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Key Safety Systems plans Japan expansion, focussing on air bags
October 5, 2016 / 4:03 AM / a year ago

Key Safety Systems plans Japan expansion, focussing on air bags

TOKYO (Reuters) - U.S. auto parts maker Key Safety Systems said on Wednesday that it planned to double revenue in Japan by 2020 by winning over new air bag customers as many automakers have stopped using air bag inflators made by embattled supplier Takata Corp.

The world’s fourth-largest air bag maker is among five bidders offering a financial lifeline to help Takata bear the costs of a massive global recall of its exploding air bags, people with knowledge of the process have told Reuters.

All five bids require Takata to file for bankruptcy protection, they say.

KSS declined to confirm whether it was among the bidders, although the company in June said it was discussing a potential investment with Lazard, the investment bank Takata has hired to lead its financial restructuring.

KSS CEO Jason Luo said he planned to increase revenue from Japanese automakers to 10 percent of total global revenue by 2020, from 5 percent at the moment, focussing on research and development and manufacture of air bags and also automated driving functions.

“We’re looking at M&A opportunities and also technological alliances,” he told Reuters in an interview.

The Michigan-based KSS, whose origins go back 100 years as a supplier of steering wheels for Ford’s Model T, is planning to expand its Japanese customer base, which includes small-volume customers such as Isuzu Motors and Suzuki Motor Corp.

Earlier this year, KSS was acquired by Chinese auto parts supplier Ningbo Joyson Electronic Corp, which produces components from electronic control units to rear-view mirrors to both domestic and foreign manufacturers.

KSS’s biggest global clients include Ford, Fiat Chrysler Automobiles and Volkswagen.

Air bag modules, which include the bag itself and a chemical-based inflator, are KSS’s biggest selling product, accounting for around 56 percent of annual revenue.

Luo said he planned to win new business by offering an alternative supply of air bag modules to automakers, including Japanese ones, which have stopped using Takata inflators in new vehicle models and for replacement parts.

He said KSS’s strategy differs from competitors including Sweden’s Autoliv, the world’s largest air bag maker which has ramped up its inflator production capacity in a bid to leverage replacement supply into new contracts.

“The inflator is just part of the air bag ... I would rather replace the whole air bag and not just the inflators,” Luo said.

Reporting by Naomi Tajitsu; Editing by Simon Cameron-Moore

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