Annual and
Sustainability
Report 2022
22
More Lives Saved
– More Life Lived
22
Content
03 ���������������������������������������������������������������������������������������� 2022 in Brief
06 ������������������������������������������������������������������������������������� CEO Message
08 ���������������������������������������������������������� Vision / Mission / Key Behaviors
10 ������������������������������������������������������������������������������The Autoliv Journey
12 ������������������������������������������������������������������������������������������������ Targets
14 ����������������������������������������������������������������������������Strategic Framework
16 ������������������������������������������������������������������������������������������ Year in Brief
18 ��������������������������������������������������������������������������������������Market Trends
20 ��������������������������������������������������������������������������������������� Our Products
22����������������������������������������������������������������������������� Sales and Launches
24 ����������������������������������������������� Uniquely Positioned to Save More Lives
28 ��������������������������������������������������������������������������������������������Innovation
30 ��������������������������������������������������������������������� Building a Winning Team
31 �������������������������������������������������������������������������������������������������� Quality
32 ������������������������������������������������ A Driving Force in Sustainable Mobility
34������������������������������������������������������������������������ Materiality Assessment
36 �������������������������������������������������������������������Sustainability Governance
38 ��������������������������������������������������������Road Safety – a Global Challenge
40������������������������������������������������������������ A Safe and Inclusive Workplace
42 �������������������������������������������������������������������������������������� Climate Action
46���������������������������������������������������������������������������������� TCFD Disclosure
48�������������������������������������������������������������������������� Responsible Business
54 ���������������������������������������������������������������������������������������� Shareholders
58 ��������������������������������������������������������������������������������Board of Directors
59 ��������������������������������������������������������������Executive Management Team
60 ���������������������������������������������������������������������������������������������� Contacts
61 ������������������������������������������������������������������������ Sustainability Appendix
65 ��������������������������������������������������������������Multi-Year Financial Summary
Forward-Looking Statements
Except for historical information, matters discussed in the annual report are forward-looking statements and are
based on management’s estimates, assumptions and projections� Actual results could vary materially� Please
review the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” sections in the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2022, and subsequent SEC filings, for factors that could affect the Company’s performance and cause results
to differ materially from management’s expectations� The information in this report reflected management’s
estimates, assumptions and projections as of January 27, 2023� Autoliv has not made updates since then and
makes no representation, express or implied, that the information is still current or complete� The Company is
under no obligation to update any part of this document�
This report includes content supplied by S&P Global� Copyright © Light Vehicle Production Forecast,
January, 2023� All rights reserved�
Cover photo: Autoliv colleagues constantly challenge and redefine the
standards of mobility safety to sustainably deliver leading solutions� Here,
represented by Alexandru Moharta, Autoliv Steering Wheels Line Opera-
tor in Sfântu Gheorghe, Romania�
Location and Capabilities
Location 3)
Headcount
Tech
center
Production
Airbags
Seat-
belts
Steering
wheels
Other 2)
Sales
support
BRAZIL1)
CANADA
CHINA1)
ESTONIA1)
FRANCE
GERMANY
HUNGARY1)
INDIA1)
INDONESIA1)
ITALY
JAPAN
MALAYSIA1)
MEXICO1)
NETHERLANDS
PHILIPPINES1)
POLAND1)
925
428
8,910
1,033
1,728
851
1,845
3,238
190
14
2,069
15,427
7
1,528
2,467
ROMANIA1)
10,473
SOUTH AFRICA1)
SOUTH KOREA
SPAIN
SWEDEN
SWITZERLAND
THAILAND1)
TUNISIA1)
TURKEY1)
207
464
426
563
8
4,084
4,243
2,955
UNITED KINGDOM
248
USA
4,607
1) Defined as a best-cost country. 2) Includes weaving and sewing of textile cushions and seatbelt webbing, inflators,
and components for airbag and seatbelt products. 3) Our operations in Russia are currently suspended.
03
Location 3)
Headcount
Tech
center
Production
Airbags
Seat-
belts
Steering
wheels
Other 2)
Sales
support
BRAZIL1)
CANADA
CHINA1)
ESTONIA1)
FRANCE
GERMANY
HUNGARY1)
INDIA1)
INDONESIA1)
ITALY
JAPAN
MALAYSIA1)
MEXICO1)
NETHERLANDS
PHILIPPINES1)
POLAND1)
SOUTH AFRICA1)
SOUTH KOREA
SPAIN
SWEDEN
SWITZERLAND
THAILAND1)
TUNISIA1)
TURKEY1)
925
428
8,910
1,033
1,728
851
1,845
3,238
190
14
2,069
15,427
7
1,528
2,467
207
464
426
563
8
4,084
4,243
2,955
ROMANIA1)
10,473
UNITED KINGDOM
248
USA
4,607
The World’s
Largest Automotive
Safety Supplier
ALIV.sdb) is the worldwide leader in automotive
safety systems.
Autoliv, Inc. (NYSE: ALV; Nasdaq Stockholm:
At Autoliv, we challenge and redefine the
standards of mobility safety to sustainably deliver leading
solutions. In 2022, our products saved close to 35,000 lives
and reduced more than 450,000 injuries. Autoliv develops,
manufactures, and supplies passive safety systems for the
automotive industry as well as mobility safety solutions.
Passive safety systems are primarily meant to improve
safety for occupants in a vehicle, and include modules and
Share of total sales
components for frontal-impact airbag protection systems,
side-impact airbag protection systems, seatbelts, steering
wheels and inflator technologies.
To extend into new market areas beyond light vehicles
and occupant safety, Autoliv has formed Mobility Safety
Solutions (MSS). By combining our core competence and
industry experience, MSS develops and manufactures
mobility safety solutions such as pedestrian protection, bat-
tery cut-off switches, connected safety services and safety
solutions for riders of powered two-wheelers.
E U R O P E
27%
CHINA
21%
A M E R I C A S
33%
REST
OF ASIA
11%
JAPAN
8%
Key Figures 2022
$8.8b
net sales
6.8%
adjusted* operating margin
54%
cash conversion*
$713m
operating cash flow
14%
organic* sales growth
43%
market share
22%
improvement in Incident Rate
9%
renewable energy use
98%
direct material suppliers
sustainability audited
Associates 69,100 worldwide
Lives Saved Close to 35,000
Operations in 27 countries
Headquartered in Stockholm, Sweden
Incorporated in Delaware, United States
Tech Center Locations 14
*) Non-U.S. GAAP Measure. See "Non-U.S. GAAP Performance Measures" section in the 10-k filed with the SEC.
Autoliv people challenge and redefine the standards of
mobility safety to sustainably deliver leading solutions.
Autoliv’s leading safety solutions create the confidence
to embrace the new horizons in mobility.
05
CEO MESSAGE
Well-positioned
to Manage
New Business
Conditions
As the market leader, we are well-positioned to sustainably adapt to and manage new
business conditions� Our actions have built an even more competitive position for
Autoliv, despite a challenging macro environment. Commercial excellence, efficiency,
cost control, and a focus on innovation, quality and climate action defined 2022.
Market development
We continued to strengthen our position as the market leader
in 2022 through our strong sales growth and the solid profit-
ability and cash flow performance, especially in the second
half of the year.
2022 was marked by direct and indirect effects of the
COVID-19 pandemic, particularly related to the lockdowns in
China in the early part of the year and the country’s reopening
towards the end of the year. Component shortages (primarily
for semiconductors), unstable supply chains, increased costs
for raw materials, and significantly increased inflation all chal-
lenged the global economy and our industry.
The direct impact of the tragic war in Ukraine on our busi-
ness has been relatively limited. Since the war began in February
2022, we adjusted both our Russian operations and our pres-
ence in Russia. The indirect effects of the war include supply
chain disruptions and significant energy price increases in
Europe. My sympathies go to all of those affected by the war.
As a result of these challenges, part of the automotive in-
dustry continued to operate at, or near, recessionary levels.
For example, due to supply constraints, European registra-
tions in 2022 were approximately 30% lower than in 2009
during the financial crisis. The component shortages not only
limited the industry output, they also created a situation with
unpredictable and volatile light vehicle production (LVP) that
substantially effected our operational efficiency.
During the year, we faced the worst cost inflation seen in
three decades, which initially significantly impacted our profit-
ability. Through price adjustments, we managed to gradually
offset the raw material cost inflation and profitability was re-
stored towards the end of the year.
The continued high level of product launches and relentless
cost control were the foundation for our strong performance.
Our performance was also supported by price adjustments that
compensated for the high raw material cost inflation, which was
a result of the extensive discussions we initiated early in the year
with our customers.
In 2022 our sales grew organically* by 14%, outperforming
LVP growth in all major regions, mainly due to pricing and prod-
uct launches. Order win rates for new electrical vehicle (EV)
platforms were high, both with new EV makers and traditional
car manufacturers.
Quality and innovation – At the heart of what we do
Autoliv exists to Save More Lives. Our relentless focus on in-
novation and quality has made us a preferred partner and es-
tablished our market-leading position.
While the automotive landscape is constantly changing,
quality expectations are only increasing. This requires us to
always focus on quality across the value chain, and as part of
our product lifecycle management program, we are building a
proactive end-to-end approach to achieve zero defects and
reduce total non-quality cost.
06
Our innovation agenda supports our continued evolution to
include safety for mobility and society, and our focus on key
current industry technology and product development. We
continue to develop our products based on real world data to
ensure their benefit for our customers and the end user.
Autoliv’s Mobility Safety Solutions (MSS) develops prod-
ucts and services for businesses adjacent to Autoliv’s core
areas of airbags, steering wheels, and seatbelts for light pas-
senger vehicles. Such adjacent products and services include
powered two-wheelers, connected safety services, and offer-
ings to customers beyond passenger vehicle manufacturers.
A major focus area for us is new passive safety solutions
driven by the evolution of global automotive market trends.
Our development teams constantly challenge and redefine
the standards of mobility safety to deliver solutions for future
development such as autonomous cars and advanced driver-
assistance systems.
Creating a positive societal and environmental impact
Sustainability is firmly rooted in our business and, as a market
leader in our field, our efforts are aligned with society’s broader
agenda. We are committed to leading the way and being an ac-
tive contributor to sustainable mobility and society. Our products
save close to 35,000 lives and reduced more than 450,000 inju-
ries every year. We want to do more, and our ambition is to save
100,000 lives per year. Our business contributes to the realiza-
tion of several UN Sustainable Development Goals (SDGs),
and we are a signatory of the UN Global Compact principles.
Autoliv is firmly committed to supporting the United Nations
Road Safety Fund (UNRSF) and its mission to increase aware-
ness and availability of life-saving products where they are most
needed. Supporting the UNRSF is a way for Autoliv to share our
expertise while gaining additional insights into the main road
safety challenges facing the world today. Autoliv will contribute
knowledge and experience regarding global traffic safety chal-
lenges. In 2022, Autoliv joined the UNSRF Advisory Board,
whose objective is to provide strategic direction to the Fund.
We have a strong commitment to climate action. Back in
June 2021, Autoliv became the first automotive safety supplier
to commit to become carbon neutral in our own operations by
2030 and aim for net-zero emissions across the supply chain
by 2040. In 2022, our detailed and ambitious climate targets
were approved by the Science Based Targets initiative (SBTi).
To reach our ambitious science-based climate targets, we
need to collaborate across the value chain. Autoliv will reduce
its greenhouse gas emissions through the use of renewable
electricity in our own and suppliers’ operations, improve en-
ergy and materials efficiency, adopt low-carbon logistics and
low-carbon materials, and develop attractive low-carbon prod-
uct offerings to support our customers in their transformation
to zero-emission vehicles.
We are well-positioned to continue to support our partners
and customers in achieving their sustainability goals. Exam-
ples of our collaborations include the green steel collabora-
tion with SSAB and our collaborations with Piaggio and POC
that push the boundaries of safety to include vulnerable road
users. Together, we are researching and developing technology
aimed at finding climate-neutral solutions and innovations re-
lated to mobility safety.
Outstanding employee efforts
Autoliv employees are actively redefining the standards of
mobility safety to sustainably deliver leading solutions. In-
spired from the beginning by our vision of Saving More Lives,
the 69,100 members of our global team are passionate about
creating innovations and collaborations that best meet safety
needs in both the current and new mobility.
During a year focused on managing new business condi-
tions, I am proud to have witnessed the resilience of our col-
leagues and the commitment of our global Autoliv commu-
nity when it comes to supporting those in need – affected by
Typhoon Rai in the Philippines, COVID-19, and the tragic war
in Ukraine. Through the strong engagement of our local teams,
we maintained direct contact with our colleagues and provided
support when it was needed.
I am proud of what the Autoliv team has done and contin-
ues to achieve in a challenging environment. We have a strong
foundation that we continue to build on. In turbulent times,
collaborative learning and sharing best practices allow us to be-
come better and better. I am convinced that we will continue to
grow even stronger as we move beyond the challenges of the
past few years.
“We will continue to
leverage our market-leading
position to build an even
more competitive position
going forward.”
Going forward
We will continue to leverage our market-leading position to
build an even more competitive position going forward. Cus-
tomer focus, innovation, quality, efficiency, and cost control
will continue to guide our path as Autoliv succeeds by creating
value for our customers, our shareholders, and other stake-
holders.
In 2023, Autoliv turns 70 years old. The Autoliv story began
in 1953 when two brothers, Lennart and Stig Lindblad, founded
a small automotive parts and service company in Vårgårda,
Sweden, beginning a long tradition of a relentless focus on in-
novation, quality, and customer focus.
Autoliv’s vision of Saving More Lives guides our work eve-
ry day. Sustainability is an integral part of our business and a
fundamental driver for market differentiation and stakeholder
value creation, helping to ensure that our business will contin-
ue to thrive and contribute to sustainable development. This is
our responsibility – to our shareholders, customers, business
partners and employees. We welcome you to join us on our
continuing journey.
Mikael Bratt
President and CEO
Stockholm, February 2023
07
Our Vision
Our Mission
Saving
More Lives
Providing World Class
Life-Saving Solutions
for Mobility and Society
More Lives Saved – More Life Lived
"More Lives Saved – More Life Lived" is anchored in our fundamental vision that has
driven Autoliv’s success to date: Saving More Lives� This concept connects all the
innovation, technology, and quality standards inside Autoliv’s business with what we
know is very important to people outside our business: Staying safe when on the
move so they have the confidence to live life to the fullest�
08
Our Key
Behaviors
Take
Ownership
Be Curious
Add Value
Collaborate
Make it
Easy
We are the market leader of our industry and what we
do matters� This calls for a focused approach on our ways
of working� Our Key Behaviors express the essence of our
ways of working in a clear and consistent way�
09
The
Autoliv
Journey
2030
• Safety for Mobility & Society
• Market Transformer
• System Integration
• One Team
• Carbon Neutral in Own
Operations
We are proud that our products save
close to 35,000 lives and reduce more
than 450,000 injuries every year� As a
safety company our products never get
a second chance� Therefore, quality is
always at the core of what we do�
2023
• Light Vehicle Safety
• Market Leader
• Mechanical Components
• Functional & Divisional Execution
• Energy Efficient
10
The journey explained
Guided by our vision, mission and key behaviors, the Autoliv
journey from 2022 to 2030 will transition our business from
light vehicle safety to safety for mobility and society.
By being more proactive and strategic with our customers
and in the market in general, we will evolve from being the mar-
ket leader, to an influencer and ultimately a market transformer.
In a world where cars are becoming computers on wheels,
we must build on our mechanical component competence
and grow electronics and mechatronics systems and sys-
tems Integration capabilities.
Driving efficiency requires an end-to-end approach where
we become one global team executing on our prioritized
transformation projects – product lifecycle management,
commercial excellence and digitalization. Becoming a low-
carbon energy user and reach climate neutrality by 2030, re-
quires a coordinated approach.
This is a journey on a well-paved road to take us to our
financial and sustainability targets. We know what to do and
how to do it, supporting our vision of Saving More Lives.
2025
• Light & Commercial Vehicle Safety
• Market & Commercial Influencer
• Electronics & Mechatronics Systems
• End-to-End Ways of Working
• Low-Carbon Energy User
11
TARGETS
Continuous
Improvement
Our ability to consistently outperform
market growth is rooted in a steady flow
of new safety technologies, a strong focus
on quality and a superior production and
engineering footprint�
Our roadmap to leverage growth into
higher profitability
In the medium term, we intend to continue to grow our
core business – airbags, seatbelts and steering wheels
– through successful execution of the current product
launch programs and strong order book� To maintain
growth momentum beyond the ongoing step change, we
are pursuing an ambitious innovation program which in-
cludes targeting several “world firsts”�
Successful organic growth will also rely on driving op-
erational excellence while providing superior quality to our
customers in terms of product performance and delivery
reliability prior to and after the start of serial production� We
are also investing in capabilities beyond the light vehicle
markets, which we organize in Mobility Safety Solutions�
Continuous improvement remains a cornerstone of
Autoliv’s ongoing efforts to leverage growth into higher
profitability� The Autoliv Production System enables us to
pursue a broad agenda of continuous improvement activi-
ties across all functions including sales, operations, sup-
ply chain and support functions� To accelerate our margin
expansion journey, we invest in automation and digitali-
zation of our core business and support processes and
execute end-to-end value chain improvement programs�
12
Financial and
Sustainability Targets
Our strategic roadmap, business priorities and targets are
deeply rooted in the growing demand for traffic safety and
a strong belief that the need for our products will continue
to grow.
To enhance shareholder value, we focus on growth,
both near-term and long-term, profitability improvement
and over-the-cycle resilience, cash flow generation for
shareholder returns, a strong balance sheet and prudent
leverage policy.
We have set short- and long-term sustainability targets
in the key areas to make sure we maximize our positive im-
pacts and manage our negative impacts.
Autoliv Key Targets: Growth Drivers
Autoliv Key Targets & Ambition: Profitability Drivers
Average annual
organic growth*
• Market share gains
• Content per vehicle
LVP+~4%
excluding price
compensations
Average annual
organic growth*
4-6%
• Content per Vehicle
• Mobility Safety Solutions
• Light Vehicle Production
4
2
0
2
-
2
2
0
2
m
r
e
T
-
g
n
o
L
)
4
2
0
2
d
n
o
y
e
b
(
Adjusted operating
margin¹ target
~12%
• Stabilized light vehicle
production >85 million
• Net negative impact from
inflation not greater than
in 2021
• Strategic initiatives
Adjusted operating
margin¹ ambition
• Strategic initiatives
• Stability in market conditions
~13%
m
r
e
T
-
m
u
i
d
e
M
m
r
e
T
-
g
n
o
L
Focus Area
Key Targets and Ambitions
Saving
More Lives
100,000
Lives saved per year
A Safe and
Inclusive
Workplace
0.35
Incident Rate
by 2023
3.8
Severity Rate
by 2023
95%
of senior and mid-level
management trained
in unconscious bias
by 2023
Year-on-year
improvement in
Employee
experience
22%
women in senior
management
by 2023
Climate
Action
Carbon
neutrality
in own operations
by 2030
Net-zero
emissions
across our supply
chain by 2040
12%
reduction in energy
intensity by 2023
Year-on-year
reduction
in waste
Continuous
Responsible
Business
100%
in target group
completed anti-
corruption training
Continuous
100%
in target group
completed anti-
trust training
Continuous
100%
in target group
Code of Conduct
certified
Continuous
100%
direct material
suppliers sustainability
audited
by 2022
100%
direct material suppliers
respond to conflict
minerals survey
Continuous
1) Non-US GAAP measure. Excluding costs for capacity alignments.
13
Strategic
Framework
The Strategic Framework is made up of four elements that
directly support our financial and sustainability objectives
and targets. The implementation of our Strategic Framework
is driven by our Policy Deployment program.
PROFITABLE
& CAPITAL
EFFICIENT…
…GROWTH
The
Autoliv
Way
14
THE WHO
THE WHAT
Customer Focus
We create value for the customer by
creating a fit between the customer
need and the product or solution
we sell
Customer Focus at Autoliv is about
identifying the customer dimension
of the customer-product fit, the
customers we need to work with to
meet our targets, and their needs
Competitive Products
and Solutions
We complete the customer-product
fit by developing competitive products
and solutions to meet the identified
customer needs
We deliver on our product and solution
profitability targets along the full
product lifecycle by creating efficient
processes and actively managing our
portfolio
…GROWTH
THE WHERE
THE HOW
Efficient Value Delivery
We align our value chain to ensure
value is delivered to our customers
at the right time, in the right place,
at the right cost and with the right
capital intensity
The Autoliv Way
The Autoliv Way gives us a common
view of what great looks like at Autoliv
and how we get there� It is about estab-
lishing common ways of working to
deliver on Autoliv’s vision of Saving
More Lives
For the 2023-2025 Strategy Cycle,
we have identified a selection of focus
areas that require everyone's commit-
ment in order to realize our strategy
and meet our targets
15
YEAR IN BRIEF
2022
Summary
We ended the year with strong profitability and cash flow, after managing to offset
significant market challenges, especially industry-wide raw material cost increases
and component shortages which lead to a volatile and unpredictable LVP�
T
he full year 2022 was an
important step
towards our medium-term targets. We contin-
ued to strengthen our position as the market
leader through our strong sales growth and the
solid profitability and cash flow performance in
the second half of the year.
In 2022, we faced the worst cost inflation seen in three
decades, which initially significantly impacted our profitabil-
ity. Through substantial price adjustments, we managed to
gradually offset this raw material cost inflation, and profit-
ability was restored towards the end of the year.
