China Market Insider Autoneum acquires a Chinese automotive supplier

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Autoneum focuses on expansion: The Swiss supplier acquires 70 percent of Jiangsu Huanyu Group, strengthening its position in the booming Chinese automotive market.

Many suppliers in the automotive industry are currently grappling with the question of how to remain competitive in the face of the qualitative rise of their Chinese counterparts. It is an urgent question. The Swiss company Autoneum believes it has found an answer: it is attempting to acquire a leading Chinese automotive supplier.

On November 19, top managers from Autoneum signed an agreement to initially acquire 70 percent of the shares of the Chinese Jiangsu Huanyu Group. The globally active Swiss company, based in Winterthur, is spending 75 million Swiss francs, just under 81 million euros (85.187.700 USD), for this majority stake in China, as announced in a press release.

Autoneum states that this is only the first phase of its acquisition of Jiangsu Huanyu Group. The company has secured a "call option" on the remaining 30 percent of the Chinese shares, which could be used for a complete takeover in 2028, marking "Phase 2."

The first phase of the transaction, which is expected to be completed by March 2025, pending necessary regulatory approvals, has already garnered significant attention in China's auto industry. This "strategically significant acquisition" is being called a true "blockbuster," according to the Chinese automotive portal Yiche.

Autoneum Holding AG describes itself as a "global market leader in acoustic and thermal management" for vehicles. The 50 subsidiaries in 20 countries employ 11,000 people, 5 percent of whom are in Switzerland.

In China, Autoneum already has three own plants in Chongqing, Taicang, and Shenyang, each near its international OEM customers. It also operates two additional joint-venture factories in Tianjin and Guangzhou. Through Automotive Management (Shanghai) Co., Ltd., the Swiss handle sales and procurement in China and also operate an R&D center for automotive acoustics there.

This is what Autoneum hopes to achieve from the acquisition

The Chinese Jiangsu Huanyu Group is a leading manufacturer of acoustic and thermal management in China, generated nearly 140 million euros in revenue in the 2023 fiscal year, and is experiencing rapid growth.

With the acquisition, Autoneum gains overnight access to important new customers in China. The Chinese company has established long-term supply relationships with Chinese automakers such as BYD, BAIC, and GAC.

Over 14 plants with a total of 1,100 employees supply Jiangsu Huanyu Group, which is to continue operating under this name, to local manufacturers in the north, west, and south of the People's Republic. The product portfolio includes carpets, firewall insulations, headliners, trunk and interior linings, wheel arch liners, and insulation for engine compartments and underbodies.

"The Jiangsu Huanyu Group has wide access to the largest local vehicle manufacturers in China. With its plants in key automotive hubs in China, the company is an excellent strategic addition for Autoneum and brings us significantly closer to our goal of generating 20 percent of the Group's revenue in Asia in the medium term," says Eelco Spoelder, Autoneum CEO, as quoted in his company's press release.

The investment is expected to provide "not only access to an established customer base in China," but also to expand Autoneum's presence in the rapidly growing Chinese automotive market in the People's Republic and "gain significant influence in the emerging automotive centers Anhui and Shaanxi," the company says further.

The Swiss are particularly interested, according to their own statements, in expanding their truck business, which, alongside the category of light vehicles and the business with particularly lightweight thermal insulation for electric vehicles, is currently growing especially fast. The Chinese supplier is also well-positioned in the commercial vehicle sector.

Autoneum has set the goal of expanding its global revenue from 2.3 billion to 3 billion Swiss francs (2.582.440 USD to 3.368.400 USD). Expanding its commitment in China is an important milestone on this path.

*Henrik Bork is Managing Director at Asia Waypoint, a consultancy specializing in China, based in Beijing. "China Market Insider" is a joint project of the Vogel Communications Group, Würzburg, and Jigong Vogel Media Advertising in Beijing.