With its $7.1 billion acquisition last week of FCA's Magneti Marelli, Calsonic Kansei — traditionally a Japanese supplier of heaters and air conditioners — hopes to become a credible player in the fast-growing infotainment industry.
The combined company, called Magneti Marelli CK Holdings, will boast global sales of $17.3 billion and 66,000 employees, big enough to make it No. 11 on the Automotive News list of the top 100 global suppliers.
But it's still the new kid on the block. And Magneti, led by Calsonic CEO Beda Bolzenius, will have to contend with a trio of well-entrenched rivals — Panasonic, Samsung and LG Electronics, which will account for 35 percent of infotainment systems produced this year, according to IHS Markit.
Those three companies have deep pockets, economies of scale and engineering expertise honed in the cutthroat world of consumer electronics.
Magneti Marelli CK Holdings "is not going to create anything overnight that swallows up half the industry," said Mark Boyadjis, IHS Markit's global technology analyst. "But the new company will be good for gathering additional business."
At first glance, the product portfolios of the two new partners seem to mesh.
Both companies are major producers of instrument clusters, according to Boyadjis. With a combined 12 percent share of global production, they are the segment's third-largest supplier, behind Samsung and Panasonic.
Magneti also manufactures 3 percent of the auto industry's ECUs for telematics, enough to be a player, but trailing far behind that segment's leader, LG Electronics.
"I think there is still opportunity for growth, but there is no shortage of powerful suppliers in this space," Boyadjis said. Magneti and Calsonic "will be more likely to leverage their strength in displays."
To be sure, the new company isn't making an all-or-nothing bet on infotainment. Calsonic is a major producer of climate-control systems and exhausts, while Magneti makes engine components, exhausts, suspensions and lighting.