Despite continued strong end-consumer demand for new
vehicles, global light vehicle production (LVP) did not recover
to its pre-pandemic level. This was mainly a result of an indus-
try wide shortage of semi-conductors and a distressed global
automotive supply chain. The shortages also resulted in late
changes to call-offs with short notice as global car manufac-
turers (OEMs) managed their output to match availability
of components. This negatively impacted our production
efficiency and profitability.
percentage points, driven by price increases, increased
market shares and higher safety content per vehicle. Our
adjusted operating margin* improved from 3.2% in the first
quarter to 10.0% in the fourth quarter, as a result of suc-
cessful negotiations regarding cost compensation and our
strong focus on continuous improvements throughout the
organization. For the full year the adjusted operating mar-
gin* was 6.8%. Our cost control measures in 2022 included
footprint and capacity alignment in Europe and footprint
adjustments in Japan and in South Korea.
Operating cash flow declined slightly from prior year,
to $713 million, mainly due to inventory inefficiencies as
result of the volatile LVP. Free cash flow amounted to $228
million, down $72 million from 2021. Capex, net in relation
to sales was 5.5%, and cash conversion was around 54%.
In 2022 we paid $2.58 per share in dividends, an in-
crease of around 37% from 2021, and repurchased and
retired 1.44 million shares. Additionally, we retired 10 mil-
lion of our treasury shares from previous stock repurchase
programs.
Our sales increased organically* by 14%, outperform-
ing global LVP by 6.6 percentage points. This was the fifth
consecutive year that we outperformed global LVP by 5 to 7
In 2022, the GHG emissions intensity of our operations
improved by 9% compared to 2021, driven largely by a sig-
nificant increase in the use of renewable energy.
16
Sales and global LVP
US$ (Millions) and Units (Millions)
Organic sales vs. LVP change
Percentage Points
10,000
8,000
6,000
4,000
2,000
0
115
95
75
55
35
15
8
6
4
2
0
18
19
20
21
22
18
19
20
21
22
Sales
LVP
Outperformance
Adjusted operating profit
& margin
US$ (Millions) and in relation to sales %
Operating cash flow & cash
conversion 1)
US$ (Millions) and in %
1,200
1,000
800
600
400
200
0
12
10
8
6
4
2
0
900
800
700
600
500
400
300
200
100
0
300
250
200
150
100
50
0
18
19
20
21
22
18
19
20
21
22
Adj. operating income
Adj. operating margin
Operating Cash Flow
Cash Conversion
1) 2018 continuing operations; 2019 adjusted for the
EC antitrust payment
Return on capital employed
Percent
Leverage ratio
Net Debt/ EBITDA
25
20
15
10
5
0
18
19
20
21
22
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Long-Term Target: 1.0x
0.5-1.5x
Long-Term
Range
17
MARKET TRENDS
Strong Market
Position in a
Growing Market
O
ur strategy, business priorities and targets
are deeply rooted in the growing global de-
mand for traffic safety. 1.35 million lives are
lost annually on the roads, according to the
World Health Organization (WHO). Vulner-
able road users – pedestrians, cyclists, and motorcyclists –
make up about half of these fatalities. Road traffic accidents
are a major cause of death among all age groups and the
leading cause of death for children and young adults be-
tween the ages of 5 and 29. In addition, tens of millions suf-
fer non-fatal traffic-related injuries, causing not only human
suffering but also costs corresponding to about 3% of GDP
in a majority of countries. This underlines the importance of
our commitment to save more lives and reduce the number
of injuries on our roads.
Market development
The automotive safety market is driven by two fundamen-
tal factors: light vehicle production (LVP) and safety con-
tent per vehicle (CPV). In the long-term, new technologies
such as autonomous driving and drivetrain electrification
are expected to have positive effects on the safety con-
tent per vehicle. With advanced protective systems for
new flexible seating positions, safety integration in seats,
human-machine interface (HMI) in steering wheels, and
protection systems outside the vehicle for vulnerable
road users, there is an increasing need for innovations in
safety systems. In the medium term, content per vehicle is
expected to grow mainly due to increased government
regulations and test rating requirements in growth markets,
as well as from higher installation rates of knee airbags,
Clear Industry Leader at 43%
2022 Market share
By product area
Comp.6
Comp.5
Comp.4
Other
Comp.3
Comp.2
Autoliv
Comp.1
43%
Airbags
44%
Seatbelts
45%
Steering
wheels
37%
Company estimates. Based on Autoliv's passive safety market definition
including airbags, seatbelts, steering wheels and pedestrian safety.
18
front-center airbags, more advanced steering wheels and
more advanced seatbelt systems in more mature markets.
Commercial customer recoveries compensating for in-
creased raw material costs also added to CPV in 2022.
Market position
Our long-term focus on quality, delivery and cost in every-
thing we do is the foundation for our long-term success. We
have been involved in less than 2% of recalls of airbags and
seatbelts in the last 10 years, an important indicator that we
are delivering on our quality strategy. Since 2017, our mar-
ket share has increased by 5 percentage points to 43% in
2022. Our market position is strong in all product catego-
ries, with 44% in airbags, 45% in seatbelts and 37% in steer-
ing wheels. All three product categories have substantially
improved their position since 2017. All of our largest regions
have increased their market shares since 2017, to 46% in
Americas, 45% in Europe, 36% in China and 39% in Japan.
Global light vehicle production
LVP has increased at an average annual growth rate of 1.6%
since 1997. However, global LVP has declined from the peak
of 92 million in 2017, to 79 million in 2022, mainly as a con-
sequence of component shortages related to semiconduc-
tors. We expect that light vehicle production will continue to
grow both in the short and long term. The growth is expected
to take place in all regions. In the short-term, growth is ex-
pected to be driven by strong order books at the OEMs and
a rebuilding of new vehicle inventories.
Content per vehicle
A global development towards increased safety stand-
ards with stricter regulations and increasingly stringent
rating frameworks is a strong driver of safety content in
vehicles. Other drivers are the premium vehicle trend and
the increas- ing focus on safety in emerging markets. By
continuously researching, developing and introducing new
technologies with higher value-added features, Autoliv can
influence safety content per vehicle. In 2022, global aver-
age CPV increased by more than 6%, excluding currency
effects, to around $255. As a result of the increase, the
automotive safety market has outgrown LVP historically
and we expect this trend to continue. Since 2017, CPV has
increased in all regions, and most prominently in North
America, but also in emerging markets like South America
and India. In recent years India introduced regulations lead-
ing to mandatory frontal airbags for all new models, and pro-
posed that side airbag systems also be made mandatory in
the future.
Competitive landscape
Autoliv is the undisputed leader in automotive safety. We
face a variety of competitors in a landscape that is constant-
ly evolving. We consider our key competitors to be ZF and
Joyson Safety Systems (JSS), which we regard as global,
full-scope competitors. ZF is a broad-based automotive
supplier. JSS was formed through the combination of KSS
and Takata. JSS is owned by Ningbo Joyson Electronic. In
Japan, Brazil, South Korea and China, we also compete
with a number of domestic suppliers, often with close ties to
domestic vehicle manufacturers. We also face competition
from product specialists.
Content per vehicle
US$ per vehicle
400
300
200
100
0
NA
WEU
Japan
EEU
China
India
2022
2017
Company estimates. Includes seatbelts, airbags, steering wheels and
pedestrian safety.
Competitive landscape
Global
Full Scope
China
Challengers
OEM
Associated
Product
Specialists
19
OUR PRODUCTS
At the Forefront
of Automotive Safety
Based on our extensive research into real-life accidents, we
develop and engineer automotive safety solutions to save more
lives and prevent injuries on the roads� The way we innovate
solutions is a key differentiator that sets us apart from
our competitors�
FRONT CENTER AIRBAG
Enhances front-row protection
Front center airbag can prevent front-row passengers
from colliding with each other during side impacts.
INTEGRATED CHILD BOOSTER SEAT
Provides protection and comfort
The integrated booster seat is specially designed to
provide safety for children, together with the car's seatbelt.
1
2
SIDE AIRBAG
Protects in side collisions
3
Side airbags reduce the risk of chest injuries
by approximately 25%. With dual-chamber side
airbags, both the pelvis and the chest areas are
protected which further reduces the risk of
serious injuries in side-impact crashes.
KNEE AIRBAG
Reduces leg injuries
4
Knee airbags, which deploy from a vehicle’s lower dashboard,
distribute the impact forces on an occupant's legs, thereby reducing
leg and knee injuries. Additionally, they are designed to control the
movement of the occupant so that the driver and passenger airbags
can provide optimal protection.
ACTIVE HOOD LIFTER
Reduces pedestrian head injuries
Active hood lifters help to mitigate the impact of a pedestrian's
head against the structure beneath the hood, meaning the
engine, suspension, etc.
5
20
6
SEATBELT
Top life-saving device
Seatbelts are considered the primary restraint
system, because of their vital role in occupant
safety, and can reduce the overall risk of serious
injuries by as much as 60%.
7
SIDE-CURTAIN AIRBAG
Reduces head injuries
Reduces the risk of life-thretening head injuries
by approximately 50%.
8
FRONTAL AIRBAGS
Save lives and reduce injuries
The driver airbag reduces fatalities in frontal crashes by approximately 25%
(for belted drivers) and reduces serious head injuries by over 60%.
9
STEERING WHEEL
With the lives of others in your hands
The steering wheel is a vital part of the safety system
and controls many of the vehicle’s functions.
10
PEDESTRIAN AIRBAG
Protects pedestrians
The pedestrian airbag aims to mitigate and
reduce the severity of a head impact in case
of a pedestrian-vehicle accident.
11
PYRO SAFETY SWITCH
Stops the fire
Pyro safety switches can disconnect or
cut power during/after an accident.
Innovative steering wheel technologies
The steering wheel is fast developing into a multi-functional Human-Machine Interface. We are
driving steering wheel transformation by introducing integrated electronic and mechatronic systems
for driver feedback and driver detection, as well as new stylish design opportunities.
By using 3D switches on the steering wheel, a more intuitive and ergonomic control of the ve-
hicle's systems can be created, thereby reducing driver distraction and improving reaction time.
This is complemented by a Hands-on Detection (HOD) system to ensure that the driver always is in
control of the vehicle, providing an extra layer of safety when the vehicle is in autonomous driving mode.
A flexible Rim design provides an unmatched level of comfort and control, enabling the integra-
tion of Augmented Reality Windshield and Steer-by-Wire technology to take the driving experience
to new heights.
With its sleek design, our Seamless Cover seamlessly integrates into the overall look of the
vehicle, adding a touch of elegance to the interior while maintaining the optimal safety performance.
21
SALES AND LAUNCHES
Around the
World Deliveries
A
utoliv has one of the industry’s most diverse
customer bases, reflecting a strong sales mix
with high-volume global vehicle manufac-
turers, global premium brands as well new
entrants to the automotive industry. Autoliv
currently delivers to around 100 vehicle brands around the
world and has a leading market position with all but one
of the global car manufacturers (OEMs). During 2022, we
launched many new products on a number of important
Electric Vehicles (EV) and Internal Combustion Engines
(ICE), supporting our future growth. A contract typically
covers the lifetime of a vehicle model, which is normally
between five and seven years depending on customer plat-
form sourcing preferences and strategies.
Sales by customer and vehicle type
In 2022, our top five customers represented 49% of sales
and the ten largest represented 80% of sales. This reflects
the concentration in the automotive industry. The five largest
customers in 2021 accounted for 48% of global Light Vehicle
Production (LVP) and the ten largest for 70%. The top ten
customer list now includes all major Asian vehicle manufac-
turers, as well as a pure EV manufacturer.
Asian vehicle producers have steadily become in-
creasingly important, mainly driven by growth with Japa-
nese OEMs. As a group they now represent around 43% of
global sales of which Japanese OEMs accounts for 29 per-
centage points. This is a result of our high order intake with
them over the past years, built on our strong local presence
in Japan and our global manufacturing footprint. Globally,
European-based brands accounted for 30% of our sales in
2022. U.S.-based brands (including Chrysler and new EV
OEMs) account for 25% of our global sales. The fastest
growing customer in 2022 was a global EV manufacturer,
followed by Stellantis.
The Company estimates that the sales in 2022 to EVs
(not including Plug-in-Hybrid vehicles) amounted to more
than $1 billion. The positive sales trend to EVs is expected to
continue as around 45% of our total order intake in 2022 was
for future EVs.
Sales by region
With operations in 27 countries and one of the broadest cus-
tomer bases of any automotive supplier, Autoliv has the best
global footprint in the industry. In 2022, the Asian market ac-
counted for 40% of Autoliv sales. This was slightly lower than
in 2021, despite LVP in the region increasing more than the
global average. The second largest market was Americas
representing 33% of sales. The European market accounted
for 27% of sales in 2022, which is roughly ten percentage
points less than ten years ago, reflecting a weak LVP as well
as our strong market share gains in Asia and North America
over the past years.
Sales by product
Autoliv is the leading global supplier of airbags, seatbelts
and steering wheels. Of our $8.8 billion sales in 2022,
approximately 66% consisted of airbag products (including
steering wheels) and approximately 34% consisted of seat-
belt products.
Sales by product
Sales by customer
Sales by region
Nissan /Mitsubishi/Renault 11%
Others 10%
Seatbelts
34%
Airbags
66%
Stellantis 11%
VW 10%
Toyota 9%
Great Wall Motors 1%
Subaru 2%
Suzuki 2%
Volvo 2%
Mercedes 4%
BMW 4%
EV Maker 5%
General
Motors 7%
Rest
of Asia
11%
Japan
8%
China
21%
Americas
33%
Europe
27%
22
Honda 8%
Ford 8%
Hyundai/Kia 7%
Important
Electric Vehicle
Launches in 2022
Nio ET7
Ford Lightning
BMW i7
VW ID.Buzz
Li Xiang L9
Great Wall Ora Ballet Cat
Huyndai IONIQ 6
Xpeng G9
Renault Megane E-Tech
23
OUR POSITION
Uniquely
Positioned to
Save More Lives
A
s Autoliv has pioneered automotive safety
for almost exactly 70 years, including the
introduction of many world firsts, we have
become the largest supplier of automotive
safety systems. We are expanding our focus
beyond light vehicle safety to a wider mobility safety arena.
Industry trends, such as electrification, autonomous driving,
shared mobility, digitalization and connectivity, and more
comfortable interiors and cockpits, are giving rise to new
safety needs that call for more sophisticated and digi-
tal safety products, both inside and outside the car. Our
approach to real-life safety to meet emerging safety needs
throughout the entire mobility chain, from in-vehicle occu-
pants in different levels of automated vehicles to vulnerable
road users such as pedestrians and riders of two-wheelers,
together with our methods and processes, puts Autoliv in
a unique position.
We support our customers through our technical centers
and manufacturing facilities located close to their assembly
plants. We employ 5,700 people in research, development
and application engineering (RD&E). A large portion of our
RD&E resources are focused on application engineering to
adapt safety products to new vehicles.
We innovate, develop and customize our airbag, seat-
belt, steering wheel and other solutions and systems to im-
prove safety, comfort and usability with the aim of Saving
More Lives in road traffic.
Our solutions strive to accommodate any kind of jour-
ney in a constantly changing environment where a vehicle
occupant or a road user meets a mixed fleet of traditional
and new types of vehicles. In addition, we continuously
innovate to make things smaller and lighter – such as our
driver airbags – or better integrated – such as our advanced
seatbelt solutions integrated into seats – as well as apply-
ing more decentralized intelligence – such as our small
integrated decentralized electronic control units (ECUs)
for future steering wheels.
Innovation through collaboration
We are engaged in research activities across multiple dis-
ciplines such as biomechanics, human factors and traffic
safety analysis as well as computer science and chemistry.
Through our research and collaborations, we aim to im-
prove safety for all, meaning that regardless of what type of
road or user you are or the type of vehicle used you should
have a safe journey.
24
Real-Life Safety
Autoliv has a research-based approach to Saving More Lives
in real-lite situations. This approach has allowed us to be a leader
in automotive safety for 70 years.
Start of Production
Once validated, these new
technologies move into the
Autoliv production system.
Validation of New
Safety Systems
We then validate the
feasibility of these
technologies in real-life
traffic situations.
Developing New
Test Methods
Continued research
also drives us to develop
new methods for testing
real-life safety technologies.
Real-
Life
Safety
Start of
Production
Crash
Statistics on
a Macro Level
Crash Statistics
on a Macro Level
Autoliv's research team gathers
and analyzes real-life safety
statistics on a global level to
understand traffic crashes.
Validation of
New Safety
Systems for
Real-Life
Traffic
The Autoliv
Circle of Life for
Traffic Safety
In-Depth
Studies of
Crashes and
Incidents
ln-Depth Studies of
Accidents and Incidents
Autoliv partners with
leading safety institutions
to study traffic crashes,
their causes and outcomes.
Developing
New Test
Methods
Biomechanics
and Human
Factors
Finding
the Best
Technology
for Safety
Needs
Biomechanics and
Human Factors
Autoliv is a global leader
in understanding how
biomechanics and driver
behavior affect safety in
real-life traffic conditions.
Finding the Best Technology
Our research allows us to develop technologies that meet the
needs of real-life traffic situations for all people.
We also engage in multi-partner government-funded
projects. In the area of car occupant safety, the project
Proactive Safety Systems and Tools For Constantly Up-
grading Road Environment (Safe-Up) will be concluded
during 2023, ending our successful collaboration with
European partners to enable safe new seating posi-
tions in future collision scenarios involving connected
and autonomous vehicles. On the same topic, we are
continuing our engagement
in the Steering Commit-
tee for the Research Consortium for Crashworthiness in
Automated Driving Systems (RCCADS) in the US.
In the area of vulnerable road users, we are continuing
our efforts to create a Motorcycle Rider Model for injury
prediction, to further enhance our human body model in
predicting injuries sustained by motorcycle riders in crash-
es. We have also developed a new powered two-wheeler
dummy together with Humanetics.
We showed a car-based external airbag for cyclist
protection in side impacts at the SAE World Congress in
Detroit in 2022, an airbag integration into a bicycle helmet
at the Airbag 2022 conference in Germany and a face air-
bag at the IRCOBI conference in Portugal.
25
OUR POSITION
We also engaged with numerous stakeholders in the
Motorcyclists Safety Workshop, Riding in a Safe System,
organized by International Transport Forum, where eight
priority areas were highlighted by the workshop to achieve
the integration of powered two-wheelers into the safety
system by 2030. As the safety of motorcycle riders is a huge
challenge in Southeast Asia, we also entered in an agree-
ment with the Malaysian Institute of Road Safety Research
(MIROS) where we collaborate on on-rider and on-bike
protection.
Innovations driven by human behavior and
accident research
To constantly improve traffic safety, we need to know what is
happening on the roads today, how current safety systems
perform in real-life traffic, and how to design safety sys-
tems for the future. The analysis and predictions from this
research serve as the basis for the development of future
safety systems
During 2022, we analyzed and published data on crash
characteristics and injury risk in near-side impacts in the US,
an analysis of sampling bias and weight factors for in-depth
motorcycle crash data in Thailand, characteristics of future
crashes on Indian roads using counterfactual simulations of
pre-crash vehicle safety technologies, and fatality and injury
risks of pedestrians, cyclists, motorcyclists, and car drivers
as a function of impact speed and age using German data.
As a contribution to understanding driver state, we pub-
lished a study in the journal Accident Analysis and Preven-
tion entitled “Detecting driver fatigue using heart rate vari-
ability: A systematic review”. We also presented the studies
interface designs assisting drivers of
“Human-machine
automated vehicles during transitions: evaluation from an
end-user perspective” and “Heart rate variability as an in-
dicator for driver fatigue, different effects of time of day and
time-on-task” at Driver Distraction and In attention confer-
ence in Sweden. Monitoring driver state using the seatbelt
or steering wheel along with two sensors close to the driver/
occupant can provide the necessary redundancy for a
camera-based monitoring system.
26
Autoliv and
Malaysian Institute
of Road Safety
Research Collaborate
to Save More Lives
Road traffic accidents claim 1.35 million
lives every year and are the leading
cause of death among children and
young adults. More than 90% of road
in developing
traffic fatalities occur
countries. The safety of motorcycle ri-
ders is a major challenge in Southeast
Asia and motorcycle crashes accoun-
ted for 66% of all traffic fatalities in
Malaysia in 2021.
In 2021, Autoliv entered a part-
nership with the Malaysian Institute of
Road Safety Research (MIROS), an or-
ganization with a progressive approach
to road safety in Malaysia and a par-
ticular focus on powered two-wheelers.
The collaboration directly supports
Autoliv's vision of Saving More Lives
and UN Sustainabile Development
Goal 3, which aspires to ensure good
health and well-being for all, with one
of its targets focused on halving global
deaths and injuries from road traffic
crashes.
"I am very excited and fully support
the development of this motorcycle air-
bag technology. I am sure that MIROS
will support and cooperate with Autoliv
in the development of this technolo-
gy and evaluate its potential to save
motorcyclists in our country going for-
ward," says Dr. Wee Ka Siong, Minister
of Transport in Malaysia.
"Autoliv is committed to our vision
of Saving More Lives and to providing
world class
life-saving solutions for
mobility and society. Autoliv is prioriti-
zing developing products that specif-
ically protect vulnerable road users.
The development of these products
is an integral part of our sustainability
agenda," said Mikael Bratt, CEO and
President, Autoliv.
The MIROS collision test labora-
tory, PC3 Crash Lab, has played an
important role in the vehicle safety
ecosystem over the past ten years.
Industry partners such as Autoliv con-
duct research and development in col-
laboration with the test laboratory to
improve the level of road and vehicle
safety in Southeast Asia and worldwide.
"It was a privilege to be a part of the
MIROS tenth anniversary event and
be asked to conduct a crash test with
new technology that brings us one step
closer to saving more lives in Southeast
Asia. Autoliv has an important role
to play in markets like Malaysia, and
I am proud to see Autoliv's airbag
for powered two-wheelers generating
interest in the country," says Cecilia
Sunnevång, Vice President Research
at Autoliv.
