry-Wide Could Infringe on Profits
A current trend in the auto industry involves the use of incentives (special financing deals, reduced prices, factory rebates, etc.) in order to encourage consumers to purchase new automobiles by lowering the cost of a vehicle. As domestic automakers GM, Ford and DaimlerChrysler continue to struggle in the auto market, they have been turning to heavy incentive use in order to generate sales. The average incentive on an automobile from a domestic automaker (i.e., one of the Big Three) is approximately $3,358. Meanwhile, Asian automakers have been saving profit by limiting incentives on their vehicles (the average incentive on an Asian companies automobile is $1,478). The average incentive on a Nissan automobile is $2,211, a figure lower than the Big Three's, keeping Nissan's profit margin relatively healthy; however, Honda and Toyota offer even lower incentives yet still manage to sell more autos than Nissan.
Growing Demand for Alternative-Energy Autos
Despite the global energy crisis and the increasing research in renewable energy for automobiles, Nissan has yet to release an alternative-energy powered vehicle, such as a hybrid vehicle like the Toyota Prius or Honda's hybrid Civic. This has hurt Nissan: hybrids have become increasingly popular as rising oil prices have led consumers to seek more efficient vehicles. In order to capitalize on the growing market for hybrid and alternative-energy vehicles and catch up with alternative-energy auto leaders Toyota and Honda, Nissan recently announced the Nissan Green Program 2010. The Nissan Green Program 2010 is Nissan's medium-term plan towards making its cars more eco-friendly. The Green Program included plans for:
Reducing CO2 emissions in all vehicles and manufacturing plants
Eco-friendly diesel engines by 2008 in Europe and 2011 in Japan, China and North America
Bio-ethanol-capable vehicles within the next three years
Electric vehicles to be launched in the Japanese market around 2010
A hybrid automobile for launch in North American and Japan around 2011
Fuel cell vehicles for North America and Japan sometime after 2010
Exchange Rates Can Help and Hurt Profits
As a Japanese automaker that relies upon sales across the globe, particularly in the US, Nissan is greatly affected by changes in exchange rates. Fluctuations in the yen/dollar exchange rate significantly affect Nissan's profits. Also, in the long run, fluctuations in exchange rates can affect consumer demand as well--appreciating and depreciating currencies may change the relative prices of autos. For example, when the yen appreciates relative to the US dollar, auto sales in the US decrease in worth for Nissan, while concurrently Japanese cars become more expensive for US consumers, lowering demand for Nissans.
Competition
Despite being one of the world's smaller automakers in terms of sales, Nissan is one of the most profitable major automakers, trailing only Toyota and Honda in operating margin. Also, Nissan hopes to boost overall profitability by revitalizing its Infiniti brand line of luxury cars, which are estimated to have a profit margin twice as high as Nissan's middle-market cars.
In the luxury car market, NSANY competes with Toyota's Lexus, Honda's Acura, Ford's Jaguar, Lincoln, Land Rover and Lincoln brands, GM's Buick, Saab and Cadillac and DaimlerChrysler's Mercedes-Benz line. Nissan's competitors are in similar situations with their respective luxury lines, as none of these companies' luxury lines account for much more than 10% of revenue. However, since the profit margins are so much higher in the luxury brands, growing sales of luxury lines is important to all of the automakers, and competition amongst these brands is intense.
Nissan is in the process of growing in size to match up with Toyota and the Big Three. Nissan hopes to utilize its advantage in profitability over the Big Three to take over more market share in the auto industry as the ailing giants struggle under the financial burden of expensive health benefits and pension plans. After overtaking the Big Three, Nissan will have to compete with the top two Japanese automakers, Toyota and Honda as those companies are likely to continue to grow as they ride the success and growing popularity of their hybrids. Once Nissan has matured to a size comparable to Toyota, it will be able to focus on the future of automobiles in its alternative-energy and hybrid research and development and begin competing head-to-head with Toyota and Honda.
Autoliv develops and manufactures automotive safety systems for all major automotive manufacturers in the world. Together with its joint ventures Autoliv has 80 facilities with 40,000 employees in 30 vehicle-producing countries. In addition, the company has development and engineering centers in six countries around the world, including 20 test tracks, more than any other automotive safety supplier. The company's shares are listed on the New York Stock Exchange and its Swedish Depository Receipts on the OMX Stockholm Stock Exchange
Autoliv, Inc. (NYSE: ALV) manufactures protection systems for automobiles, with a product portfolio consisting primarily of safety airbags, seat belts, and steering wheels.[1] Autoliv sells its products to automobile manufacturers such as Ford Motor Company (F), Nissan Motor (NSANY), General Motors (GM), and Volkswagen (VLKAY).[2]
Autoliv is the largest airbag and seat belt producer with 33% of the world market. Despite Autoliv's large size, it is heavily exposed to a few customers as sales to the company's five largest customers comprise nearly 60% of Autoliv's revenues.[3]
Business Overview
Business & Financial Metrics[4]
In 2009, ALV generated a net income of $10 million on revenues of $5.12 billion. This represents a 93.9% decrease in net income and a 20.9% decrease in revenues from 2008, when the company earned $165 million on $6.47 in revenues.
