Credit: Shutterstock photoAs announced on July 24, 2015, Johnson Controls ( JCI ) will spin off its automotive seating and interiors business into a stand-alone public company named Adient. This company, today, is the largest global automotive seating supplier in the world, providing its products to all major automakers. It supplies over 25 million seat systems a year and its FY 2016 (year ended September 2016) consolidated revenue is expected to be $17 billion, with $7 billion unconsolidated seating revenue, and $8 billion unconsolidated interiors revenue.
Click here to see our complete analysis of Johnson Controls
The company has aglobal marketleadership in North America, Europe, and China, with a unique and longstanding position in the latter through joint venture structures with leading Chinese manufacturers, such as SAIC and Faway. Furthermore, since China is the world's largest and the fastest growing automotive market, Adient's leading position in the country will bode well for it in the future. The company further aims to invest over a billion dollars in the Asia region, primarily to drive continued growth in the China market. The market share of all the major companies has been shown in the graph below.
The current market size of the industry is estimated at $59.8 billion, with the Americas forming over 34% of the market, and China inching towards a quarter of the market. During the 2012-2014 period, the industry grew at a CAGR of 1.5% in the Americas and Europe, at 1% in South East Asia, Japan, and Korea, and at a massive 11.3% in China. In the future as well, the bulk of the growth is expected to come from this region. Government support for FDI (Foreign Direct Investment) in Asian countries such as China, India, Thailand, and Indonesia, has increased the attractiveness of such markets, and has shifted the focus from developed markets to such developing countries.
Factors such as low production costs and economical labor has resulted in higher growth in these markets, than in the more mature markets of Europe and North America. Automotive seat manufacturers are now focusing on lightweight design, which would help in increasing the fuel efficiency of vehicles. However, cost reduction seems to be a major challenge for most manufacturers, prompting them to experiment with new and different designs and materials, as this would enhance comfort, while at the same time, curtail costs.
Have more questions on Johnson Controls? See the links below:
- How Has Adient Performed For Johnson Controls?
- How Can Increasing Interest In Energy Efficiency Help Johnson Controls?
- How Did Johnson Controls Fare In Q3 2016?
- How Will Johnson Controls Perform In Q3 2016?
- Why Is Johnson Controls Banking On China For Its Absorbent Glass Mat Batteries?
- Why Is Johnson Controls Increasing The Production Of Its Absorbent Glass Mat ( AGM ) Batteries?
- What Are The Prospects For Johnson Controls' Power Solutions Business?
- What Will Be The Effect On The Segment Operating Margin As A Result Of The Johnson Controls-Tyco Merger?
- What Are The Benefits Johnson Controls Will Attain From The Tyco Merger?
- What Will Be Johnson Controls' Revenue Composition Post The Tyco Merger?
- Why Did The SG&A Expenses For Johnson Controls Increase In The First Half Of FY 2016?
- How Did Johnson Controls' Segments Perform in Q2 2016?
- Will The U.S. Treasury Department Rules, That Killed The Pfizer-Allergan Deal, Affect Johnson Controls-Tyco Merger?
- Johnson Controls' Earnings Beats Expectations
- Will Johnson Controls Miss Estimates Again?
- How Has Johnson Controls' Net Sales Changed By Geographic Areas?
- How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls' and Tyco's Shareholders?
- What Costs Did Johnson Controls' 2015 Restructuring Plan Entail?
- Johnson Controls: Year 2015 In Review
- How Will Johnson Controls' Revenue And EBITDA Composition Change In The Next 3 Years?
- What's Johnson Controls' Fundamental Value Based On Expected 2016 Results?
- What's Johnson Controls' Revenue And EBITDA Breakdown?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Johnson Controls .
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