“I am very excited
and fully support the
development of this
motorcycle airbag
technology.”
DR� WEE KA SIONG,
MINISTER OF TRANSPORT IN MALAYSIA
27
INNOVATION
Innovating for
a Safer Society
Our focus areas for future mobility
Staying at the forefront of safety technology is key in sup-
porting our long-term growth in a rapidly changing technol-
ogy environment. Vehicles of the future, with increasing
levels of electrification and autonomy, are placing new de-
mands and are creating new opportunities for automotive
safety systems. Our safety solutions for electric and auton-
omous vehicles are a natural evolution of our safety prod-
ucts, positioning Autoliv at the forefront of innovation.
research in steering wheel technology has resulted in im-
proved ease of control by integration of mechatronics and
additional driver monitoring systems, including solutions for
autonomous driving.
Today, vulnerable road users (VRUs) – pedestrians,
cyclists and riders of powered two-wheelers – account for
nearly half of all road fatalities. Protecting VRUs is a natural
progression of our real-life approach to safety.
We strive to improve existing airbag effectiveness and to
develop new types of airbags to meet new challenges with
electric and autonomous vehicles. We continuously de-
velop new seatbelt systems for new seating positions and
improved comfort to accommodate any kind of journey. Our
We have collected adjacent business opportunities,
including safety for powered two-wheelers, into Mobility
Safety Solutions (MSS). In MSS we investigate opportuni-
ties where our core product and product competences can
be applied for additional growth.
28
Safety for Autonomous Driving
Hands-on detection
Autoliv is developing
steering wheels with
hands-on-detection,
for self-driving vehicles,
featuring capacitive
switches.
Seatbelts for ”zero gravity”-style seats
Autoliv is in development for series production of a seatbelts
for “Zero Gravity” car seats intended for self-driving vehicles.
Safety for Electric Vehicles
Silent seatbelts
Electric cars are substantially more quiet than traditional cars
with combustion engines. Therefore, it is becoming increasingly
important to reduce disturbing noise from various products,
such as through so-called "silent seatbelts”.
Battery cut-off switch
The Battery cut-off switch disconnects and cuts power from
the high voltage battery in a crash, preventing battery failures
and overcharging due to short circuits, which can lead to
thermal events and fires.
Safety for Vulnerable Road Users
Motorized two-wheelers
The airbag systems for powered two-wheelers is mounted on
the vehicle frame and will deploy in milliseconds, for greater
rider safety.
Vulnerable road users
To protect vulnerable road users,
such as pedestrians, cyclists and
riders of powered two-wheelers,
cars can be equipped with
pedestrian airbags or active
hood lifters. In the event of frontal
collisions, the system protects
the occupant by an outside
airbag or by raising the rear-end
of the hood, using it a cushion.
29
Building
a Winning
Team
Collaboration is core to how we work at Autoliv� No matter where we sit in the
organization, it is by working together that we enable people to grow and deliver
excellence to our customers and other stakeholders�
I
n Autoliv, we want each individual to reach their full
potential – this is the very foundation for building a high-
performing team. Through strategic workforce planning,
we identify talent needs and talent gaps, and determine
the appropriate mix of strategies to enable people to grow.
We take great pride in working together to provide lifesaving
solutions for mobility and society – from the earliest stages
of product development to sales and design and through
the final delivery of the finished product. We strive to be the
best employer, where our team members can be themselves,
develop and deliver results together.
Employee development
Supporting the development of our employees is essential in
a highly competitive and rapidly changing environment. We of-
fer continuous personal development by creating an attractive
workplace and by providing a collaborative and positive work
environment where we focus on performance, tackle chal-
lenges, and achieve great things together. An important cor-
nerstone of each employee’s growth is the ongoing personal,
transparent communication between the team member and
manager, which is summarized during an annual performance
and development dialog (PDD). During 2022, 99% of targeted
employees conducted a PDD with their managers.
To further support the growth of our employees, we have
a multitude of development channels, including facilitated
and self-paced development programs, such as technical
and specialist career paths and international assignments.
We promote continuous on the job development every day,
and more than 4,000 employees attended at least one
development program in 2022.
Health and safety
Ensuring a safe and inclusive workplace is a top priority for
Autoliv. Our health and safety goals are clear. We want zero
accidents in the workplace, and we are dedicated to prevent-
ing all occupational injuries, be it from lifting heavy objects or
working late hours.
The management of Autoliv is strongly committed to pro-
viding safe and healthy working conditions for all our people
and contractors. Our ambitious goals require that we all take
ownership and proactively care for ourselves and one another.
We strive to make health and safety an integrated part of our
daily work, on all levels and across functions. In 2022, we initi-
ated a Health and Safety leadership training which is rolled out
globally. The purpose is to empower and inspire everyone to
work proactively with health and safety issues.
Our continuous work with risk assessments is vital. We
continuously work to improve our ability to identify risks and
prevent injuries by actively involving teams who are exposed
to an area of risk in the assessment process. This enables us
to leverage valuable insights from around Autoliv and makes it
easier for all of us to take ownership of our safety. Just like our
vision, Saving More Lives, ensuring a safe work environment,
is a collective achievement.
Diversity and inclusion
The diversity of our people is one of the things that makes
Autoliv great. Our workforce reflects the diversity of the coun-
tries and cultures in which we operate. The more diverse our
organization, the better we will be at anticipating, leveraging,
and adapting to future needs and changes.
Inclusive ways of working are an asset and a fundamen-
tal part of the Autoliv Key Behaviors that were launched in
2021. Including a multitude of perspectives is an integral part
of successful decision-making in all parts of the organization
and helps drive innovation and create long-term sustainable
shareholder value in a rapidly changing industry. We believe
that everyone should be respected and treated fairly, and we
are committed to providing an inclusive and diverse workplace
where everyone can be themselves, deliver results and bring
their authentic selves to work.
Labor rights
We offer fair terms and conditions of employment. Our Key
Behaviors, Code of Conduct, talent development strategies
and employment policies support the principles in the United
Nations Universal Declaration of Human Rights, and the
International Labour Organization’s Fundamental Principles
and Labour Standards.
30
Quality at The
Forefront of
Everything We Do
We can never lose sight of our vision of Saving More Lives, and our products
never get a second chance� This is why we can never compromise on quality�
I
n addition to our primary goal of saving lives, quality is
key to our financial performance, since quality excellence
is critical for winning new orders, preventing recalls and
maintaining low scrap rates. For all of these reasons,
we are committed to providing customers with products
and services that are – and are perceived as – more valuable
than those of our competitors. We strive for zero recalls, zero
repeat issues and a year-on-year reduction of total non-
quality costs.
By embodying our Key Behaviors, we lead by example
and contribute to the journey towards zero defects. Our goal
is for all functions in Autoliv to think, plan and execute based
on a zero-defect mindset, whether working with products or
services.
Our zero-defect principle extends beyond Autoliv to the
entire supplier base. We work proactively with our suppliers,
using audits, Go & See, Lean manufacturing training and
other tools to minimize risk and continuously develop our sup-
plier base.
Quality leadership
Quality assurance is a continuously ongoing process along
the end-to-end value chain. Increasing our utilization of data
is significantly improving our possibilities to monitor and act
on anomalies early on.
To achieve this, we establish a digitalized and connected
data foundation that we can build on to become smarter in
our operations and quality work. This gives us possibilities to
carry out more automatic inspections supported by machine
learning to improve our capabilities to identify potential quality
problems, and to reduce the dependency on human inspec-
tion variability.
Our quality culture
We are adapting our ways of working to incorporate quality
earlier in the design process and cooperate more closely with
suppliers to further improve our zero-defect performance ap-
plying our Q5 methodology – quality in all dimensions.
The Q5 program addresses quality in five dimensions:
customers, products, employees, processes and suppliers.
In 2022, the journey towards zero defects continued, and
we saw an improvement in the number of zero-defect lines.
This was achieved through well-defined cross-functional
workshops to eliminate potential defects, and an ongoing
drive to empower teams with a proactive mindset. A vital part
in this is the culture of Jidoka, where an operator who detects
an anomaly can directly stop the line and allow for appropriate
actions to be taken.
Our quality performance
We have been involved in less than 2% of recalls of airbags
and seatbelts in the last ten years, an important indicator that
we are delivering on our quality strategy. Additionally, we mon-
itor our quality culture through a regular employee survey that
helps each site identify areas for improvement. Autoliv’s qual-
ity management system is regularly audited by both internal
and external parties.
Minimal recalls
Share of airbag and seatbelt recalls in vehicles in the past 10 years¹
<2%
Autoliv
Other
1) The share is calculated as a ten year rolling average based on information
from national official databases.
31
SUSTAINABILITY
A Driving Force in
Sustainable Mobility
G
uided by our vision of Saving More Lives, our
mission is to provide world-class, life-saving
solutions for mobility and society. Sustainabi-
lity is an integral part of our business strategy
and a fundamental driver for market differenti-
ation and stakeholder value creation, helping to ensure that
our business will continue to thrive and contribute to sustai-
nable development in the long term. To truly be a driving force
in sustainable mobility, we strive to systematically assess and
to manage key impacts, risks and opportunities on society
and the environment related to our business, operations and
supply chain. We also engage with our customers to ensu-
re that we are part of driving the transition to low-carbon and
circular mobility, thus realizing new business potential.
Our sustainability approach is based on four focus areas,
with broad ambitions and more specific short-term targets
Focus Area
Ambitions
Sustainable Development Goals
Saving More Lives
100,000 lives saved
per year
A Safe and Inclusive
Workplace
• Zero accidents
• Embrace inclusive ways of working
Climate Action
Responsible Business
• Carbon neutrality in own operations by 2030
• Net zero emissions across our supply
chain by 2040
• Proactively prevent corruption and
other unethical business practices
• Respect human rights
• Manage supply chain sustainability risks
32
defined for each area. These areas repre-
sent the strongest links to our business
risks and opportunities and the greatest
impact on key stakeholder groups, so-
ciety and the environment. All four are-
as represent global challenges where
we believe that our work can make a
positive difference, through our Ways of
Working or by inspiring and collaborating
with others. We are a signatory of the UN
Global Compact and our work and poli-
cies, such as our Code of Conduct, are
aligned with
international frameworks
such as the ILO core conventions and
the OECD Guidelines.
Our core business and sustaina-
bility work contribute to the realization
of a number of UN Sustainable Deve-
lopment Goals (SDGs). Our core bu-
siness directly contributes to reducing
the number of road fatalities (SDG 3)
and making transportation systems sa-
fer for everyone, including vulnerable
road users (SDG 11). We actively sup-
port research and knowledge sharing
that benefit developing markets (SDG
17). Over time, our climate and circula-
rity agenda aims to not only greatly re-
duce our own negative environmental
impact (SDG 9, SDG 13) but also help
drive green innovation (SDG 12) among
direct material suppliers, vehicle manu-
facturers and energy providers (SDG 7).
By proactively managing health and sa-
fety risks and labor rights (SDG 8), pro-
moting diversity and inclusion (SDG 5)
and holding all employees to the highest
ethical business standards (SDG 16),
we lay the foundation for a high-perfor-
ming organization where every employ-
ee has the means to speak up and drive
improvement.
For more information about perfor-
mance data, definitions, etc., see the
Sustainability Appendix on p. 61-64.
Autoliv’s Multi-year
Commitment to Support
the United Nations
Road Safety Fund
is supporting
Autoliv
the effort
of the United Nations Road Safety
Fund, UNRSF, to strengthen insights
into road safety challenges and contri-
bute to safer mobility where it is most
needed�
By exchanging valuable insights,
knowledge, and data, Autoliv and the
UNRSF will actively support the Glo-
bal Plan for the Second Decade of
Action 2021-2030, which seeks to
prevent at least 50% of road traffic
deaths and injuries by 2030�
Road traffic crashes claim 1.35
million lives every year and are the
leading cause of death among child-
ren and young adults� More than 90%
of road traffic fatalities take place in de-
veloping countries� Autoliv's support
of the UNRSF is an important step to
further democratize road safety and
increase awareness and availability of
life-saving products�
Autoliv's vision of Saving More
Lives directly supports UN SDG 3,
which aspires to ensure good health
and well-being for all, with one of its
targets focused on halving global
deaths and injuries from road traffic
crashes�
"Cross-sector collaboration is key
if the world is to advance its posi-
tions with respect to the Sustainable
Development Goals� Supporting the
UNRSF is a way for Autoliv to share
our expertise while gaining additional
insights into the main road safety
to-
challlenges
day� Through our core business of
the world
facing
life-saving products, we have an im-
portant role to play� Saving More Lives
is an integral part of our sustainability
agenda," said Mikael Bratt, CEO and
President, Autoliv�
“Autoliv directly
supports the UNRSF's
thinking on high-impact
road safety projects”
NNEKA HENRY,
HEAD OF THE UNRSF SECRETARIAT
"As a member of the multi-stakeholder
UNRSF Platforms of Engagement,
Autoliv directly supports the UNRSF's
thinking on high-impact road safe-
ty projects. With its financial contri-
bution, Autoliv is also directly sup-
porting UNRSF project operations in
low- and middle-income countries� It
is this type of multi-pronged engage-
ment from the private sector that
will leapfrog the global community
towards achieving the SDGs related
to safe, sustainable and inclusive mo-
bility for all," said Nneka Henry, Head
of the UNRSF Secretariat�
Autoliv's commitment to support
the UNRSF will directly result in road
safety interventions in low- and middle-
income countries ranging from bet-
ter vehicle standards and road infra-
structure design to effective systems
to improve road user behavior and
emergency post-crash response�
33
SUSTAINABILITY
Materiality
Assessment
T
he starting point for sustainability management
and reporting is understanding our most mate-
rial topics. Our materiality assessment aims to
identify the key sustainability topics in our own
operations and our value chain. The process is
based on the double materiality principle: both impact mate-
riality (how Autoliv impacts people and the environment) and
financial materiality (how various sustainability topics impact
Autoliv) are considered.
Materiality assessment is part of the Enterprise Risk Ma-
nagement (ERM) process and is carried out on an annual
basis. In 2022, the process was further developed to ensure
that we are aligned with current and upcoming legislation
on corporate sustainability due diligence and sustainability
reporting, in particular the upcoming EU Corporate Sustai-
nability Due Diligence Directive, EU Corporate Sustainabi-
lity Reporting Directive and SEC regulations. Assessment
activities included:
Workshops with internal topic experts as well as repre-
sentatives from other functions to ensure a broad insi-
de-out understanding of current and future topics
Review of
industry-related reports, etc. regarding
impacts, risks and opportunities
Market research as well as direct dialog to understand
our customers’ sustainability priorities, challenges and
opportunities for collaboration
Investor-driven sustainability/ESG assessments and
face-to-face meetings with key shareholders
The annual Autoliv Quality Culture employee survey,
quarterly Pulse employee surveys and Autoliv’s Speak
Up channel
For many of the most material topics, we also carry out topic-
specific assessments to gain a deeper understanding of
both impact and financial materiality. For example, for
climate change, we have carried out an extensive value
chain GHG
identified emission
sources and reduction levers, and identified key tran-
sition and physical risks and opportunities that could
impact our business. For more climate change-related in-
formation, see the TCFD Disclosure, p. 46-47.
footprint assessment,
In 2022, key material topics identified included:
Environment
Social
Business ethics
Climate change
Circularity
Life-saving products and
innovations
Product safety
Health and safety
Inclusion
Labor rights
Anti-corruption
Anti-trust
Supply chain sustainability impact and performance cut
across most of the above topics, in particular regarding cli-
mate change, circularity, product safety, health and safety,
labor rights and business ethics.
While many of the topics listed above have been consi-
dered the most material for several years, some topics such
as inclusion and circularity are growing in importance driven
by trends of natural resources scarcity and more complex
operating environments. The material topics are covered by
our sustainability focus areas, with targets and action plans
defined for each of these focus areas to ensure that we make
measurable progress.
34
A HELMET WITH AN INTEGRATED AIRBAG
Autoliv and POC
Join Forces to
Reduce Cyclist
Head Injuries
“Our safety mission drives
everything we do, and we always
challenge conventional thinking in
order to improve protection.”
OSCAR HUSS, CHIEF PRODUCT OFFICER, POC
Autoliv and POC, a global leader in
snow sports and cycling protection,
have joined forces to study and devel-
op bicycle and e-bike helmets equipped
with airbag technology to improve head
protection and reduce the consequen-
ces of an impact.
Head injuries alone account for half
of all deadly cyclist injuries. Although
it has been established that helmets
are beneficial to head safety, the latest
Bicycle Safety Report by Swedish in-
surance company Folksam makes the
case that helmet absorption efficiency
could still be greatly improved, especi-
ally when collisions occur with a car at
speeds above 20 km/h (12 mph).
POC and Autoliv have been working
together to assess the potential of
in helmets.
using airbag technology
initial
The airbag would act as the
energy absorber while the underlying
helmet would act as a secondary ener-
gy absorber.
After conducting a pre-study, the
Autoliv research team concluded that
a bicycle helmet with an integrated air-
bag can significantly improve protec-
tion and reduce the consequences of
impacts to cyclists. The combination
of both absorbing technologies ena-
bles a reduction of peak linear head
acceleration and significantly reduced
the risk of head injuries in impact tests.
The pre-study also showed that these
protection
improvements could be
achieved without critically compro-
mising the design, weight, or comfort of
a helmet equipped with integrated air-
bag technology.
“Autoliv is committed to the vision
of Saving More Lives and to providing
world-class life-saving solutions for mo-
bility and society. The safety of vulne-
rable road users, such as cyclists and
e-bike riders, is high on our agenda.
Therefore, it was natural to collaborate
on this initiative with POC, a leader in
cyclist safety, to explore how to improve
helmet protection in current standard
testing and more challenging scenari-
os, such as higher impact speeds”, said
Dr. Cecilia Sunnevång, Vice President
Research, Autoliv.
The pre-study showed that the ad-
dition of airbag technology on top of the
helmet could significantly contribute to
enhanced safety performance, espec-
ially in linear impacts. It is estimated that
the risk for a bicyclist to sustain mod-
erate to fatal head injuries is reduced
from 80% to 30% in a 20 km/h (12 mph)
impact.
“Our safety mission drives every-
thing we do, and we always challenge
conventional thinking in order to improve
protection. Helmets are tested and
certified in a laboratory setting and can
never fully address all the real-world
variables of bike crashes. Together with
Autoliv, who are world-renowned and
have some of the most advanced tes-
ting and research facilities in the field,
we have embarked on a development
journey with airbag technology, asking
ourselves what could be done to excel
in current test scenarios and push the
envelope towards even more shock
absorbing capacity”, said Oscar Huss,
Chief Product Officer, POC.
Finding new ways to save lives
Boosted by an increased environmen-
tal consciousness and the emergence
of e-bike commuting, the number of
bicycle riders worldwide is increasing
rapidly. This growth needs to be sup-
ported by improved helmet protection,
especially at higher speeds enabled by
e-biking. During the pre-study, Autoliv
and POC developed the initial con-
cepts using advanced simulation tools
and conducted correlated physical
crash tests. The successful outcome
of the pre-study will now lead to further
testing and refinement, with the objec-
tive of developing the concept further
and potentially bringing a product to
the market.
35
SUSTAINABILITY
Sustainability
Governance
Autoliv’s sustainability work is managed within a well-defined governance
structure, with clearly established ownership and responsibilities at all
levels in the organization�
T
he underlying principle of our governance mo-
del is integrating sustainability responsibilities
into the ordinary course of business and com-
pany processes. This means that the ultimate
responsibility for executing sustainability acti-
vities and targets lies with the line organization and is regu-
larly monitored through management reporting. According
to our Key Behaviors, we expect every employee to take
ownership of sustainability topics by proactively contribu-
ting improvement ideas as well as by following company
policies and standards.
Ultimate oversight of the company’s sustainability acti-
vities lies with the Board of Directors. The Board sets the
direction for sustainability activities and regularly monito-
rs progress on Autoliv’s sustainability strategy and targets
through its Nominating and Corporate Governance Com-
mittee (NCGC). The Board reviews and approves the Code
of Conduct as well as the Annual and Sustainability Report
and the Modern Slavery Act Statement.
Implementation responsibility for sustainability lies with
the Executive Management Team (EMT). The EMT has
appointed a Sustainability Board charged with providing
regular direction and oversight. The Sustainability Board
consists of the CEO and other EMT members and meets
on a quarterly basis. The Sustainability Board reviews and
approves Autoliv’s sustainability strategy, annual and long-
term plans, targets and policies for key topics, and monitors
implementation and performance.
Integration of sustainability into Autoliv’s business is led
by the Group HR & Sustainability function. The Vice Pre-
sident, Sustainability, who reports to the Executive Vice
President, HR & Sustainability, coordinates, develops and
monitors Autoliv’s sustainability agenda and facilitates the
Sustainability Board meetings and other sustainability-
related reporting to management. Everyday sustainability
topics are managed, as appropriate, by the HR & Sustai-
nability function, divisions and other corporate functions
such as supply chain management, research, development
and engineering, and legal and compliance. Divisions and
corporate functions have dedicated sustainability resour-
ces such as Environment, Health & Safety coordinators,
life-cycle assessment (LCA) experts and supplier sustaina-
bility auditors.
Risk Management
Autoliv has a global risk management organization and uti-
lizes several different tools, such as an enterprise risk man-
agement (ERM) framework which includes annual, divi-
sional, functional and corporate risk mapping activities,
monitoring risk trends, implementation of risk improvement
plans and follow-up of the effectiveness of risk mitigation me-
asures. Risk reporting is done on a regular basis to the Audit
and Risk Committee as well as the Board of Directors. With
regard to sustainability-related risks, the ERM framework
takes into consideration the double materiality perspective.