Business Segments
Autoliv's main products are airbags and seat belts, but the company also makes related automobile safety products, including night vision systems, steering wheels, and electronic control systems.[5] The company operates through a single reportable operating segment.[6]
Airbags and Associated Products
Airbags and Associated Products manufactures airbags and related products, such as airbag inflators and modules that control when the airbags deploy.[7] Autoliv's airbags include innovations such as the "Safety-Vent Airbag" which changes size and shape based on the weight and build of the driver or passenger it is protecting. Due to new federal laws in the U.S. requiring that all passenger vehicles in the United States have side curtain airbags by 2012, Autoliv said it expects side curtain airbags to be this segment's strongest growth driver.[8]
Contents
1 Business Overview
1.1 Business & Financial Metrics[4]
1.2 Business Segments
1.2.1 Airbags and Associated Products
1.2.2 Seat Belts and Associated Products
2 Key Trends and Forces
2.1 All passenger cars sold in the U.S. must have side airbags by 2012
2.2 Exchange rates affect ALV's revenues
3 Key Competitors
4 References
Seat Belts and Associated Products
In addition to seat belts, the Seat Belts and Associated Products segment makes related components like pretensioners, which tighten the seat belt right before a crash to help prevent injury, and load limiters, which loosen seat belt tension in a controlled way to decrease pressure on the occupants chest.[9]
Key Trends and Forces
All passenger cars sold in the U.S. must have side airbags by 2012
In 2007, the National Highway Traffic Safety Administration announced a new regulation under which all new cars sold in the United States must have side curtain airbags by 2012.[10] This should correlate to an increased demand for the types of products Autoliv produces.
Exchange rates affect ALV's revenues
Because Autoliv reports its revenue in U.S. dollars but does 75% of its business outside of North America, its revenue is highly exposed to fluctuations in exchange rates. When foreign currencies depreciate, the dollar value of Autoliv's international revenues decreases. On the other hand, when the value of the dollar decreases (foreign currencies appreciate), the dollar value of Autoliv's international revenues increases.
Key Competitors
TRW Automotive Holdings (TRW) provides active safety systems such as braking and steering controls as well as air bags and seat belts to automobile manufacturers.[11]
Takata provides seat belts, airbags and related safety products to automobile manufacturers.[12]
Key Safety Systems is an example private company that manufacturers of airbags, seat belts, and related safety components. The company sells its safety components to automobile manufacturers.[13]
Autoliv and Key Competitors 2007 ($ in millions)[
The company is trying to further increase profitability and has set its sights on gaining market share against industry leaders like Toyota and the floundering US Big Three: (General Motors, Ford and DaimlerChrysler). In order to do this, Nissan has established a plan to develop efficient, alternative-energy and hybrid powered vehicles in order to compete with alternative-energy auto leaders Toyota and Honda for the increasingly important alternative and renewable energy auto market. Despite being a latecomer to the field, Nissan has monetary incentives on its side: the current industry-wide system of federal tax credits given for the sale of hybrid vehicles will cease to apply to Honda and Toyota cars after these companies sell a certain (and rapidly approaching) preset number of hybrid cars.
Nissan's challenges will be many, including rising prices for steel and aluminum and fluctuations in exchange rates. Rising steel and aluminum prices drive up production costs and drag down profits. As a Japanese company, when the Japanese yen appreciates to the US dollar, sales in the US become less valuable to Nissan and it loses profits. Also, an appreciated yen makes Nissans more expensive for American consumers and drives down demand.
Business Overview
Nissan sells cars under two brands:
Contents
1 Business Overview
1.1 Nissan and Renault
2 Trends and Forces
2.1 Rising Incentives Industry-Wide Could Infringe on Profits
2.2 Growing Demand for Alternative-Energy Autos
2.3 Exchange Rates Can Help and Hurt Profits
3 Competition
4 References
The Nissan line is aimed at middle-class Americans and includes popular sedans such as the higher-end Altima and Maxima, and the lower-end Sentra. Nissan's line also includes trucks, sports cars and SUVs.
The Infiniti brand is Nissan's luxury line aimed at higher-income consumers who want high-performance automobiles that come with the best possible features and styling. Like all luxury cars, Infiniti generates higher profits per car than the Nissan brand. However, sales of Infiniti branded cars account for only a small fraction of Nissan's total global sales.
