Motherson Group’s bid to acquire embattled Japanese auto parts maker Marelli Holdings from US investment firm Kohlberg Kravis Roberts (KKR) is part of a goal to transform the Indian company into a top 10 auto parts supplier through an aggressive merger and acquisition strategy.
The key to Motherson’s success has been diversity. While it is firmly an auto parts company that has enjoyed a robust domestic market, its policy has been not to rely on a specific group of products, customers or country as a market.
Some of the company’s main customers are in Europe, including Mercedes-Benz and Volkswagen. But Motherson also supplies products to Japanese automaker Suzuki and South Korean leader Hyundai. This strategy is in contrast with Marelli, which relies on Nissan Motor and Stellantis for about half its revenue.
Marelli, with a strength in electrical components, also develops parts for electric vehicles and software-defined vehicles. Should the acquisition bid be successful, Motherson aims to expand Marelli’s sales through its customer network while also proposing group companies’ products to Nissan and others.
Wiring harnesses have been a main growth pillar for Motherson. Group revenue in auto parts business was $11.6 billion in fiscal 2023, a rise of 25% compared to fiscal 2018, according to a research firm MarkLines.
The company is the largest auto parts supplier in India and ranks 25th in the world. Marelli is 27th globally with $11.4 billion in revenue, which would raise Motherson to 12th with $23 billion if the acquisition is completed.
India’s new auto sales have been on a steady rise thanks to the country’s expanding population and economic growth. In 2022, India surpassed Japan to become the third-largest auto market in new cars sold after China and the US.
Even with its massive home market, Motherson has been keen to expand overseas. In 2023, it bought a mirror supply business from Japanese parts manufacturer Ichikoh Industries. Last year, it acquired Yachiyo Industry—now Motherson Yachiyo Automotive Systems—which was a supplier to Honda Motor.
The Indian group has strong business ties to Japan. It has supplied auto parts to Suzuki in India since the 1980s. It also has a history of collaborating with Marelli’s predecessor, Calsonic Kansei, and even considered supporting Marelli when the Japanese company faced struggles in 2022.
As for Marelli, some industry sources suggest the company may have lost some of its top employees after its recent financial struggles. A potential acquisition by Motherson Group could help the company regain the trust it lost and rebuild a stronger foundation.