This means assessing both how Autoliv’s operations impact
people and the environment, and how various sustainability
topics impact Autoliv’s business. Sustainability risks, such
as product safety, climate change, natural resources scarci-
ty, environmental compliance, health and safety and other
labor rights, business ethics, business conduct and supp-
ly chain sustainability, are included in the ERM framework.
We assess how sustainability relates to business risks,
such as legal proceedings, regulatory changes, contingent
liabilities, supply chain disruptions and operational disrup-
tions. Furthermore, there are relevant corporate standards
for topics such as site risk management, loss prevention,
emergency procedures, business contingency planning
and physical security.
A more detailed description of Autoliv’s material opera-
tional, strategic and financial risks, including sustainability-
related risks, can be found in the “Risk Factors” and “Risks
and Risk Management” sections of the 10-K filed with the
SEC. More information on climate-related risks can be
found in the TCFD disclosure, p. 46-47.
36
Sustainability Governance
Board of Directors
Nominating & Corporate Governance Committee
Executive Management Team
Sustainability Board
EVP, HR & Sustainability
VP, Sustainability
Organization
Functions
Divisions
All employees
37
SUSTAINABILITY
Ambition:
Ambition:
100,000
100,000
Lives saved per year
Lives saved per year
2022 Outcome:
2022 Outcome:
Close to 35,000 lives saved
Close to 35,000 lives saved
Road Safety
– a Global Challenge
W
hen the UN SDGs were launched, road
safety was made a global priority for good
reason: 1.35 million people die in traffic
every year, a figure likely to increase signi-
ficantly unless disruptive action is taken.
According to the World Health Organization (WHO), road
traffic injuries are the leading cause of death among young
people between the ages of 5 and 29. Low- and middle-inco-
me countries are hit the hardest, accounting for over 90% of
global traffic deaths. As well as being a public health problem,
road traffic injuries are a development issue: according to
WHO, low- and middle- income countries lose approximately
3% of their GDP as a result of road traffic crashes. Many fami-
lies are driven into poverty by the loss of a breadwinner or by
the expenses of prolonged medical care. The societal costs
are also significant for developed countries: the US National
Highway Traffic Safety Administration estimates the total so-
cietal cost of US traffic crashes in 2019, which led to 36,500
fatalities and 4.5 million injuries, at a staggering $340 billion.
In August 2020, the UN General Assembly adopted the
resolution "Improving global road safety", proclaiming the
Second Decade of Action for Road Safety 2021-2030. The
target, represented as SDG 3.6, is to reduce road traffic
deaths and injuries by at least 50% by 2030. According to the
resolution, vehicle safety is a key component and member
states are encouraged to adopt vehicle safety regulations that
make seatbelts, airbags and active safety systems standard
equipment. In addition to safer vehicles, infrastructure im-
provements, road user behavior and protective equipment
are also key to achieving the target.
Our ambition and approach
Saving More Lives is our core business and our most impor tant
contribution to sustainable development and the realization
of SDG 3.6. According to our estimations, our products in
use already save close to 35,000 lives and reduce more than
450,000 injuries every year.
Our long-standing ambition is for our products to save
100,000 lives per year. Achieving this ambition is based on:
Retaining our strong market position and continue to
grow in our core business, including increasing content
per vehicle. This needs to be done while maintaining the
highest level of quality – our products never get a second
chance.
Successfully expanding our business in new mobility
segments such as motorcyclists, and better protection of
vulnerable road users. This includes proactively broad-
ening the scope of research and development to also
cover a wider range of parameters regarding height,
weight, age and gender.
Increased multi-stakeholder efforts in education to in-
crease seatbelt use since they are the most effective way
of reducing fatalities and serious injuries.
Research and development collaborations
We proactively engage with national and international author-
ities as well as academia to further our impact. Below are
some examples of our collaborations during 2022.
Together with Piaggio, we are developing a motorcycle
airbag. During the year, the airbag concept was demon-
strated in Malaysia together with the Malaysian Institute
of Road Safety Research (MIROS). In addition to in-
vehicle solutions, we are also exploring how to increase
the comfort and safety of personal protective equipment,
such as helmets with integrated airbags that provide
improved protection of the head and face and inflatable
vests that improve protecting of the thorax and shoulders.
38
Distribution of fatalities
by road user type
WORLD
3%
17%
23%
29%
28%
AMERICAS
18%
22%
3%
34%
23%
Driver/passengers of 4-wheeled vehicles
Riders of motorized 2 and 3-wheelers
Cyclists
Pedestrians
Others
We remain a Steering Committee member of the Rese-
arch Consortium for Crashworthiness in Automated Dri-
ving Systems (RCCADS), which aims to collaboratively
work towards validation methods for automated driving
systems. During 2022, we advanced our knowledge in
several areas related to impact modelling of automated
driving systems.
Around 15% of the over 8,000 car occupant fatalities in
the EU in 2020 occurred in crashes with Heavy Goods
Vehicles (HGVs). Together with our partners in the SA-
FE-UP project, funded by the European Commission, we
found crashes involving cars and HGVs to be more seve-
re than the typical frontal impact covered in regulations
and ratings. We also found limitations in some restraint
systems when it comes to optimally protecting the car
occupants. We are currently running analyses and plan
to present further related findings in 2023.
E-scooters have become popular in many cities but pose
new traffic safety challenges with increasing numbers
of accidents. However, crash and injury causation are
poorly understood since riding data preceding crashes
is lacking. In 2022, we concluded a project together with
mobility company Voi, funded by the Swedish Innovation
Agency Vinnova, where we collected naturalistic riding
data from shared e-scooters. Subsequently, we are en-
gaging with even more partners to develop models on
rider behavior to guide intelligent transport systems and
connected automated vehicles in their interaction with
e-scooterists.
We also engage and collaborate with a number of universi-
ties. At Ohio State University's annual Injury Biomechanics
Symposium, Autoliv held several presentations and engaged
EASTERN
MEDITERRANEAN
2%
10%
34%
39%
15%
SOUTH -EAST
ASIA
2%
16%
25%
14%
43%
EUROPE
5%
9%
27%
48%
11%
11%
AFRICA
7%4%
40%
40%
9%
WESTERN
PACIFIC
6%
14%
22%
22%
36%
Source: WHO Global Status Report on Road Safety 2018.
with students and graduates to promote further interest in
vehicle safety. Autoliv India runs incubators at several Indian
technical colleges to engage with students in finding new so-
lutions for safety and mobility as well as to build the percepta-
tion of Autoliv as an attractive employeer. Going forward, we
are partnering with Chalmers University of Technology and
AB Volvo to design and evaluate a prototype for a safer truck
front-end.
Read more about our R&D agenda and research collab-
orations under Innovating for a Safer Society, p. 28-29.
Community engagement
We regularly engage with both national authorities as well as
local communities and stakeholders where we operate to
contribute to road safety awareness. As an example, in Japan,
close to 60 children and their families were invited to the annual
event at Autoliv's tech center in Tsukuba to learn from Autoliv
employees about road safety awareness. In Romania, Autoliv
and the road safety association E.R.A and emergency servi-
ces hosted presentations at several high schools on the topic
of road safety and vehicle safety systems, and provided first
aid training. In China, Autoliv together with Polestar launched
a social media campaign aimed at promoting child road safety.
According to research1, seatbelts alone
reduce occupant fatalities by 45%, frontal
airbags alone by 14% and both together
reduce fatalities by 51%.
1) Kahane, 2015
39
SUSTAINABILITY
Ambitions:
Zero accidents
Embrace inclusive
ways of working
A Safe and
Inclusive Workplace
Targets:
0.35
Incident Rate
by 2023
3.8
Severity Rate
by 2023
95%
of senior and mid-level
management trained in
unconscious bias by 2023
2022 Outcome:
0.32
2022 Outcome:
3.31
2022 Outcome:
52%
Year-on-year
improvement in
Employee
experience
2022 Outcome:
Improvement
22%
women in senior
management by 2023
2022 Outcome:
18%
Health and Safety
Our ambition and approach
Autoliv is committed to providing safe and healthy working
conditions for our employees and contractors. We believe that
work-related injuries and illnesses are preventable and contin-
ually strive to eliminate all workplace accidents. The respon-
sibility for health and safety (H&S) starts with senior manage-
ment. All employees share a responsibility for identifying and
eliminating unsafe conditions and behaviors, and speaking up.
Health and safety management
We strive to make H&S an integral part of everyday business
by integrating H&S into our production system and at the initial
stage of all our projects and processes that may affect the work-
ing environment of our employees.
All production sites are required to implement Autoliv’s
health and safety management system (HSMS), which is alig-
ned with ISO 45001 requirements. The HSMS is supported by
local leadership teams who encourage operators and visitors
to engage in and proactively speak up about health and safety
concerns and to take responsibility for safety. Implementation
of the system is monitored through internal audits and exter-
nal certification audits.
The cornerstone of our HSMS is the Hazard Identification
Risk Assessment. These assessments establish the princip-
les and internal standards by which H&S activities and ope-
rations are managed, provide a factual basis for identifying
significant hazards and risks, and support in implementing
continuous improvement activities to eliminate or mitigate
these hazards and risks.
As part of an increasing focus on accident prevention, we
are expanding the use of leading H&S indicators. In 2022, we
added identified unsafe acts and conditions to our monthly
management reporting. On our lagging KPIs we significantly
improved our performance compared to 2021.
40
Autoliv's H&S work principles
Leadership
commitment
Leaders at all levels of
the organization are ac-
tively involved in creating
a behavior that supports
and promotes strong
H&S performance and
continuous improvement.
Employee
involvement
Employees are actively en-
gaged in all aspects of H&S
performance, including es-
tablishing goals, identifying
and reporting hazards/risks,
investigating incidents and
tracking progress.
Work safety
is a condition
for employment
Every employee is
responsible for
contributing to their
own workplace safety.
Recognition
and control
of risks
Processes and proce-
dures are implemented
to proactively identify,
prevent, reduce and/or
control potential
hazards/risks.
Continuous
improvement
Processes and proce-
dures are implemented
to monitor H&S, verify
implementation, identify
defects and provide
opportunities for
improvement.
H&S training and awareness building
During 2022, H&S continued to be a key topic at EMT and
Divisional Management Team meetings. Leadership safety
training continued to be deployed throughout the year, and
the plan is for all managers to undergo training during 2023.
All employees working in production are continuously trai-
ned in relevant H&S topics, and H&S is included as a manda-
tory item in daily team meetings. In addition, they are trained
in the use of on-site H&S reporting tools and empowered to
immediately stop production if an actual or potential serious
risk is identified.
Focus on high-risk activities
Despite a positive trend in the number of recordable injuries,
serious and even fatal accidents occur in our operations.
During the year, we began implementing common standards
for high-risk activities such as working at heights. Going for-
ward, these standards will form the foundation of our H&S
assessments.
COVID-19 response
During the year, we saw the effects of the pandemic subside
across the organization. Our “Smart Start Playbook”, which
was developed in 2020 to handle the effects of the pandemic,
was further developed to also include exit strategies for retur-
ning to normal operations.
Inclusion
Our ambition and approach
Inclusive ways of working are an asset and a fundamental part
of the Autoliv Key Behaviors that were launched in 2021. Inclu-
ding a multitude of perspectives is an integral part of success-
ful decision-making in all parts of the organization and helps
drive innovation and create long-term sustainable shareholder
value in a rapidly changing industry. We believe that everyone
should be respected and treated fairly, and we are committed to
providing an inclusive and diverse workplace where everyone
can be themselves, deliver results and bring their authentic
selves to work.
Activities during the year
In 2021, we defined our company-wide inclusion approach
and set the first inclusion targets. During 2022, we increased
our activities and focus to deliver on our targets and action
plan, including a focus on increasing the share of women in
management. This included steps to create a more diverse
candidate base, and the implementation of scientific selec-
tion methods to increase objectivity in both internal and exter-
nal recruitment. The share of women in senior management
improved slightly from 2021. We also continued unconscio-
us bias training for senior and mid-management to enhance
managers’ insight and ability to take diversity into account in
everyday work.
Measuring inclusion
The company-wide quarterly employee survey includes sta-
tements that measure key aspects of an inclusive work en-
vironment: whether employees feel that they can be them-
selves at work (“Authenticity”) and whether they have the
same opportunity to advance in the organization (“Percei-
ved fairness”). The scores showed overall consistent results
compared with 2021, with a slight improvement in authenti-
city (82% favorable) and an unchanged score for perceived
fairness (73% favorable). There was no significant difference
between employee categories. Overall, the results were on a
par with or above the external benchmark.
For more information about employee development, see
Building a Winning Team on p. 30.
Including a multitude of perspectives is an integral
part of successful decision-making in all parts of
the organization and helps drive innovation and
creates long-term sustainable shareholder value
in a rapidly changing industry.
41
SUSTAINABILITY
Ambitions:
Carbon neutrality
in own operations by 2030
Net-zero emissions
across our supply chain by 2040
Climate Action
Targets:
Carbon
neutrality
in own operations
by 2030
2022 Outcome:
430 kton CO2e
12%
reduction in energy
intensity by 2023
Year-on-year
reduction
in waste
Continuous
2022 Outcome:
5% above 2018 baseline
2022 Outcome:
8% Increase from previous year
Our ambition and approach
We are committed to operating our business in an environ-
mentally sustainable manner, taking into account our environ-
mental impact throughout the life cycle of sourcing, design,
production and end of life. Our key environmental impacts are
greenhouse gas (GHG) emissions, energy use, waste gene-
ration and water use. With particular emphasis on climate ac-
tion, we actively engage with customers, suppliers and other
stakeholders to take on the decarbonization challenge across
the value chain and drive sustainable mobility.
Updated climate strategy
In 2021, we launched an updated climate strategy including
new long-term climate ambitions:
Carbon neutrality in own operations by 2030
Net-zero emissions across our supply chain by 2040
These industry-leading climate ambitions are aligned with
a 1.5°C trajectory and position us as the supplier of choice
for the most progressive customers, helping to ensure our
competitiveness now and in the future. In addition to these
ambitions, we have adopted Science Based Targets for 2030
covering our own operations (Scope
1+2) as well as our supply chain
(Scope 3 upstream). The targets are
available on the SBTi website.
Our GHG footprint
To fully understand our GHG foot-
print as well as key climate-related risks and opportuni-
ties, we carried out an extensive value chain GHG footprint
assessment and scenario analysis in 2021. The assess-
ment was carried out in accordance with the GHG Protocol
Scope 3 Calculation Guidance. Scope 1 and 2 emissions
were calculated based on actual operational data such as
energy consumption, while Scope 3 emissions were mod-
elled based on actual and estimated sourcing data and
generic emission factors. The assessment showed that for
the emissions covered by our long-term ambitions, materials
42
used in our production (in particular steel, textiles and other
plastics, and magnesium) were the largest contributors, fol-
lowed by emissions from logistics and electricity used in our
own operations.
Downstream Scope 3 emissions, in particular use-pha-
se emissions, constituted the largest share of the total GHG
footprint. Since we consider our possibility to reduce
downstream Scope 3 emissions to be greatly limited (such
reductions are mainly driven by our customers' work on elec-
trification), they are excluded from our long-term ambitions
and Science Based Target covering Scope 3.
Autoliv’s GHG footprint across own operations and our supply chain¹ 2022 (kton CO2e)
3,000 (73%)
510 (12%)
190 (5%)
100 (2%)
330 (8%)
4,130 (100%)
Scope 1
Scope 2
Scope 3¹:
Purchased goods
and services
Scope 3¹:
Upstream
transportation
Scope 3¹:
Other upstream
Total
Own operations
Upstream activities
GHG emissions
from fossil fuels and
fugitive emissions in
operations
GHG emissions
from purchased
electricity, heat and
steam in operations
GHG emissions
from materials used
in products and
packaging
(Scope 3 Category 1)
GHG emissions
from upstream
transportation
(Scope 3 Category 4)
GHG emissions
from business travel,
employee commuting
and more (Scope 3
Categories 2, 3, 5, 6, 7)
1) Considering the challenges related to accurately modelling upstream Scope 3 emissions, such as the accuracy of historical data and the availability and applicability of emission fac-
tors, actual upstream Scope 3 emissions may differ materially from those modelled. The modelling primarily aims to identify the major sources of Scope 3 emissions across the value
chain, which supports Autoliv in developing specific activities for improvement and implementing the relevant measures. Autoliv aims to, over time, increase the accuracy of reported
upstream Scope 3 emissions by addressing material uncertainties. The illustration above does not include modelled downstream Scope 3 emissions, which include emissions from the
use phase of vehicles where Autoliv's products are installed.
Autoliv's climate program
Based on the results of the GHG footprint assessment, we
have designed a climate program organized into a number
of operational initiatives focusing on the most important de-
carbonization levers or value creation and enabling activities.
A number of cross-cutting initiatives related to governance,
performance measurement, business strategy integration,
risk management and competence development support
the operational initiatives. Guided by our 1.5°C aligned long-
term ambitions, the climate program represents Autoliv’s
low-carbon transition plan.
Low-Carbon Supply Chain
Low-Carbon and Efficient Operations
Low-Carbon Product Offering
Low-carbon electricity in the
supply chain
Low-carbon material sourcing
Low-carbon logistics
Energy and resource efficiency
Low-carbon product design
Phase-down of natural gas equipment
Low-carbon sales strategy
Elimination of fugitive emissions
Renewable energy for operations
Cross-cutting initiatives
Program governance
and performance
measurement
Business strategy
integration
Risk management
Organization and compe-
tence development
43
SUSTAINABILITY
The most impactful decarbonization levers identified within
our own operations include:
Transitioning to low-carbon electricity at our facilities
using a mix of on-site solar generation, long-term Power
Purchase Agreements (PPA), Renewable Energy Certifi-
cates (REC) and Energy Attribute Certificates (EAC)
Continued focus on energy and materials efficiency
Replacing current fossil-fuel equipment such as natural
gas furnaces with electric alternatives
Phasing out fugitive emissions
Key initiatives that we intend to implement to reach net-zero
emissions across our supply chain include:
Transition to recycled, bio-based and other low-carbon
materials in our products
Requiring our suppliers to use low-carbon electricity in
their production
Reducing the GHG footprint of our logistics through
route, capacity and footprint optimization as well as a shift
towards low-carbon transportation modes and vehicles
Below is a summary of some of the work and key achieve-
ments within the program during the year.
Low-carbon supply chain
During the year, we continued engaging with a broad range
of direct material suppliers to systematically review options
for increasing the use of bio-based, recycled and low-carbon
materials in our products. One example is the partnership be-
tween SSAB and Autoliv first launched in 2021 to research
and develop fossil-free steel components for automotive
safety products. This partnership aims to allow us to become
the first automotive safety supplier to produce products using
fossil-free steel.
To better understand our direct material suppliers, we car-
ried out a large-scale climate survey. The survey covered ar-
eas such as whether suppliers are able to quantify their emis-
sions, whether they are using renewable energy and whether
their targets are aligned with Autoliv’s net-zero ambition. The
results showed that, overall, there is a large spread in suppli-
ers' readiness with larger suppliers generally being better pre-
pared. The outcome of the survey will be reflected in climate-
related supplier criteria.
Low-carbon and efficient operations
The renewable energy strategy expanded to cover both short-
term and long-term actions for all divisions. With a focus on
electricity, we expanded purchasing of renewable electricity
instruments and began planning for long-term PPAs in sev-
eral markets. In 2022, 13% of our total electricity consump-
tion came from renewable instruments, up from 1% in 2021. In
addition to renewable electricity instruments, many sites have
installed or are in the process of installing on-site solar gen-
eration capacity. While still representing less than 1% of our
total energy consumption, we are working to grow this share
significantly over the coming years. In total, we estimate that
renewable energy helped us reduce our GHG emissions by
almost 40 kton compared to if we had used non-renewable
sources. Despite an increase in total energy consumption, we
reduced our Scope 1+2 emissions compared to 2021.
As part of our Green Factory Program, manufacturing fa-
cilities regularly conducted energy audits to find opportunities
to improve their energy efficiency. Energy efficiency initiatives
during the year targeted areas such as air compressor leaks,
waste heat recovery, installing LED lighting and replacing older
equipment with new, more efficient equipment. To further best
practice sharing, one of our production sites in France carried
out an extensive energy monitoring project, to be rolled out to
more sites in 2023.
We launched a concrete action plan to phase out the re-
maining use of SF6, over the next few years. SF6, which is used
in steering wheel production, is our largest source of fugitive
emissions, making up around 8% of Autoliv’s own (Scope
1+2) emissions.
Low-carbon product offerings
Our ambition is to develop attractive, low-carbon product offer-
ings to support our customers in their transition to electrified,
zero-emission vehicles. We see constantly increasing ambi-
tion levels from our customers, and therefore also increasing
requirements on us as a supplier.
During the year, all product lines started development on
action plans for net-zero aligned product roadmaps and we
continued our collaboration with Polestar to create the first
climate-neutral car. We continued our work to evaluate our
products’ overall environmental footprint throughout their life
cycle. These life-cycle assessments (LCAs) help prioritize
actions in product development such as light-weighting and
insourcing of low-carbon materials. The LCAs also allow us
to proactively engage with customers, highlighting the carbon
footprint of our products and how embedded emissions can
be reduced. We already offer our customers specific products
that support their carbon footprint reduction strategies, such
as products with lower weightand higher content of recycled
non-ferrous metals and low-carbon polymers.
Cross-cutting initiatives
During the year, targeted climate training for top management
was carried out in all divisions and corporate functions. This
training will continue to be rolled out in 2023 to all mid-level
management and employees. In addition, certain functions
such as supply chain management and sales teams received
further in-depth training on relevant topics.
Our CAPEX investment guidelines were updated with spe-
cific climate guidance, to ensure our invetments are aligned
with our long-term climate ambitions. Investments covered in-
clude for example installation of solar panels and replacement
of fossil fuel equipment with electric alternatives. The guide-
lines also specify exclusion criteria for investments that could
lead to increased GHG emissions.