Nissan and Renault
In 1999 Nissan was in a dire situation--steamrollered by the competition, the business was losing billions of dollars. In order to effect a turnaround, Nissan established a formal alliance with the leading French automaker Renault (about 15% of Renault is actually owned by the French government). In the 1999 deal, Renault received a 40% stake in Nissan, and Nissan received 15% of Renault's stock. In the short term, the founding of the alliance provided financial capital to revitalize Nissan and innovative ideas from new management. Today, the two companies continue to work together on research and development, purchasing agreements, manufacturing, and logistics and distribution. In fact, Nissan and Renault even share a CEO in Carlos Ghosn.
Trends and Forces
Rising Incentives Industry-Wide Could Infringe on Profits
A current trend in the auto industry involves the use of incentives (special financing deals, reduced prices, factory rebates, etc.) in order to encourage consumers to purchase new automobiles by lowering the cost of a vehicle. As domestic automakers GM, Ford and DaimlerChrysler continue to struggle in the auto market, they have been turning to heavy incentive use in order to generate sales. The average incentive on an automobile from a domestic automaker (i.e., one of the Big Three) is approximately $3,358. Meanwhile, Asian automakers have been saving profit by limiting incentives on their vehicles (the average incentive on an Asian companies automobile is $1,478). The average incentive on a Nissan automobile is $2,211, a figure lower than the Big Three's, keeping Nissan's profit margin relatively healthy; however, Honda and Toyota offer even lower incentives yet still manage to sell more autos than Nissan.
Growing Demand for Alternative-Energy Autos
Despite the global energy crisis and the increasing research in renewable energy for automobiles, Nissan has yet to release an alternative-energy powered vehicle, such as a hybrid vehicle like the Toyota Prius or Honda's hybrid Civic. This has hurt Nissan: hybrids have become increasingly popular as rising oil prices have led consumers to seek more efficient vehicles. In order to capitalize on the growing market for hybrid and alternative-energy vehicles and catch up with alternative-energy auto leaders Toyota and Honda, Nissan recently announced the Nissan Green Program 2010. The Nissan Green Program 2010 is Nissan's medium-term plan towards making its cars more eco-friendly. The Green Program included plans for:
Reducing CO2 emissions in all vehicles and manufacturing plants
Eco-friendly diesel engines by 2008 in Europe and 2011 in Japan, China and North America
Bio-ethanol-capable vehicles within the next three years
Electric vehicles to be launched in the Japanese market around 2010
A hybrid automobile for launch in North American and Japan around 2011
Fuel cell vehicles for North America and Japan sometime after 2010
Exchange Rates Can Help and Hurt Profits
As a Japanese automaker that relies upon sales across the globe, particularly in the US, Nissan is greatly affected by changes in exchange rates. Fluctuations in the yen/dollar exchange rate significantly affect Nissan's profits. Also, in the long run, fluctuations in exchange rates can affect consumer demand as well--appreciating and depreciating currencies may change the relative prices of autos. For example, when the yen appreciates relative to the US dollar, auto sales in the US decrease in worth for Nissan, while concurrently Japanese cars become more expensive for US consumers, lowering demand for Nissans.
Competition
Despite being one of the world's smaller automakers in terms of sales, Nissan is one of the most profitable major automakers, trailing only Toyota and Honda in operating margin. Also, Nissan hopes to boost overall profitability by revitalizing its Infiniti brand line of luxury cars, which are estimated to have a profit margin twice as high as Nissan's middle-market cars.
In the luxury car market, NSANY competes with Toyota's Lexus, Honda's Acura, Ford's Jaguar, Lincoln, Land Rover and Lincoln brands, GM's Buick, Saab and Cadillac and DaimlerChrysler's Mercedes-Benz line. Nissan's competitors are in similar situations with their respective luxury lines, as none of these companies' luxury lines account for much more than 10% of revenue. However, since the profit margins are so much higher in the luxury brands, growing sales of luxury lines is important to all of the automakers, and competition amongst these brands is intense.
Nissan is in the process of growing in size to match up with Toyota and the Big Three. Nissan hopes to utilize its advantage in profitability over the Big Three to take over more market share in the auto industry as the ailing giants struggle under the financial burden of expensive health benefits and pension plans. After overtaking the Big Three, Nissan will have to compete with the top two Japanese automakers, Toyota and Honda as those companies are likely to continue to grow as they ride the success and growing popularity of their hybrids. Once Nissan has matured to a size comparable to Toyota, it will be able to focus on the future of automobiles in its alternative-energy and hybrid research and development and begin competing head-to-head with Toyota and Honda.