To strengthen our capacity for accurate GHG account-
ing and forecasting, we initiated a project to implement a
comprehensive GHG accounting solution covering both our
44
own operations and supply chain activities such as materials
and logistics sourcing. We expect to have the solution in place
in 2023.
Read more about climate-related governance and risk
management in the TCFD disclosure, p. 46-47.
Waste and circularity
We approach waste management through the principle of
Reduce-Reuse-Recycle. As part of the EMS and our Q5 qual-
ity program, we continuously look for opportunities to reduce
the amount of waste generated in production.
In 2022, we launched initiatives such as reusing magne-
sium scrap from our own operations, thereby greatly increas-
ing the share of recycled magnesium in armatures. Other intia-
tives for reuse and recycling included recycling scrap airbags
and selling the materials, such as metal, fabric and plastic, to
local recycling companies. Another example came from the
operations in Romania, where webbing, airbag textiles and
steering wheel leather were turned into bags available for
Autoliv employees to purchase from our internal webshop.
Several sites also use reusable packaging.
Our production facilities are continuously researching op-
tions to direct their waste away from landfill. The rate of re-
use, recycling and energy recovery increased to 90% (89%
in 2021) of total waste reported.
In 2023, we will continue to develop and strengthen our ap-
proach to circularity.
Environmental management
Autoliv’s environmental management system (EMS) em-
phasizes continuous improvement and is aligned with ISO
14001 requirements. The EMS establishes the requirements
for a standardized approach to environmental management,
including identification of material environmental aspects,
objective setting, competence development, performance
follow-up and standardized reporting. At year end, 97% of all
manufacturing facilities (89% in 2021) were externally certi-
fied in accordance with ISO 14001.
As part of our Green Factory Program, manufacturing fa-
cilities regularly carry out assessments covering energy use,
GHG emissions, water and waste to assess their performance
and identify opportunities for improvement.
Materials management
Materials management is an important part of our product
development process, from identifying materials and their
composition for new products to reporting on the material
composition of our parts supplied to customers. We have
clear requirements for reporting the material composition of
our purchased and supplied parts and the restrictions to which
certain chemical substances will be subject. Autoliv’s related
standard for chemical substance use restrictions is regularly
reviewed and updated to meet the latest legal and customer
requirements. We continuously follow up with our suppliers to
phase out chemical substances according to the latest legal
requirements. This year, special efforts were devoted to phas-
ing out hexavalent chromium in the chrome coating process
for plastic and steel parts.
Autoliv Collaborates
with Polestar on
Groundbreaking
Climate-neutral Car
The "Polestar 0" project unites companies across
the automotive supply chain to leverage innovation
and collaboration to address the climate crisis and
change the view of how to manufacture cars in a
sustainable way. The collaboration is in line with
Autoliv's commitment to be the first automotive
safety supplier to become carbon neutral in its own
operations by 2030 and aim to achieve net-zero
emissions across its supply chain by 2040.
Autoliv and Polestar intend to research and de-
velop technology aimed at finding climate-neutral
solutions and innovations related to automotive
safety such as pyrotechnics, textiles, and new
generations of materials for airbags and seatbelts.
"We are happy and proud to join forces with
Polestar. To reach our ambitious climate targets,
we need to collaborate across the value chain. We
are well-positioned to continue to support our part-
ners and customers in achieving their sustainability
goals," says Mikael Bratt, President and CEO of
Autoliv.
"It was clear from the start that this is not a solo
mission and we are very excited to present such
a strong lineup of interested partners, all leaders
within their fields, including Autoliv. We are levera-
ging innovation and collaboration to address the cli-
mate crisis," says Thomas Ingenlath, Polestar CEO.
“ It was clear from the start that this
is not a solo mission and we are
very excited to present such a strong
lineup of interested partners.”
THOMAS INGENLATH,
CEO POLESTAR
45
SUSTAINABILITY
TCFD Disclosure
Autoliv sees the management of climate-related risks and opportunities as
a key component of ensuring long-term business success� This disclosure,
aligned with the Task Force on Climate-Related Financial Disclosures (TCFD)
recommendations, aims to provide an overview of Autoliv’s work�
For more information on GHG emissions, see page 55.
Governance
Strategy
The Board of Directors is ultimately responsible for the
oversight of sustainability-related matters, including cli-
mate change, and has delegated certain responsibilities
to its committees. The Board of Directors and the Nomi-
nating and Corporate Governance Committee (NCGC)
receive regular updates on climate-related matters and
performance. In 2021, the Board of Directors endorsed Au-
toliv’s long-term climate ambitions as well as the strategic
direction for reaching the ambitions. Throughout 2022, the
Board and NCGC received updates on our progress in the
climate program as well as our plans for 2023.
The Executive Management Team (EMT) is responsi-
ble for implementation of sustainability-related matters,
including climate change. The Sustainability Board, which
consists of the CEO and several EMT members, has
overall operational oversight of Autoliv's climate program.
Other relevant company Boards consisting of members of
management, such as the Industrial & Product Board, In-
novation Board and Commercial Board, focus on specific
climate program initiatives. Performance against climate-
related targets is reviewed regularly by the EMT, divisional
and other functional management teams and followed up in
monthly business reviews. The underlying governance prin-
ciple of the climate program is close integration into existing
governance structures.
Supported by the VP Sustainability, the Executive Vice
President HR & Sustainability, is ultimately responsible for
the overall program definition and governance, and for en-
suring implementation progress.
For more information about sustainability governance,
see p. 36-37.
Scenario analysis
During 2021, as part of the development of the updated
climate strategy, we carried out our first climate scenario
analysis. The analysis, which covered both transition and
physical risks, was based on a 2°C (equivalent to RCP 4.5)
scenario and a 3-4°C (equivalent to RCP 8.5) scenario.
Transition risks were assessed on a 2030-2040 timeframe,
while physical risks were assessed on a 2050 timeframe.
From a financial impact perspective, the most material
transition risks identified were:
the risk of a global decrease in overall vehicles sales
increasing prices for raw materials with a large carbon
footprint as a result of various carbon pricing mechanisms
potential revenue loss if Autoliv fails to meet increasingly
strict supplier requirements from OEMs who themselves
have set strict GHG emissions reduction targets
The most material physical risks identified, generally con-
nected to a 3-4°C scenario, were factors that would lead
to production disruptions. These include wildfires, flooding
and extreme heat. These risks were seen as particularly
high in countries and regions such as the Southwest US,
Mexico, India and China. These risks are also expected to
impact suppliers and customers in these regions.
The most material opportunities identified pertained
to building a strong position among climate-progressive
OEMs including EV manufacturers as a supplier of low
carbon components as well as realizing opportunities to in-
crease operational energy and materials efficiency.
46
Strategy and business integration
Climate change is integrated into Autoliv’s business strate-
gy, which is cascaded through established steering mecha-
nisms such as annual business planning and target setting.
To realize the key climate-related business opportuni-
ties, we are in the process of developing low-carbon product
offerings and forming partnerships with customers to help
them reduce the carbon footprint of their products. In addi-
tion, efforts to increase the energy and materials efficiency
of our operations will support in reducing related OPEX. As
part of our climate transition plan, we aim to further develop
and use scenarios as a supporting tool in quantifying the
financial impacts of climate-related risks and opportunities,
including setting a price on carbon and other climate-relat-
ed financial KPIs.
Autoliv's strategic plan was updated in 2022, covering
the years 2023-2025. Climate is included as one of the
focus areas in the strategic plan. During 2022, we also fo-
cused on integrating climate considerations into the com-
pany's strategic product planning process and other key
processes, such as CAPEX decisions.
Risk management
In 2021, climate-related risks were identified and assessed
as part of the scenario analysis. Going forward, they will be
integrated into the Enterprise Risk Management (ERM)
process. For more information about ERM and manage-
ment of sustainability risks, see page 36.
Transition risks are generally considered mitigated
through continuous legal and market intelligence reviews,
sales forecasting and stakeholder (e.g. customers and
investors) engagement. Physical risks are generally con-
sidered mitigated through impact assessments before
production sites are planned as well as ongoing business
continuity management.
Metrics and targets
In addition to Autoliv's long-term ambitions and Science
Based Targets, the climate strategy includes a number of
more detailed KPIs and related targets. These cover the
most important emissions reduction levers such as sourc-
ing of low-carbon raw materials, low-carbon logistics and a
transition towards renewable electricity use.
In 2022, GHG emissions from own operations (Scope
1+2) was added as a performance component to the the
long-term equity incentive program. The program covers
around 300 participants, including the CEO and all EMT
members.
Climate risk assessment
Transition risks
Most material risks
Potential financial impacts
Policy and legal
Technology
Market
Reputational
Physical risks
Acute/short-term
Chronic/long-term
Carbon pricing mechanisms leading to
increasing prices for raw materials with a
large carbon footprint
Increased OPEX
Decrease in overall vehicle sales
Loss of revenue
Higher demand for renewable electricity
and low-carbon raw materials
Increased OPEX
Increasing stakeholder requirements or
expectations on Autoliv to aggressively re-
duce GHG emissions in its own operations
and/or supply chain
Loss of revenue, reduced
access to capital
Wildfires
Extreme heat
Flooding
Extreme heat
Water stress
Loss of revenue related to production
disruptions
Costs related to the need of relocating
production
47
SUSTAINABILITY
Responsible
Business
Ambitions:
Proactively prevent corruption
and other unethical business practices
Respect human rights
Manage supply chain sustainability risks
Targets:
100%
in target group
completed anti-
corruption training
Continuous
2022 Outcome:
>95%
100%
in target group
completed anti-
trust training
Continuous
2022 Outcome:
99%
100%
in target group
Code of Conduct
certified
Continuous
100%
direct material
suppliers sustainability
audited
by 2022
100%
direct material suppliers
respond to conflict
minerals survey
Continuous
2022 Outcome:
99%
2022 Outcome:
98%
2022 Outcome:
89%
Our Responsible Business strategy
Responsible business is a fundamental element of Autoliv’s
sustainability framework. To recruit and retain the best tal-
ent and to build enduring relationships with our customers
and suppliers, it is essential that Autoliv is known for the
quality of its conduct as well as its products and services.
Through our approach to responsible business, we work to
continually strengthen how we:
Proactively prevent corruption and other illegal or uneth-
ical business practices wherever we operate
Respect human rights across our value chain
Manage sustainability risks across our supply chain
Code of Conduct
Saving Lives
with Integrity
48
Do I
have all the
information to
support a good
decision?
Do I still
feel proud of
myself and
Autoliv?
Is it legal
and consistent
with our
Code?
Do I know
how to explain
the decision
to those
impacted?
Have I
discussed
with the right
people?
Autoliv's
Integrity
Check
If you answer any of these questions
with a “no” or “I’m not sure”, pause and
seek additional guidance.
Compliance and
Corporate Integrity
Saving Lives with Integrity: Our Code of Conduct
Our Code of Conduct is at the core of responsible business,
guiding our specific compliance and integrity commitments
as well as framing the Key Behaviors that run through eve-
rything we do.
The revised Code was launched in January 2022 and
rolled out through leader-led discussions throughout the
year. Over 600 leaders from different parts of the company
conducted these sessions with their teams, allowing the
teams to discuss the role of our Code, our Integrity Check,
what we should expect from each other, and speaking up.
To continue to embed the Code as a tool to both protect
and enable Autoliv and our employees, the Code launch
sessions were supplemented by team-based discussions
focused on different aspects of our Code and responsible
business approach. These discussions will continue during
2023 as a complement to our more formal e-learning pro-
gram available to all employees.
Each year, all Autoliv employees in a leadership role
must complete a Code of Conduct certification. The certi-
fication requires the disclosure of known violations of the
Code and an acknowledgement that the leaders are aware
of and promote the Code to their teams. At year end, 99%
of target group employees had completed certification.
Anti-corruption
At Autoliv, we compete vigorously and effectively while al-
ways complying with applicable anti-corruption laws. We
have zero tolerance for any form of corruption in our busi-
ness dealings and expect the same standards from our
business partners. We perform due diligence on all high-
risk third-party relationships and apply risk-based controls
to support our third parties in applying our anti-corruption
commitments. We use a combination of face-to-face work-
shops and e-learning to maintain employees' anti-corrup-
tion awareness and knowledge for certain employees within
functions with increased risk exposure. Anti-corruption
training is mandatory for selected employees in functions
with a high risk exposure. During 2022 we focused on revis-
ing our anti-corruption e-learning, which will be launched in
2023. Based on 2021 figures we estimate that over 95%
of target group employees have completed anti-corruption
training.
Antitrust
We will always thrive best in fair and open markets. There-
fore, we rigorously follow all competition and antitrust laws
that apply to our operations. We regularly offer training and
communication about how we compete fairly. To provide
further clarity regarding our Antitrust and Competition Pol-
icy, we provide antitrust “Dos and Don’ts” guidelines with
practical guidance. In 2022, we developed a new Compe-
tition and Antitrust e-learning, to be rolled out to selected
employees in functions with a high risk exposure in 2023.
In addition to the e-learning, we developed facilitator-led
trainings tailored to fit different target groups such as Sales.
49
SUSTAINABILITY
Speaking Up @Autoliv:
“Any communication or discussion
with the intent to bring positive change,
show encouragement or highlight
an issue for improvement”.
Speaking Up
The more colleagues feel safe to speak up within and across
teams, the more ideas we will generate and the more prob-
lems we will catch early. This is why at Autoliv we have
embraced a broad definition for speaking that covers “any
communication or discussion with the intent to bring posi-
tive change, show encouragement or highlight an issue for
improvement”.
To help ensure that our broad definition of Speaking Up is
consistently referenced and promoted across workstreams
and strategic initiatives, implementation of the Speak Up pol-
icy is the joint responsibility of several functions: Compliance
& Corporate Integrity, Health & Safety, Quality, and HR.
Although we believe this broader definition will benefit our
business in all aspects of speaking up, we make it clear that
Autoliv employees are responsible for immediately report-
ing suspected or known violations of the Code of Conduct,
the law or Autoliv’s policies. All employees are frequently
informed of the multiple channels available for raising such
issues. In most cases, this should be to their manager or a
member of local management. When this is not possible
(for any reason), colleagues in HR, the Legal Department,
or Compliance Officers are always available, or the Autoliv
Helpline can be used.
Awareness of Speak Up channels and confidence in
speaking up without fear of retaliation is measured in the an-
nual and quarterly employee surveys. 84% of employees who
participated in the 2022 annual employee survey felt that they
can raise or escalate problems without fear of negative conse-
quences, up from 83% in 2021. While many teams report that
they feel confident in speaking up, we know this sentiment is
not yet universal in all parts of Autoliv. The Code of Conduct
and Speak Up policy firmly state that no employee or third par-
ty should be adversely affected for reporting in good faith or for
refusing to carry out a directive believed to constitute a viola-
tion of the Code or other Autoliv policies, laws, or regulations.
Autoliv Helpline
The Autoliv Helpline is a third-party operated reporting ser-
vice available to all employees as well as third parties. Re-
ports can be made anonymously (where allowed by law)
and/or confidentially in the language of any country where
Autoliv operates. All reports are investigated to determine
whether there is any violation of the law, the Code or other
Autoliv policies.
In 2022, a total of 318 reports were received by the Com-
pliance team. Close to 90% were received via the Helpline
reporting system (phone or online) and the other reports
were raised internally, meaning reported directly to manage-
ment, HR, Legal or Compliance teams. Of the reports re-
ceived, 77% were opened for investigation. Of the investiga-
tions closed in 2022, 32% of the allegations or cases were
substantiated or partially substantiated. Compared to previ-
ous years, 2022 saw an increase in the number of reports
related to inappropriate behavior, labor issues and conflict of
interest.
Data privacy
During 2022, we strengthened our internal communications
on the importance of good data privacy habits and the duty of
care we all have to protect personal data. Workshop training
was carried out with leaders and managers and will continue
during 2023. The data privacy team continued implementing
the improvements identified through review and benchmark-
ing of the program, as well as applicable legal requirements.
Tax policy
At Autoliv, tax planning is carried out in compliance with all
relevant laws, disclosure requirements and regulations, while
safeguarding shareholder interests and the Autoliv brand.
All tax planning must be in line with Autoliv’s business pur-
pose and no baseless organizational structure is permitted.
50
All Autoliv affiliates are required to pay all tax obligations and
meet relevant payment deadlines, to fully comply with all rel-
evant tax laws and accounting rules and regulations in the tax
jurisdictions in which the business operates, and to be open
and transparent with tax authorities about their tax liability.
Where disputes arise, Autoliv will proactively seek to work
cooperatively with full transparency.
Human rights
Human rights are an integral part of Autoliv’s sustainability
agenda and cut across all sustainability focus areas. We are
committed to respecting the UN Universal Declaration of Hu-
man Rights. Key human rights commitments include:
Our products save lives, and we need to ensure the
quality and safety of our products as they never get a
second chance
We are committed to offering a safe and inclusive work-
Human rights are also a cross-cutting theme in our com-
munity engagement activities. One such example is our and
other large Swedish companies’ long-standing collaboration
with the NGO Pratham to ensure effective education for
30,000 children in Assam in India.
Labor rights
Autoliv is committed to offering fair terms and conditions of
employment. These commitments extend across our supply
chain. Our talent development strategies and employment
policies support the International Labour Organization’s
Fundamental Principles and Labor Standards. We are com-
mitted to:
Providing fair and equitable wages, working hours, ben-
efits and other conditions of employment in accordance
with applicable laws
Recognizing and respecting employees’ right to free-
dom of association and collective bargaining
place and respecting all other labor rights
Providing decent working conditions
Our climate agenda contributes to limiting global warm-
ing to 1.5°C, thereby mitigating the most severe impacts
on societies
Our supply chain sustainability risk management pro-
cesses consider human rights risks and impacts
Human rights commitments are included in our Code of Con-
duct and our Supplier Code. These Codes are supported by
topic-specific policies that cover human rights, such as our
Health & Safety Policy, Respect in the Workplace Policy
and Conflict Minerals Policy. Implementation of our commit-
ments is ensured through management attention, manage-
ment systems, standards, risk assessments, other tools and
training. During 2023, we aim to further develop our human
rights due diligence processes.
Prohibiting child, forced and bonded labor
Promoting a safe workplace free from any form of dis-
crimination or harassment
Autoliv is committed to engaging in open and transparent di-
alog with all employees and where applicable with represent-
atives of organized labor groups and unions. We recognize
and respect employees' rights to freedom of association and
collective bargaining. In the majority of the countries where
we operate, all or part of our workforce is covered by a col-
lective bargaining agreement. In addition, we have a number
of different mechanisms through which employees can bring
up topics with management. These include Autoliv's Speak
Up channels (including the Autoliv Helpline), an employee
suggestion program, local health and safety committees,
51
SUSTAINABILITY
and operational committees. The major unions representing
Autoliv employees in different regions are disclosed as part of
the 10-K filed with the SEC.
proach is to work with suppliers, to the extent possible, to
resolve issues before determining to potentially phase out
the supplier.
Supply Chain Sustainability
Our ambition and approach
Through responsible sourcing practices and supplier col-
laboration, Autoliv aims to create positive social and environ-
mental value across our supply chain. We expect suppliers
and third parties to enact the same standards and processes
as we do when it comes to managing key impacts and risks
such as greenhouse gas emissions, labor rights, and anti-
corruption.
To manage our global supply chain in a responsible man-
ner, we focus on integrating sustainability into relevant supply
chain management processes. Suppliers are monitored in a
live risk tool covering such factors as natural disasters, finan-
cial status, reputation, cybersecurity risks, and responsible
sourcing practices. Autoliv’s lead buyers are updated regu-
larly with information related to their suppliers, allowing them
to take immediate action when necessary.
While our main focus is on direct material suppliers,
during 2022 we continued to expand the scope of our sup-
ply chain sustainability risk management to indirect suppli-
ers as well as strengthened our third-party compliance due
diligence processes. A revised supplier escalation model
was integrated including protocols and timing for the ap-
propriate escalation of potential supply chain risks. Our ap-
Further information related to supply chain risks is avail-
able in the 10-K filed with the SEC.
Supplier Code and Supplier Manual
We expect our suppliers to comply with the laws and regula-
tions in the areas where they operate and to follow Autoliv’s
policies and procedures, including our Standards of Busi-
ness Conduct and Ethics for Suppliers (Supplier Code). In
situations where an Autoliv requirement may be in conflict
with local laws or regulations, we expect our suppliers to fol-
low the most stringent requirements.
The Supplier Code conveys our expectation that suppli-
ers will uphold our social, ethical and environmental stand-
ards in conducting their businesses in areas including human
rights and working conditions, environmental protection,
and business conduct and ethics. For direct material sup-
pliers, the Supplier Code is included in the Autoliv Supplier
Manual (ASM). All direct material suppliers are required to
acknowledge their compliance with the ASM as part of our
general terms and conditions and by signing a separate ac-
knowledgement letter for the ASM. In the case of indirect
suppliers, a reference to the Supplier Code is included in the
general terms and conditions attached to purchasing orders.
In 2022, the Autoliv Supplier Code was substantially revised
with strengthened requirements in particular related to con-
flict minerals and environmental impacts.
52
To ensure our understanding of the potential use of con-
flict minerals, we have implemented an annual conflict min-
erals campaign covering our direct material suppliers. The
scope of the annual campaign includes all direct material
suppliers that have conducted business with us during the
current calendar year and have listed gold, tin, tantalum, or
tungsten ("3TG") in their Bill of Materials. This information is
extracted from the automotive industry standard reporting
platform IMDS. The response rate to the latest completed
campaign was 89%. Most non-responding suppliers were
customer-directed suppliers. We are working with these cus-
tomers to mitigate this issue for future conflict minerals cam-
paigns. We publish an annual report on our conflict minerals
campaign our website.
During the year, we also strengthened our processes re-
lated to working together with suppliers to better trace cobalt
and mica used in components supplied to us.
Supplier audits
Autoliv has dedicated teams responsible for the quality man-
agement of our supply base, including mandatory steps such
as pre-qualification audits for new direct material suppliers.
Sustainability criteria are included as a module in these pre-
qualification audits and must be met before becoming an Au-
toliv supplier. These audits ensure that our suppliers adhere
to Autoliv’s standards as well as to applicable local laws and
regulations, and establish a process for working with sup-
pliers that fail to meet our policies and standards. If audited
suppliers don’t meet our requirements, an internal escalation
process is in place to ensure that non-conformities are cor-
rected.
At year-end, 98% (81% in 2021) of active direct material
suppliers within audit scope had undergone a sustainability
audit. Carrying out on-site audits remained a challenge due
to COVID-19 restrictions that prevented physical visits at
some suppliers. In these cases, remote audits were carried
out according to Automotive Industry Action Group (AIAG)
guidelines. We continued to develop our supplier sustain-
ability audit criteria, process and capability to follow up, and
provided further guidance to our supplier quality auditors who
perform sustainability audits.
Conflict minerals
Pursuant to SEC rules, conflict minerals include certain min-
erals (tin, tantalum, tungsten and/or gold) that originated in
the Democratic Republic of Congo or an adjoining country
and are sold to benefit groups financing armed conflicts in
those regions. We recognize the need to end the illegal ex-
traction and trade of natural resources, and the human rights
violations, conflicts and environmental degradation that re-
sult from this trade. Our Conflict Minerals Policy provides fur-
ther clarification regarding conflict minerals, and its principles
are incorporated into our Supplier Manual.
We have designed our conflict minerals approach in ac-
cordance with the related OECD Due Diligence Guidance,
specifically as it relates to our position as a downstream pur-
chaser. In order to comply with the SEC’s conflict minerals
rules and regulations and to ensure responsible sourcing of
components, parts or products containing conflict minerals,
we continuously review our supply chain and work with our
suppliers to identify and improve the traceability of potential
conflict minerals. We support industry initiatives, such as the
Responsible Minerals Initiative (RMI), and utilize external
expert guidance to validate that the metals used in our prod-
ucts do not contribute to conflicts and come from sustainable
sources. In cases where we find potential risks and conflicts
with smelters identified within our supply chain, we take im-
mediate action to mitigate the potential risks. In some cases,
this means to discontinue sourcing from suppliers that are in
violation of our requirements to ensure sourcing from desig-
nated RMI Active or conformant suppliers.
53
SHAREHOLDERS
Creating
Shareholder
Value
By ensuring customer satisfaction, maintaining tight cost control
and developing new products, we generate cash for long-term growth,
financial stability and competitive returns to our shareholders�
A
utoliv has a strong cash flow and cash gen-
eration focus. Our operating cash flow has
always exceeded our capital expenditures.
On average, our continuing operations ex-
cluding antitrust payment in 2019 have gen-
erated $793 million in cash per year over the last five years,
while our capital expenditures, net, have averaged $448
milion per year during the same period.
Capital efficiency
Our strong cash flow reflects both Autoliv’s earnings perfor-
mance and our capital efficiency. During 2022, our capital
turnover rate, meaning our sales in relation to average capi-
tal employed, increased from 2.2 to 2.4 times, slightly better
than our 5-year average capital turnover rate of 2.2.
Our cash flow model
When analyzing how best to use each year’s cash flows
from operations, Autoliv’s Executive Management and the
Board of Directors use a model for creating shareholder
value that considers variables such as the marginal cost
of borrowing, the return on marginal investments and the
price of Autoliv shares. When evaluating the various uses
of cash, the need for flexibility is weighed against acquisi-
tions and other potential uses of cash.
Investing in operations
To create long-term shareholder value, cash flow from
operations should only be used to finance investments in
operations until the point when the return on investment no
longer exceeds the cost of capital. Our historical weighted
average cost of capital has been approximately between
10% and 13% in the past ten years. Autoliv’s pre-tax return
on capital employed has generally exceeded this level, ex-
cept during the COVID-19 pandemic in 2020. During the
last five years, the return on capital employed has varied
between 10% and 20%, i.e. about one to two times the
pre- tax cost of capital. In 2022, $485 million was reinvested
in the form of capital expenditures, net. This corresponds
to 68% of the year’s operating cash flow of $713 million.
Capital expenditure, net, was 34% higher than deprecia-
tion and amortization as we invest in footprint optimization,
flexible automation and capacity increases to support the
organic growth we expect from executing on our strong or-
der book in the coming years.
Acquisitions, divestments and investments in assets
In order to accelerate company growth and create share-
holder value over time, we could use some of the cash flow
generated for acquisitions and for investments in assets
such as joint ventures and intellectual property. These in-
vestments are typically made to consolidate our position in
the industry, increase our vertical integration or expand into
new markets. In the near future, we do not consider acquisi-
tions as a high priority part of our strategy.
Shareholder returns
Autoliv has historically used both dividend payments and
share repurchases to create shareholder value. Autoliv
does not have a set dividend policy. Instead, the Board of
Directors regularly analyzes which method is most effec-
tive in order to create shareholder value. For the full year
2022, the dividend was increased from $1.88 to $2.58 per
share. In total, $224 million was used to pay dividends to
shareholders in 2022. Historically, the dividend has usu-
ally represented a yield of approximately 2-3% in relation
54
to Autoliv's average share price, except in 2020, when
dividend was only paid for one quarter, as a response to
the effects of the COVID-19 pandemic. In 2022, this yield
was around 3.2%. Repurchases of shares can create more
value for shareholders than dividends, if the share price
appreciates over the long-term. This has been the case
for Autoliv, as the Company's existing 5.0 million treasury
shares have been repurchased at an average cost of $56.13
per share, while the closing price at the end of 2022 was
$76.58. In 2022, the Company retired 10 million shares of
common stock that had been repurchased under a prior
stock repurchase program and since held in treasury. These
shares were acquired between 2008 and 2014. During 2022,
Autoliv repurchased and retired 1.44 million shares, equal
to $115 million, under the current stock repurchase program
authorized by the Board to repurchase up to $1.5 billion,
or 17 million common shares (whichever comes first), be-
tween January 2022 and the end of 2024.
Cash flow vs. Capex1)
US$ (Millions)
Shareholder returns
US$ (Millions)
1,000
800
600
400
200
0
18
191
20
21
22
Operating cash flow
Capital expenditures, net
1) 2018 continuing operations
350
300
250
200
150
100
50
0
18
19
20
21
22
Share buybacks
Dividend
Assets by category
US$ (Millions)
Capital turnover rate
Times, sales in relation to average
capital employed
5,000
4,000
3,000
2,000
1,000
0
3
2
1
0
19
20
21
22
Trade working capital
Property, plant and equipment
Goodwill and other intangible assets
18
19
20
21
22
55
Autoliv's model for creating shareholder value
US$ (millions)
IN OUT
115
2022
2021
4
8
5
4
5
4
3
1
7
4
5
7
CASH
FLOW
37
661
001
3
46
6
771
22
Operations
Common stock issue
Increase in net debt and other
Capital expenditures, net
Restructuring
Total dividends paid
Decrease in net debt and other
Stock repurchases
Capital structure
Our debt limitation policy is to maintain a financial lever-
age commensurate with a “strong investment grade credit
rating”. Our long-term target is to have a leverage ratio (Net
Debt, including pension liability, in relation to EBITDA) of
around 1 time and to be within the range of 0.5 and 1.5 times.
In addition to the above, the objective is to provide the Com-
pany with sufficient flexibility to manage the inherent risks
and cyclicality in Autoliv’s business and allow the Company
to realize strategic opportunities and fund growth initiatives
while creating shareholder value. In 2022, Autoliv remained
inside the target range as cash flow remained solid. On De-
cember 31, 2022, the leverage ratio was 1.4 times. Autoliv
holds a “BBB with stable outlook” long term credit rating
from Standard & Poor's. We aim to maintain a strong invest-
ment grade rating as our current capital structure should pro-
vide flexibility to generate further shareholder returns and the
funding of our capital requirements.
Shareholder information
Autoliv’s common stock is traded on the New York Stock
Exchange (NYSE) while Autoliv's Swedish depositary
receipts (SDRs) are traded on NASDAQ Stockholm’s list
for large market cap companies. As of December 31, 2022,
Autoliv estimates that approximately 49% were SDRs (vs.
58% a year earlier) while 51% were common stock (vs.
42% a year earlier). In 2022, approximately 76% of to-
tal volumes was traded on the NYSE. During 2022, the
number of shares outstanding decreased by 1.3 million to
86.2 million (excluding dilution and treasury shares). The
number of shares outstanding was 86.2 million. Stock op-
tions (if exercised) and granted restricted stock units and
performance shares could increase the number of shares
outstanding by 0.3 million shares in total. Combined, this
would add 0.4% to the Autoliv shares outstanding. As of
December 31, 2022, Autoliv estimates that of the outstand-
ing shares, around 90% were held by institutional investors
and around 5% by retail investors. Of the shares held by
institutional investors, Autoliv estimates that around 47%
were held by Sweden-based shareholders, around 31% by
US-based shareholders and around 9% by UK-based share-
holders. Most of the remaining Autoliv shares were held in
Switzerland, Norway, Germany and France.
56
Ownership distribution institutional investors
The largest shareholders, Dec 31, 2022
Holder name
Rest of Europe 2%
Rest of World 1%
France 1%
Germany 2%
Norway 3%
Switzerland 4%
United Kingdom 9%
United States 31%
Company estimates, end of 2022.
1. Cevian Capital AB
2. Alecta Pension Insurance Mutual
3. AMF Tjänstepension AB
Sweden 47 %
10.8%
7.5%
6.3%
57
Board of Directors
1. Jan Carlson
Chairman since 2014.
Director since 2007.
2. Mikael Bratt
President and CEO of Autoliv
Inc. Director since 2018.
3. Laurie Brlas
Director since 2020. Member of
the Audit and Risk Committee
and the Nominating and
Corporate Governance
Committee.
4. Hasse Johansson
Director since 2018. Member of
the Audit and Risk Committee.
5. Leif Johansson
Director since 2016. Chair of
the Nominating and Corporate
Governance Committee.
Member of the Leadership
Development and
Compensation Committee.
6. Franz-Josef Kortüm
Director since 2014. Member of
the Nominating and Corporate
Governance Committee.
7. Frédéric Lissalde
Director since 2020. Chair of
the Leadership Development
and Compensation Committee.
Member of the Nominating
and Corporate Governance
Committee.
8. Xiaozhi Liu
Director since 2011. Member of
the Leadership Development and
Compensation Committee.
9. Gustav Lundgren
Director since 2022. Member of
the Audit and Risk Committee.
4
10
11
8
6
1
2
3
5
9
7
10. Martin Lundstedt
Director since 2021. Member of
the Leadership Development and
Compensation Committee.
11. Thaddeus “Ted” Senko
Director since 2018. Chair of the
Audit Committee.
For more information, refer to the section on
Corporate Governance and the proxy statement
on www.autoliv.com
58
7
8
5
4
11
3
10
6
1
12
9
2
Executive Management Team
1. Mikael Bratt
President and CEO.
Employed 2016.
2. Per Ericson
Executive Vice President,
Human Resources &
Sustainability.
Employed 2020.
3. Kevin Fox
President, Autoliv Americas.
Employed 1996.
4. Magnus Jarlegren
Executive Vice President,
Operations.
Employed 2019.
5. Jordi Lombarte
Executive Vice President,
Chief Technology Officer.
Employed 1991.
6. Svante Mogefors¹
Executive Vice President,
Quality. Employed 1996.
7. Colin Naughton
President, Autoliv Asia.
Employed 1995.
8. Anthony Nellis
Executive Vice President,
Legal Affairs General Counsel &
Secretary. Employed 2002.
9. Frithjof Oldorff
President, Autoliv Europe.
Employed 2019.
10. Christian Swahn
Executive Vice President,
Supply Chain Management.
Employed 2019.
11. Fredrik Westin
Executive Vice President,
Chief Financial Officer.
Employed 2020.
12. Sng Yih
President, Autoliv China.
Employed 2022.
For more information, refer to the section on
Corporate Governance and the proxy statement
on www.autoliv.com
1) Jonas Jademyr has been appointed Executive Vice President,
Quality & Program Management effective January 15, 2023,
succeeding Svante Mogefors who is retiring.
59
Contacts
and Calendar
AUTOLIV, INC.
Visiting address:
Klarabergsviadukten 70, Section B,
7th Floor, Stockholm, Sweden
Postal address:
P.O. Box 70381, SE-107 24 Stockholm, Sweden
Tel: +46 (0)8 587 20 600
E-mail: info@autoliv.com
www.autoliv.com
CONTACT OUR BOARD
Autoliv, Inc.
P.O. Box 70381, SE-107 24 Stockholm, Sweden
Tel: +46 (0)8 587 20 600
E-mail: legalaffairs@autoliv.com
The Board, individual directors and the committees of
the Board can be contacted using the address above.
Contact can be made anonymously and communication
with individual directors is not screened. The relevant
chairman receives all such communication after it has
been determined that the content represents a message
to such chairman.
STOCK TRANSFER AGENT AND REGISTRAR
www.computershare.com
INVESTOR REQUESTS
Autoliv, Inc.,
P.O. Box 70381, SE-107 24, Stockholm, Sweden
Tel: +46 (0)8 587 20 671
E-mail: ir@autoliv.com
2023 PRELIMINARY FINANCIAL CALENDAR
April 21, Financial Report Q1
May 11, Annual Stockholders Meeting
June 12, Investor Day
July 21, Financial Report Q2
October 20, Financial Report Q3
Concept and Design: PCG
Photos: Lars Trangius, Christian Wyrwa, Dan Kullberg,
Jason Loudermilk Photography, Kun Li, Getty Images,
Shutterstock, Björn Nilsson Graphics, Spectrum digitale
medien GmbH, Jose Lue, Emmy Jonsson
60
Contacts
and Calendar
Sustainability
Appendix
Pages 32-53 and 61-64 comprise Autoliv’s Sustainability
Report 2022. Unless otherwise stated, this report cov-
ers Autoliv Inc. and all companies over which Autoliv Inc.
directly or indirectly exercises control, which as a general
rule means that the company owns more than 50% of the
voting rights (operational control approach). With respect to
environmental data from joint ventures, the equity share ap-
proach has been applied.
GHG emissions accounting
The GHG Protocol Corporate Accounting and Report-
ing Standard has been applied to greenhouse gas (GHG)
emissions accounting and reporting. Scope 1 emissions
have been calculated using EPA (energy fuels) and IPCC
(fugitive emissions) emission factors. Autoliv's primary
scope 2 GHG accounting approach is market-based. Mar-
ket-based emissions are generally based on emissions fac-
tors provided by electricity providers. Where such factors
are not available, location-based factors has been used. All
location-based scope 2 emissions are calculated using IEA
emission factors. For more information about scope 3 mod-
elling and emission factors, see p. 42-43.
Changes and restatements
In 2022, there were no material changes in reporting scope.
Minor corrections to data, scope or definitions may have
resulted in small changes to previously reported numbers.
External reporting guidelines
We consider our Sustainability Report aligned with the EU
Non-Financial Reporting Directive. The Appendix includes
references to the SASB Auto Parts Sustainability Account-
ing Standard. In addition, TR-AP-520a 1 is reported under
the “Contingent liabilities” footnote to the financial state-
ments contained in Autoliv’s periodic reports (10-Q and
10-K) filed with the SEC. We have used the GRI Standards
to inform our reporting, and relevant references to these
standards are included in the Appendix. This report is not
prepared in accordance with the GRI standard. The Sus-
tainability Report is not subject to external assurance.
Autoliv does not consider its economic activities as tax-
onomy eligible. We participate actively in the work of the Eu-
ropean automotive supplier industry association CLEPA to
develop a common position regarding taxonomy eligibility
and useful taxonomy alignment guidance.
Communication on Progress
In addition, this Sustainability Report serves as Autoliv’s
Communication on Progress related to the UN Global Com-
pact. The following sections demonstrate our commitment to
implementing the Global Compact principles:
Road Safety - a Global Challenge: Principle 1
A Safe and Inclusive Workplace: Principle 6
Climate Action: Principles 7-9
Responsible Business: Principes 1-6, 10
61
Saving More Lives
Targets & Metrics
2022
2021
2020
Comments
100,000 lives saved per year
Close to 35,000
Share of global recalls (%)1
~2%
~2%
~2%
We estimate that in addition to lives saved,
more than 450,000 injuries are
reduced annually.
The share is calculated as a ten year rolling
average based on information from national
official databases.
1) SASB TR-AP-250a 1.
A Safe and Inclusive Workplace
Targets & Metrics
2022
2021
2020
Comments
Health and Safety1
0.35 Incident Rate by 2023
0.32
0.41
0.49
3.80 Severity Rate by 2023
3.31
5.84
5.16
Work-related fatalities
2
1
0
Number of reportable injuries, i.e. injuries
that require treatment beyond first aid or results
in one or more days of lost time, per 200,000
employee hours of exposure.
Total days away from work due to a work-
related reportable injury and/or illness per
200,000 employee hours of exposure.
The fatalities in 2022 were related to an
employee involving material handling, and an
on-site construction contractor. The incidents
were closely investigated, related guidelines
were revised and appropriate actions were
taken.
Share of production sites
ISO 45001 certified (%)
71%
Not
available
Not
available
Comparable numbers for 2021 and 2020 are
not available.
1) GRI 403: Occupational Health and Safety
Inclusion
95% of senior and mid-level
management trained in unconscious
bias by 2023
52%
trained
42%
trained
Not
applicable
Training started in 2021.
Year-on-year improvement in Employee
experience. Continuous
- Authenticity
- Perceived fairness
80
73
80
73
77
71
22% women in senior management
by 2023
18%
17%
22%
Share of women in the workforce (%)
49%
47%
47%
Share of women in the Executive
Management Team (%)
0%
8%
8%
Results from the annual employee survey.
Senior management consists of
around 110 employees. The significant decrea-
se in 2021 compared to 2020 was caused by
senior management being extended to also
include some plant managers, a group that is
predominantly male.
62
Climate Action
Targets & Metrics
2022
2021
2020
Comments
Carbon neutrality in own operations
by 2030
430 kton
CO2e
435 kton
CO2e
411 kton
CO2e
Includes Scope 1+2 market-based emissions.
12% reduction in energy intensity
by 2023
5% above
baseline
10% above
baseline
11% above
baseline
Baseline 2018. Internal measurement based
on parts delivered.
Year-on-year reduction in waste
Continuous
8%
increase
3%
increase
9%
decrease
GHG Emissions1
GHG emissions intensity
Direct (scope 1) GHG emissions
(kton CO2e)
Indirect (scope 2) GHG emissions
(kton CO2e)
- Market-based
- Location-based
48.6
102
56.2
103
57.5
98
328
276
331
285
313
268
Upstream Scope 3 emissions (kton CO2e)
- Purchased goods and services (category 1)
3,000 (2,720 2018)
- Upstream transportation (category 4)
510 (450 2018)
- Other upstream (categories 2, 3, 5, 6, 7, 8)
190 (230 2018)
Total
3,700 (3,400 2018)
Ton CO2e per million USD sales (FX adjusted).
In 2022, the main source of Scope 1 emis-
sions was natural gas at 51%. 40% of
Scope 1 emissions were fugitive emissions.
In 2022, 95% of Scope 2 market-based
emissions came from electricity.
For more information on scope 3 modelling
and target scope, see p. 42-43. 2022 emis-
sions are based on 2018 numbers and adju-
sted for a number of factors such as change in
production, estimated recycled content, and
logistics volumes and modes. More informa-
tion is available in our CDP response.
1) GRI 305: Emissions
Energy1
Energy intensity
Energy use (GWh)
- Direct
- Indirect
Total
1) SASB TR-AP-130a 1.; GRI 302: Energy
Waste1
Waste (kton)
Share of waste by type (%)
- Non-hazardous
- Hazardous
Share of waste by treatment (%)
- Reuse, recycling, energy recovery
- Landfill
1) SASB TR-AP-150a 1.; GRI 306: Energy
Other
Water use (m3)1
Share of production sites
ISO 14001 certified (%)
Number of significant spills,
and related fines
1) GRI 303: Water and Effluents
111.7
120.6
123.1
MWh per million USD sales (FX adjusted).
In 2022, around 9% of total energy
consumption and 13% of total electrcity
consumption was renewable.
298
690
988
290
642
932
272
608
880
100
93
90
89%
11%
90%
10%
89%
11%
89%
11%
90%
10%
88%
12%
2,360,000
2,310,000
2,180,000
97%
89%
88%
0
0
0
A significant spill is defined as having a
financial impact of USD 100,000 or more.
63
Responsible Business
Targets & Metrics
2022
2021
2020
Comments
Business Ethics
100% in target group completed
anti-corruption training
ContinuousA
100% in target group completed
antitrust training
Continuous
100% in target group
Code of Conduct certified
Continuous
Supply Chain Sustainability
100% direct material suppliers
sustainability audited
ContinuousA
100% direct material suppliers respond
to conflict minerals survey
Continuous
Compliance Speak Up
>95%
99%
96%
99%
96%
97%
Target group is based on the risk exposure
of certain employee groups. Based on 2021
figures we estimate that over 95% of target
group employees have completed anti-corrup-
tion training by end of 2022.
Target group is based on the risk exposure of
certain employee groups.
99%
99%
99%
Target group is employees in a leadership role.
98%
81%
49%
Percentage is based on active direct material
suppliers within audit scope who have under-
gone a sustainability audit.
89%
99%
100%
Number of Compliance Speak Up reports
318
– Reported through Autoliv Helpline (%)
– Reported through other channels (%)
89%
11%
284
88%
12%
301
85%
15%
Other channels include internal reports
directly to management, HR, the Legal or
Compliance teams.
Compliance Speak Up reports
per 100 employees
0.46
0.47
0.44
Labor Rights
Share of employees covered by collective
bargaining agreements (%)C
~50%
~50%
~50%
A) GRI 205: Anti-corruption
B) GRI 308: Supplier Environmental Assessment; GRI 414: Supplier Social Assessment
C) GRI 2-30: Collective bargaining agreements
2020 figure estimated based on 2021 data.
Around 80% of the countries where Autoliv
has employees have collective bargaining
agreements.
64
Financial Report October – December 2022
2020
2021
2022
$7,447
$8,230
$8,842
Multi-Year Financial Summary
Multi-year Summary
Continuing Operations unless noted�
Continuing Operations unless noted
(Dollars in millions, unaudited)
Sales and Income
Net sales
Airbag sales1)
Seatbelt sales
Operating income
Net income attributable to controlling interest
Earnings per share (US$) – basic2)
Earnings per share (US$) – assuming dilution2, 3)
Gross margin4)
R,D&E net in relation to sales
S,G&A in relation to sales
Operating margin5)
Adjusted operating margin6, 7)
Balance Sheet
Trade working capital8)
Trade working capital in relation to sales9)
Receivables outstanding in relation to sales10)
Inventory outstanding in relation to sales11)
Payables outstanding in relation to sales12)
Total equity
Total parent shareholders’ equity per share (US$)
Current assets excluding cash
Property, plant and equipment, net
Intangible assets (primarily goodwill)
Capital employed
Net debt7)
1,332
15.7%
20.0%
9.2%
13.5%
2,648
30.10
2,705
1,855
1,395
3,700
1,052
1,183
12.7%
20.4%
10.4%
18.1%
2,626
30.30
3,119
1,960
1,382
3,810
1,184
5,380
2,850
675
435
4.97
4.96
18.4%
(4.7)%
(5.3)%
8.2%
5,807
3,035
659
423
4.86
4.85
15.8%
(4.4)%
(4.9)%
7.5%
1,366
13.6%
18.1%
7.9%
12.5%
2,423
27.56
3,091
1,869
1,412
3,637
1,214
4,824
2,623
382
187
2.14
2.14
16.7%
(5.0)%
(5.2)%
5.1%
6.8%
8.3%
6.5%
2019
2018
$8,548
5,676
2,871
726
462
5.29
5.29
18.5%
(4.7)%
(4.7)%
8.5%
9.1%
1,417
16.2%
18.6%
8.5%
10.8%
2,122
24.19
2,557
1,816
1,410
3,772
1,650
$8,678
5,699
2,980
686
376
4.32
4.31
19.7%
(4.8)%
(4.5)%
7.9%
10.5%
1,396
15.9%
19.0%
8.6%
11.7%
1,897
21.63
2,670
1,690
1,423
3,516
1,619
6,722
1,609
17.0%
13.0%
28%
7,717
1,054
17.5%
16.3%
34%
6,771
1,726
20.0%
23.0%
31%
7,537
1,662
18.3%
17.1%
35%
8,157
2,110
10.0%
9.0%
30%
Total assets
Long-term debt
Return on capital employed13, 14)
Return on total equity14, 15)
Total equity ratio
Cash flow and other data
Operating Cash flow16)
Depreciation and amortization16)
Capital expenditures, net16)
Capital expenditures, net in relation to sales16)
Free Cash flow7, 16, 17)
Cash conversion7, 16, 18)
Direct shareholder return16, 19)
Cash dividends paid per share (US$)
Number of shares outstanding (millions)20)
Number of employees, December 31
1) Including steering wheels, inflators and initiators. 2) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded
from the EPS calculation. 3) Assuming dilution and net of treasury shares. 4) Gross profit relative to sales. 5) Operating income relative to sales. 6) Excluding costs for
capacity alignment, antitrust related matters and separation of our business segments. 7) Non-US GAAP measure, for reconciliation see tables above. 8) Outstanding
receivables and outstanding inventory less outstanding payables. 9) Outstanding receivables and outstanding inventory less outstanding payables relative to annualized
fourth quarter sales. 10) Outstanding receivables relative to annualized fourth quarter sales. 11) Outstanding inventory relative to annualized fourth quarter sales. 12)
Outstanding payables relative to annualized fourth quarter sales. 13) Operating income and income from equity method investments, relative to average capital
employed. 14) The Company has decided not to recalculate prior periods since the distribution of Veoneer had a significant impact on total equity and capital employed
making the comparison less meaningful. 15) Income relative to average total equity. 16) Including Discontinued Operations in 2018. 17) Operating cash flow less Capital
expenditures, net. 18) Free cash flow relative to Net income. 19) Dividends paid and Shares repurchased. 20) At year end, excluding dilution and net of treasury shares.
641
351
476
5.6%
165
36%
217
2.48
87.2
58,900
754
394
454
5.5%
300
69%
165
1.88
87.5
55,900
713
363
485
5.5%
228
54%
339
2.58
86.2
61,700
849
371
340
4.6%
509
270%
54
0.62
87.4
61,000
591
397
555
5.7%
36
20%
214
2.46
87.1
57,700
65
25
Autoliv is the world’s largest automotive safety supplier, with operations in 27 countries and 14 Tech Centers worldwide. We design, develop and manufacture
world-leading passive safety systems for the automotive industry, as well as mobility safety solutions. Inspired from the beginning by our vision of Saving More Lives,
our 69,100 people are passionate about creating innovations and collaborations which best meet safety needs in both the current and new mobility horizons.
Annual Report
Online version
www.autoliv.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 001-12933
AUTOLIV, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
Klarabergsviadukten 70, Section B7,
Box 70381,
Stockholm, Sweden
(Address of principal executive offices)
51-0378542
(I.R.S. Employer
Identification No.)
SE-107 24
(Zip Code)
+46 8 587 20 600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Common Stock (par value $1.00 per share)
Trading Symbol(s):
ALV
Name of each exchange on which registered:
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days. Yes: ☒ No: ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes: ☒ No: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262 (b)) by the registered public accounting firm that prepared
or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes: ☐ No: ☒
The aggregate market value of the voting and non-voting common equity of Autoliv, Inc. held by non-affiliates as of the last business day of the second
fiscal quarter of 2022 amounted to $6,233 million.
Number of shares of Common Stock outstanding as of February 8, 2023: 86,189,790.
Auditor Firm Id: 1433 Auditor Name: Ernst & Young AB Auditor Location: Stockholm, Sweden
Portions of the registrant’s definitive Proxy Statement for the annual stockholders’ meeting to be held on May 11, 2023, to be dated on or around March
23, 2023 (the “2023 Proxy Statement”), are incorporated by reference into Part III of this Annual Report on Form 10-K. The 2023 Proxy Statement will be
filed with the U.S. Securities and Exchange Commission within 120 days after December 31, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
AUTOLIV, INC.
Index
PART I
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15.
Exhibit and Financial Statement Schedules
PART IV
3
10
23
24
27
27
28
31
50
52
90
90
90
91
91
91
91
91
92
1
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements that are not historical facts but rather forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that address activities,
events or developments that Autoliv, Inc. (“Autoliv,” the “Company” or “we”) or its management believes or anticipates may occur in the
future. All forward-looking statements are based upon our current expectations, various assumptions and/or data available from third
parties. Our expectations and assumptions are expressed in good faith and we believe there is a reasonable basis for them. However,
there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are
inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or
achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking
statements.
In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,”
“plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable
terminology, although not all forward-looking statements contain such words.
Because these forward-looking statements involve risks and uncertainties, the outcome could differ materially from those set out in the
forward-looking statements for a variety of reasons, including without limitation: general economic conditions, including inflation; the
impacts of the coronavirus (COVID-19) pandemic on the Company’s financial condition, business operations, operating costs, liquidity,
competition and the global economy; disruptions and impacts relating to the ongoing conflict between Russia and Ukraine; changes in
and the stability of light vehicle production; fluctuation in vehicle production schedules for which the Company is a supplier; global supply
chain disruptions including port, transportation and distribution delays or interruptions; supply chain disruptions and component shortages
specific to the automotive industry or the Company; changes in general industry and market conditions or regional growth or decline;
changes in and the successful execution of our capacity alignment: restructuring, cost reduction, efficiency, and strategic initiatives and
the market reaction thereto; loss of business from increased competition; higher raw material, fuel, energy, and other costs; changes in
consumer and customer preferences for end products; customer losses; changes in regulatory conditions; customer bankruptcies,
consolidations or restructuring or divestiture of customer brands; unfavorable fluctuations in currencies or interest rates among the various
jurisdictions in which we operate; market acceptance of our new products; costs or difficulties related to the integration of any new or
acquired businesses and technologies; continued uncertainty in pricing and other negotiations with customers; successful integration of
acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; our ability to be
awarded new business; product liability, warranty and recall claims and investigations and other litigation, civil judgements or financial
penalties and customer reactions thereto; higher expenses for our pension and other postretirement benefits, including higher funding
needs for our pension plans; work stoppages or other labor issues; possible adverse results of pending or future litigation or infringement
claims, and the availability of insurance with respect to such matters; our ability to protect our intellectual property rights; negative impacts
of antitrust investigations or other governmental investigations and associated litigation relating to the conduct of our business; tax
assessments by governmental authorities and changes in our effective tax rate; dependence on key personnel; legislative or regulatory
changes impacting or limiting our business; our ability to meet our sustainability targets, goals and commitments; political conditions;
dependence on and relationships with customers and suppliers; the conditions necessary to hit our medium term financial targets; and
other risks and uncertainties identified in Item 1A -“Risk Factors” and Item 7 - “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this Annual Report.
For any forward-looking statements contained in this or any other document, we claim the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to update publicly or
revise any forward-looking statements in light of new information or future events, except as required by law.
2
Item 1. Business
General
PART I
Autoliv, Inc. (“Autoliv”, the “Company” or “we”) is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The
Company functions as a holding corporation and owns two principal subsidiaries, Autoliv AB and Autoliv ASP, Inc. The Company's fiscal
year ends on December 31.
The Company is a leading developer, manufacturer, and supplier of passive safety systems to the automotive industry with a broad range
of product offerings.
Passive safety systems are primarily meant to improve safety for occupants in a vehicle. Passive safety systems include modules and
components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, inflator
technologies, and battery cut-off switches.
To expand its product offerings, the Company has formed Mobility Safety Solutions. By combining its core competence and industry
experience, the Company also develops and manufactures mobility safety solutions such as pedestrian protection, battery cut-off
switches, connected safety services, and safety solutions for riders of powered two wheelers.
The Company has approximately 62 production facilities in 27 countries and its customers include the world’s largest car manufacturers.
The Company’s sales in 2022 were $8.8 billion, approximately 66% of which consisted of airbag and steering wheel products and
approximately 34% of which consisted of seatbelt products. The Company's business is conducted in the following geographical regions:
Europe, the Americas, China, Japan and the Rest of Asia (ROA).
The Company’s head office is located in Stockholm, Sweden, where it currently employs approximately 98 people. At December 31,
2022, the Company had a total number of personnel of approximately 69,100 worldwide, whereof 11% were temporary personnel.
Additional information required by this Item 1 regarding developments in the Company’s business during 2022 is contained under Item 7
in this Annual Report.
Reportable Segment
The Company has one reportable segment based on the way the Company evaluates its financial performance and manages its
operations. The Company's business is comprised of passive safety products - principally airbags (including steering wheels and inflators)
and seatbelts. For more information regarding the Company’s segment reporting, see Note 1, Basis of Presentation, to the Consolidated
Financial Statements in this Annual Report.
Products, Market, and Competition
Products
Providing life-saving solutions is a key priority as the world population grows and develops. However, population expansion in growth
markets and the rise of megacities creates new complexities. To meet this challenge, the Company develops safety solutions for both
mobility and society that work in real life situations.
The Company's safety systems such as seatbelts and airbags substantially mitigate human consequences of traffic accidents.
The airbag module is designed to inflate extremely rapidly then quickly deflate during a collision or impact. It consists of the container,
an airbag cushion, and an inflator. The purpose of the airbag is to provide the occupants a cushioning and restraint during a crash event
to prevent any impact or impact-caused injuries between the occupant and the interior of the vehicle.
Seatbelts can reduce the overall risk of serious injuries in frontal crashes by as much as 60% due to advanced seatbelt technologies such
as pretensioners and load limiters.
The Company also manufactures steering wheels that are crafted to ensure they meet safety requirements and are functional as well as
stylish.
Market and Competition
Consumer research clearly shows that consumers want safe vehicles, and several significant trends are likely to have a positive influence
on overall safety content per vehicle. These include:
1) Society becoming increasingly focused on Vision Zero, which includes a goal of reducing traffic fatalities and their associated
costs;
2) Demographic trends of increased urbanization, aging driver populations, and increased safety focus in growth markets;
3) Evolving government regulations and test rating systems to improve the safety of vehicles in various markets, such as the
updated Euro New Car Assessment Program (NCAP), China NCAP, and USNCAP; and
4) The trend towards more electrical vehicles will potentially drive additional solutions to reduce noise and to cut the electrical power
in case of an accident.
3
The automotive safety market is driven by two primary factors: light vehicle production (LVP) and content per vehicle (CPV).
The first growth driver, LVP, has increased at an average annual growth rate of around 1.6% since the start of Autoliv in 1997 despite the
substantial headwinds from supply chain disruptions and semiconductor shortages. According to S&P Global, LVP is forecasted to grow
to close to 87 million by 2025 from approximately 79 million in 2021, as the market is expected to recover from the effects of the COVID-19
pandemic and component shortages.
Unlike LVP, where Autoliv can only aim to be on the best-selling platforms, Autoliv can influence CPV more directly by continuously
developing and introducing new technologies with higher value-added features. Over the long term, this increases average safety CPV
and has caused the markets where the Company does business to grow faster than the LVP.
Since 1997, the Company’s sales compound annual growth rate (CAGR) for passive safety has been around 5% compared to the market
rate of around 2.4% which includes an LVP growth of around 1.6%. The Company's outperformance is a result of a steady flow of new
passive safety technologies, strong focus on quality and a superior global footprint both in products and engineering. This has enabled
Autoliv to increase its global market share in passive safety from 27% in 1997 to 43% in 2022.
In the Developed Markets (Western Europe, North America, Japan, and South Korea) the CPV is around $320. CPV growth in these
regions mainly come from new safety systems such as active seatbelts, knee airbags, and front-center airbags along with improved
protection for pedestrians and rear-seat occupants like bag-in-belt or more advanced seatbelts.
In the Growth Markets (all markets other than the Developed Markets), the Company sees great opportunities for CPV growth from more
airbags and advanced seatbelt products. Average CPV in the Growth Markets is around $200, approximately $120 less than in the
Developed Markets.
As a result of higher installation rates of airbags, more advanced seatbelt products, and more complex steering wheels, CPV is expected
to increase at a similar pace in both Developed and Growth Markets over the next three years. LVP in the Developed Markets is expected
to increase faster than in the Growth Markets during the same period. This is because the Developed Markets are expected to recover
from the negative effects of supply chain disruptions and semiconductor shortages experienced in 2022. Supported by a positive LVP
mix effect from higher growth in higher CPV markets, the annual passive safety market (seatbelts and airbags, including steering wheels),
is expected to grow from around $20 billion in 2022 to more than $25 billion over the next three years, based on the current macro-
economic outlook and the Company's internal market intelligence and estimates. The highest growth rate is expected in steering wheels,
where Autoliv has a global market share of around 37%, generated by the trend toward higher-value steering wheels with leather and
additional features.
In seatbelts, Autoliv has reached a global market share of around 45%, primarily due to being the technology leader with several important
innovations such as pretensioners and active seatbelts. The Company's strong market position is also a reflection of its superior global
footprint. Seatbelts are the primary life-saving safety product globally and are also an important requirement in low-end vehicles in the
Growth Markets. This provides the Company with an excellent opportunity to benefit from the expected growth in this segment of the
market.
The market for airbags, where Autoliv has a global market share of around 44%, is expected to grow mainly as result of higher installation
rates of inflatable curtains, side airbags, and knee airbags. Additionally, the new front center airbag is expected to start to contribute to
the market growth.
The Company's ability to consistently outperform market growth is rooted in a steady flow of new safety technologies, a strong focus on
quality, and a superior production and engineering footprint.
The Company's competitors
Autoliv is the clear market leader in passive safety components and systems for the automotive industry with an estimated global market
share of 43%.
ZF, one of the Company's largest competitors, is a global leader in driveline and chassis technology as well as in passive safety
technologies, and is one of the largest global automotive suppliers.
Another of the Company's largest competitors is Joyson Safety Systems (JSS). JSS is a Chinese owned company and is the result of the
merger between Key Safety Systems (KSS) and Takata Corporation after KSS acquired Takata in 2018.
In Japan, Brazil, South Korea, and China, there are a number of local suppliers that have close ties with the domestic vehicle
manufacturers. For example, Toyota uses “keiretsu” (in-house) suppliers Tokai Rika for seatbelts and Toyoda Gosei for airbags and
steering wheels. These suppliers generally receive most of the Toyota business in Japan, in the same way, Mobis, a major supplier to
Hyundai/Kia in South Korea, generally receives a significant part of their business.
Other competitors include Nihon Plast and Ashimori of Japan, Yanfeng and Jinheng of China, Samsong in South Korea, and Chris Cintos
de Seguranca in South America. Collectively, these competitors account for the majority of the remaining market share in passive safety.
Additional information concerning the Company's products, markets and competition is included in the “Risks and Risk Management”
section under Item 7 of this Annual Report.
4
Manufacturing and Production
See “Item 2. Properties” for a description of Autoliv’s principal properties. The component factories manufacture inflators, propellant,
initiators, textile cushions, webbing, pressed steel parts, springs, and overmolded steel parts used in seatbelt and airbag assembly and
steering wheels. The assembly factories source components from a number of parties, including Autoliv’s own component factories, and
assemble complete restraint systems for “just-in-time” delivery to customers. The products manufactured by Autoliv’s consolidated
subsidiaries in 2022 consisted of 134 million complete seatbelt systems (of which 87 million were fitted with pretensioners), 102 million
side airbags (including curtain airbags and front center airbags), 56 million frontal airbags, 13 million other airbags and 19 million steering
wheels.
Autoliv’s “just-in-time” delivery system is designed to accommodate the specific requirements of each customer for low levels of inventory
and rapid stock delivery service. “Just-in-time” deliveries require final assembly or, at least, distribution centers in geographic areas close
to customers to facilitate rapid delivery. The fact that the major automobile manufacturers are continually expanding their production
activities into more countries and require the same or similar safety systems as those produced in Europe, Japan, or the U.S. increases
the importance for suppliers to have assembly capacity in several countries. Consolidation among the Company's customers also
supports this trend.
Autoliv’s assembly operations generally are not constrained by capacity considerations unless there is a disruption in the supply of raw
materials and components. When dramatic shifts in LVP occur, Autoliv can generally adjust capacity in response to any changes in
demand within a few days by adding or removing work shifts and within a few months by adding or removing standardized production
and assembly lines. Most of Autoliv’s assembly factories can make sufficient space available to accommodate additional production lines
to satisfy foreseeable increases in capacity. As a result, Autoliv can usually adjust its manufacturing capacity faster than its customers
can adjust their capacity as a result of fluctuations in the general demand for vehicles or in the demand for a specific vehicle model,
provided that customers promptly notify Autoliv when they become aware of such changes in demand.
When dramatic shifts in LVP occur, as we seen in 2022 due to component shortages, or when there is a shift in regional LVP, the capacity
adjustments can take more time and be more costly. Additionally, when there is significant demand for a given product due to a major
recall of a competitor’s product, like certain of the Company's customers have experienced, capacity adjustments may take time.
The Company could experience disruption in its supply or delivery chain, which could cause one or more of its customers to halt or delay
production. For more information, see Item 1A – “Risk Factors” in this Annual Report.
Quality Management
Autoliv believes that superior quality is a prerequisite to being considered a leading global supplier of automotive safety systems and is
key to the Company's financial performance, because quality excellence is critical for winning new orders, preventing recalls, and
maintaining low scrap rates. Autoliv has for many years emphasized a “zero-defect” proactive quality policy and continues to strive to
improve its working methods. This means that Autoliv’s products are expected to always meet performance expectations and be delivered
to its customers at the right times and in the right amounts. Furthermore, the Company believes its continued quality improvements further
enhance the Company's reputation among its customers, employees, and governmental authorities.
Although quality has always been paramount in the automotive industry, especially for safety products, automobile manufacturers have
become increasingly focused on quality with even less tolerance for any deviations. This intensified focus on quality is partially due to an
increase in the number of vehicle recalls for a variety of reasons (not just safety), including a few high-profile vehicle recalls. This trend
is likely to continue as automobile manufacturers introduce even stricter quality requirements and regulating agencies and other
authorities increase the level of scrutiny given to vehicle safety issues. The Company has not been immune to the recalls that have been
impacting the automotive industry.
The Company continues to drive its quality initiative called “Q5,” which was initiated in the summer of 2010. It is an integral part of the
Company's strategy of shaping a proactive quality culture of zero defects. It is called “Q5” because it addresses quality in five dimensions:
products, customers, growth, behavior, and suppliers. The goal of Q5 is to firmly tie together quality with value within all of the Company's
processes and for all of its employees, thereby leading to the best value for its customers. Since 2010, the Company has continually
expanded this quality initiative to provide additional skills training to more employees and suppliers. These activities have significantly
improved the Company's quality performance.
In the Company's pursuit of excellence in quality, the Company has developed a chain of four “defense lines” against potential quality
issues. These defense lines consist of: 1) robust product designs, 2) flawless components from suppliers and the Company's own in-
house component companies, 3) manufacturing flawless products with a system for verifying that the Company's products conform with
specifications, and 4) an advanced traceability system in the event of a recall.
The Company's pursuit of quality excellence extends from the earliest phases of product development to the proper disposal of a product
following many years of use in a vehicle. Autoliv’s comprehensive Autoliv Product Development System (“APS”) includes several key
check points during the process of developing new products that are designed to ensure that such products are well-built and have no
hidden defects. Through this process, the Company works closely with its suppliers and customers to set clear standards that help to
ensure robust component design and lowest cost for function in order to proactively prevent problems and ensure the Company delivers
only the best designs to the market.
5
The APS, based on the goals of improving quality and efficiency, is at the core of Autoliv’s manufacturing philosophy. APS integrates
essential quality elements, such as mistake proofing, statistical process control and operator involvement, into the manufacturing
processes so all Autoliv associates are aware of and understand the critical connection between themselves and the Company's lifesaving
products. This “zero-defect” principle extends beyond Autoliv to the entire supplier base. All of the Company's suppliers must accept the
strict quality standards in the global Autoliv Supplier Manual, which defines the Company's quality requirements and focuses on preventing
bad parts from being produced by its suppliers and helps eliminate defective intermediate products in the Company's assembly lines as
early as possible. In addition, Autoliv’s One Product One Process (“1P1P”) initiative is its strategy for developing and managing
standardization of both core products and customer-specific features, leading not only to improved quality, but also greater cost efficiency
and more efficient supply chain management.
IATF 16949:2016 is one of the automotive industry’s most widely used international standards for quality management. All of the
Company's facilities that ship products to OEMs are regularly certified according to the International Automotive Task Force (IATF)
standards.
Environmental and Safety Regulations
For information on how environmental and safety regulations impact the Company's business, see “Risk Factors – ‘Our business may be
adversely affected by laws or regulations, including environmental, occupational health and safety, and other governmental regulations’,
“Global climate change could negatively affect our business”, “Our goals, targets, and ambitions related to sustainability and emissions
reduction, and our public statements and disclosures regarding them, expose us to numerous risks” and “Our business may be adversely
affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market”” in Item
1A and “Risks and Risk Management” in Item 7 of this Annual Report.
Climate change
The Company is committed to operating its business in an environmentally sustainable manner, meaning developing and producing
products in a resource efficient way while limiting the Company's environmental impact in the most material areas of greenhouse gas
emissions, energy use, waste, and water. With particular emphasis on climate action, the Company actively engages with its customers,
suppliers, and others to drive sustainable mobility.
In June 2021, the Company launched an updated climate strategy including new long-term climate ambitions:
•
•
Carbon neutrality in own operations by 2030
Net-zero emissions across our supply chain by 2040
These industry-leading climate ambitions are aligned with a 1.5°C trajectory and represent a serious step-up in ambition level from earlier
short-term climate targets. They should position the Company as the supplier of choice for the most progressive climate-focused
customers, helping to ensure the Company's competitiveness now and in the future. In addition to these ambitions, the Company adopted
Science Based Targets (SBT) for 2030 covering its own operations as well as the supply chain. The targets were approved in January
2022 and are available at the SBTi website.
For more information about how climate change impacts the Company's business, see "Operational Risks - Climate impact" in Item 7 and
"Risk factors – Global climate change could negatively affect our business” in Item 1A of this Annual Report.
Raw Materials
Direct material purchased from external suppliers represents approximately 52% of the Company's net sales in 2022. The Company
mainly purchases manufactured components and raw materials for its operations. The Company takes several actions to manage the
raw material fluctuations, such as competitive sourcing and looking for alternative materials.
For information on the sources and availability of raw materials, see "Operational Risks - Component costs" in Item 7 and “Risk Factors
– Changes in the source, cost, availability of, and regulations pertaining to raw materials and components may adversely affect our profit
margins” in Item 1A of this Annual Report.
Intellectual Property
The Company has developed a considerable amount of proprietary technology related to automotive safety systems and relies on many
patents to protect such technology. The Company's intellectual property plays an important role in maintaining its competitive position in
a number of the markets the Company serves. For information on the Company's use of intellectual property and its importance to the
Company, see “Risk Factors – If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability
to compete may be impaired” in Item 1A of this Annual Report.
Backlog
The Company has frame contracts with automobile manufacturers and such contracts are typically entered into up to three years before
the start of production of the relevant car model or platform and provide for a term covering the life of such car model or platform including
service parts after a vehicle model is no longer produced. These contracts, however, do not typically provide minimum quantities, firm
prices, or exclusivity but instead permit the automobile manufacturer to resource the relevant products at given intervals (or at any time)
from other suppliers.
6
Dependence on Customers
In 2022, the Company's top five customers represented around 49% of its consolidated sales and the Company's top ten customers
represented around 80% of its consolidated sales. This reflects the concentration of manufacturers in the automotive industry. The five
largest OEMs in 2022 accounted for around 48% of global LVP, and the ten largest OEMs accounted for around 70% of global LVP. A
delivery contract is typically for the lifetime of a vehicle model, which is normally between five and seven years depending on customer
platform sourcing preferences and strategies.
For information on the Company's dependence on customers, see “Risk Factors – Our business could be materially and adversely
affected if we lost any of our largest customers or if they were unable to pay their invoices” in Item 1A of this Annual Report, and
“Dependence on Customers” under the section “Strategic Risks” in Item 7 of this Annual Report, and Note 20 to the Consolidated Financial
Statements.
Customer sales trends
Asian vehicle producers have steadily become increasingly important, mainly driven by growth with Japanese OEMs. As a group they
represent around 43% of global sales in 2022, of which Japanese OEMs accounts for approximately two thirds. This is a result of the
Company's stronger market position based on its local presence in Japan. The local Chinese OEMs as a group accounted for around 5%
of the Company's global sales in 2022, with Great Wall representing more than 1% of the Company's global sales.
European based brands accounted for 30% of the Company's global sales in 2022. The U.S. based OEMs (including Chrysler and new
EV manufactures) accounted for 25% of the Company's global sales in 2022. Globally one of the Company's strongest growing customers
from 2021 to 2022 was Stellantis.
Research, Development and Engineering, net (R,D&E)
No single customer project accounted for more than 5% of Autoliv’s total R,D&E, net spending during 2022. To fuel Autoliv’s product
portfolio, additional expertise is brought in-house via technology partnerships and licensing agreements.
During 2022, gross expenditures for R,D&E amounted to $595 million compared to $596 million in 2021. Of these amounts, $205 million
in 2022 and $205 million in 2021 were related to customer-funded engineering projects and crash tests reimbursed by the customers.
Net of this income, R,D&E expenditures in 2022 was $390 million, virtually unchanged compared to 2021. Of the R,D&E, net expense in
2022, 79% was for projects and programs where the Company has customer orders, typically related to vehicle models in development.
The remaining 21% was mainly for new innovations, products and standardizations that will yield greater benefits over time.
Regulatory Costs
The fitting of seatbelts in most types of motor vehicles is mandatory in almost all countries and many countries have strict laws regarding
the use of seatbelts while in vehicles. In addition, most developed countries require that seats in intercity buses and commercial vehicles
be fitted with seatbelts. In the U.S., federal legislation requires frontal airbags on the driver-side and the passenger-side of all new
passenger cars since 1998 and in all sport utility vehicles, pickup trucks, and vans since 1999.
For information concerning the material effects on the Company's business relating to its compliance with government safety regulations,
see “Risk Factors – ‘Our business may be adversely affected by laws or regulations, including environmental, occupational health and
safety, and other governmental regulations’ and ‘Our business may be adversely affected by changes in automotive safety regulations or
concerns that drive further regulation of the automobile safety market’” in Item 1A of this Annual Report and in Item 7 under the section
“Risks and Risk Management” of this Annual Report.
7
Human Capital Management
The Company's drive for excellence is what makes Autoliv the world’s leading supplier of automotive safety systems. From the earliest
stages of product development to sales and design to the final delivery of the finished product, Autoliv's employees are driven by the
Company's mission to save more lives.
The successful execution of the Company's strategies relies on its ability to shape a quality and performance-oriented culture, and to
adapt quickly to sudden shifts in its circumstances, such as the COVID-19 pandemic, supply chain disruptions, and geopolitical instability
experienced in 2022. A turbulent external environment presents many challenges but also opportunities. As the Company moves forward
its workforce strives to respond with agility to new possibilities to grow and improve the Company's business whilst delivering with
excellence to its customers. The Company builds a winning team by focusing on creating a work environment that attracts, retains, and
engages its employees. The Company's employees take great pride in working together to provide safety solutions for mobility and society
that work in real life situations, and the Company is always looking for new team members who share this passion.
The table below shows the Company's total workforce as of December 31, 2022 and 2021.
Total workforce
Whereof:
Direct workforce in manufacturing
Indirect workforce
Temporary workforce
Diversity and Inclusion
2022
2021
69,100
50,600
18,500
11%
60,600
43,000
17,600
8%
When attracting, developing and retaining talent, the Company seeks individuals who hold varied experiences and viewpoints to create
an inclusive and diverse workplace that allows each employee to do their best work and drive the Company's collective success. The
Company's workforce reflects the diversity of the countries and cultures in which it operates. At the end of 2022, 49% of the Company's
workforce and 18% of the Company's senior management positions were held by women.
The Company has operations in 27 different countries, with 17% of its workforce located in Asia (excluding China), 31% in the Americas,
13% in China, and 39% in Europe (including South Africa, Tunisia, Russia, and Turkey).
The table below show the Company's workforce by age group and gender in % at the end of 2022.
% of Men
1%
5%
10%
18%
15%
2%
Age group
>60
51-60
41-50
31-40
21-30
<20
% of Women
1%
5%
11%
16%
14%
2%
Talent Attraction, Development, and Retention
The Company believes that attraction, development, and retention of talent is essential to its success, especially in today's environment.
The Company offers an inclusive work environment where its employees are challenged and achieve great things together. Supporting
the development of the employees is essential in a highly competitive and rapidly changing environment. An important cornerstone of
each employee’s growth is the ongoing dialogue between the team member and manager, which is summarized during an annual
Performance and Development Dialogue (PDD). During the year, 99% of targeted employees conducted a PDD with their managers. To
provide opportunities for professional and personal growth of the employees, the Company has a multitude of development channels,
including technical and specialist career paths, international assignments and other such programs.
The Company provides market-based competitive compensation through its salary, annual incentive, and long-term incentive programs
and benefits packages that promote employee well-being across all aspects of their lives.
Health and Safety
The Company is committed to providing a zero accident work environment that promotes the health, safety and welfare of its employees.
Autoliv’s production facilities implement the Company's health and safety management system, which is supported by leadership teams.
Implementation of the system as well as the ISO 45001 health and safety management system is monitored through internal and external
audits. At the end of 2022, 71% of production facilities were certified according to ISO 45001.
Throughout the COVID-19 pandemic, the Company has protected its employees’ health and well-being by providing the technology and
communication equipment necessary to allow many of its employees to work remotely. For those who cannot effectively do their jobs
remotely, the Company has put protocols in place to ensure a safe working environment.
8
Labor Relations
The Company offers fair terms and conditions of employment. The Company's overall purpose, Code of Conduct, talent development
strategies and employment policies support the principles in the United Nations Universal Declaration of Human Rights, and the
International Labor Organization’s Fundamental Principles and Labor Standards.
The Company considers its relationship with its personnel to be good. While there have been a small number of minor labor disputes
historically, such disputes have not had a significant or lasting impact on the Company's relationship with its employees, customer
perception of its employee practices or its business results.
Major unions to which some of the Company's employees belong in Europe include: IG Metall in Germany; Unite the union in the United
Kingdom; Confédération Générale des Travailleurs (CGT), Confédération Française Démocratique du Travail (CFDT), Confédération
Française de l’Encadrement Confédération Générale des cadres (CFE-CGC), Force Ouvrière (FO), Confédération Française des
Travailleurs Chrétiens (CFTC), Solidaires, Unitaires, Démocratiques (SUD) and Conféderation Autonome du Travail (CAT) in France;
Union General de Trabajadores (UGT), Union Sindical Obrera (USO), Comisiones Obereras (CCOO) and Confederacion General de
Trabajadores (CGT) in Spain; IF Metall, Unionen, Sveriges Ingenjörer and Ledarna in Sweden; Industriaal- ja Metallitöötajate
Ametiühingute Liit (IMTAL) in Estonia; Vasas Szakszervezeti Szövetség (Hungarian Metallworkers‘ Federation) in Hungary; Samorzadny
NiezalezĪny Zwiazek Zawodowy Pracownikow and Zakladowa Organizacja Związkowa NSZZ Solidarnosc in Poland; National Union of
Metal Workers South Africa (NUMSA) in South Africa; Union Générale des Travailleurs Tunisiens (UGTT) and Union des travailleurs
Tunisiens (UTT) in Tunisia and Türk Metal Sendikasi in Turkey.
In addition, the Company’s employees in other regions are represented by the following unions: Unifor in Canada; Sindicato de Jornaleros
y Obreros Industriales y de la Industria Maquiladora de H.Matamoros, Tamaulipas (CTM); Sindicato Nacional de Trabajadores de la
Industria Metalúrgica y Similares (CTM); Sindicato Nacional de Trabajadores de la Industria Arnesera, Eléctrica, Automotriz y Aeronáutica
de la República Mexicana; “Nueva Cultura Laboral” “de trabajadores de la fabricación, manufactura, ensamble de autopartes mecánicas
y eléctricas y componentes de la industria Automotriz (CROC); Sindicato Nacional de Trabajadores de la Industria de Autopartes en
General y/o Similares, Conexos y sus Servicios de la República Mexicana, in Mexico; Sindicato dos Metalúrgicos de Taubaté e Região
in Brazil; Autoliv India Employees Association, Bangalore & Mysore in India; the Korean Metal Workers Union (FKTU) in Korea and
Autoliv Japan Roudou Kumiai in Japan; Shanghai General Labor Union in China.
In many European countries, Canada, Mexico, Brazil and Korea, wages, salaries and general working conditions are negotiated with
local unions and/or are subject to centrally negotiated collective bargaining agreements. The terms of the Company's various agreements
with unions typically range between 1-3 years. Some of the Company's subsidiaries in Europe, Canada, Mexico, Brazil and Korea must
negotiate with the applicable local unions with respect to important changes in operations, working and employment conditions. Twice a
year, members of the Company’s management conduct a meeting with the European Works Council (EWC) to provide employee
representatives with important information about the Company and a forum for the exchange of ideas and opinions.
In many Asia Pacific countries, the central or regional governments provide guidance each year for salary adjustments or statutory
minimum wage for workers. The Company's employees may join associations in accordance with local legislation and rules, although the
level of unionization varies significantly throughout its operations.
Key Performance Indicators (KPIs)
The table below reflects certain KPIs on which the Company is particularly focused on with respect to the management of its workforce.
KPI
% of Autoliv facilities certified (OHSAS 18001 or ISO 45001)
Incident rate1)
Severity rate2)
% women in workforce
% women in senior management positions
% PDD rate3)
No. of employees attended at least one training program
2022
71%
0.32
3.31
49%
18%
99%
4,100
2021
Not available
0.41
5.84
47%
17%
99%
4,400
1) Number of reportable injuries per 200,000 employee hours of exposure.
2) Total days away from work due to a work-related reportable injury and/or illness per 200,000 employee hours of exposure.
3) Percentage of total employees participating in Autoliv's annual Performance and Development Dialogue (PDD).
Available Information
The Company files or furnishes with the United States Securities and Exchange Commission (the “SEC”) periodic reports and
amendments thereto, which include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy
statements and other information. Such reports, amendments, proxy statements, and other information are made available free of charge
on the Company's corporate website at www.autoliv.com and are available as soon as reasonably practicable after they are electronically
filed with the SEC. The Company's Corporate Governance Guidelines, committee charters, code of conduct, and other documents
governing the Company are also available on its corporate website at www.autoliv.com. The SEC maintains an internet site that contains
reports, proxy statements and other information at www.sec.gov. Hard copies of the above-mentioned documents can be obtained free
of charge by contacting the Company at: Autoliv, Inc., P.O. Box 70381, SE-107 24, Stockholm, Sweden.
9
Item 1A. Risk Factors
Our business, financial condition, operating results and cash flows may be impacted by a number of factors. A discussion of the risks
associated with these material risk factors is included below.
RISKS RELATED TO ADVERSE GLOBAL HEALTH AND GEOPOLITICAL DEVELOPMENTS
We face risks related to the novel coronavirus (COVID-19) pandemic that have, and are expected to continue to have, an adverse
impact on our business and financial performance
The COVID-19 pandemic has created significant volatility in the global economy and led to reduced economic activity and employment
and has disrupted, and may continue to disrupt, the global automotive industry and customer sales, production volumes and purchases
of light vehicles by end-consumers. The spread of COVID-19 has also caused disruptions in the manufacturing, delivery, and overall
supply chains of automobile manufacturers and suppliers. Global light vehicle production ("LVP") has been lower than expected and is
expected to continue to be volatile. If the global economic effects caused by the pandemic continue or increase, overall customer demand
may decrease, which could have a material and adverse effect on our business, results of operations, and financial condition. The full
extent of the effect of the pandemic on us, our customers, our supply chain or the global supply chain and our business will depend on
future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the
outbreak, subsequent outbreaks or the extent of any recession resulting from the pandemic. We may continue to experience the effects
of the pandemic even after it has waned, and our business, results of operations and financial condition could continue to be affected. In
addition to the risks specifically described above, the impacts of the pandemic are likely to implicate and exacerbate other risks disclosed
in Item 1A of this Annual Report, any of which could have a material effect on our operating results, cash flows, or financial condition.
Although we have minimal operations in Russia, we face risks related to the war in Ukraine, which has had, and is expected to
continue to have, an adverse impact on our business and financial performance
The macro-economic uncertainty has been exacerbated by the war in Ukraine. Although the length and impact of the ongoing war is
highly unpredictable, it exacerbated volatility in commodity prices, energy prices, inflationary pressures, credit markets, foreign exchange
rates and supply chain disruptions. Furthermore, governments in the United States, United Kingdom, Canada and European Union have
each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
Existing or additional sanctions could further adversely affect the global economy and further disrupt the global supply chain. Inflation is
also currently high world-wide and may continue for an unforeseen time.
Due in part to the negative impact of the war in Ukraine, we have experienced exacerbated increases in raw materials and increased
costs for transportation, energy, and commodities. Although have negotiated and continue to negotiate with our customers with respect
to these additional costs, commercial negotiations with our customers may not be successful or may not offset all of the adverse impact
of higher transportation, energy and commodity costs. Additionally, even if we are successful with respect to negotiations with customers
relating to cost increases, there may be delay before we recover any increased costs. These may have a material negative impact on our
business and results of operations.
RISKS RELATED TO OUR INDUSTRY
The cyclical nature of automotive sales and production can adversely affect our business. Our business is directly related to
LVP in the global market and by our customers, and automotive sales and LVP are the most important drivers for our sales
Automotive sales and production are highly cyclical and can be affected by general or regional economic or industry conditions, the level
of consumer demand, recalls and other safety issues, labor relations issues, technological changes, fuel prices and availability, vehicle
safety regulations and other regulatory requirements, governmental initiatives, trade agreements, political volatility (especially in energy
producing countries and growth markets), changes in interest rate levels and credit availability and other factors. Some regions around
the world may at various times be more particularly impacted by these factors than other regions. Economic declines that result in a
significant reduction in automotive sales and production by our customers have in the past had, and may in the future have, a material
adverse effect on our business, results of operations, and financial condition. Our sales are also affected by inventory levels of our
customers. We cannot predict when our customers will decide to either increase or reduce inventory levels or whether new inventory
levels will approximate historical inventory levels. This may exacerbate variability in our order intake and, as a result, our revenues and
financial condition. Uncertainty regarding inventory levels may be exacerbated by consumer financing programs initiated or terminated
by our customers or governments as such changes may affect the timing of their sales. Changes in automotive sales and LVP and/or
customers’ inventory levels will have an impact on our mid- and long-term financial targets, earnings guidance, and estimates. In addition,
we base our growth projections in part on business awards, or order intake, made by our customers. However, actual production orders
from our customers may not approximate the awarded business or our estimated order intake. Any significant reduction in automotive
sales and/or LVP by our customers, whether due to general economic conditions or any other factors relevant to sales or LVP, could
have a material adverse effect on our business, results of operations and financial condition.
10
Growth rates in safety content per vehicle, which can be impacted by changes in consumer trends and political decisions, could
affect our results in the future
The Company estimates that the average global content of passive safety systems per light vehicle increased in 2022 to around $255.
Vehicles produced in different markets may have various passive safety content values. For example, in developed markets such as
Western Europe and North America, the premium segment has an average passive safety content values of over $350 per vehicle,
whereas in growth markets such as China and India the average passive safety content per vehicle is approximately $210 and $100,
respectively. Due to the majority of the growth in global LVP over time being concentrated in growth markets, our operating results may
be impacted if the passive safety content per vehicle remains low and if the penetration of more advanced automotive safety systems
does not increase in these regions. As passive safety content per vehicle is also an indicator of our sales development, should these
trends continue, the average value of passive safety systems per vehicle could decline.
We operate in a highly competitive market
The market for occupant restraint systems is highly competitive. We compete with a number of other companies that produce and sell
similar products. Among other factors, our products compete on the basis of price, quality, manufacturing and distribution capability,
design and performance, technological innovation, delivery, and service. Some of our competitors are subsidiaries (or divisions, units or
similar) of companies that are larger and have greater financial and other resources than us. Some of our competitors may also have a
“preferred status” as a result of special relationships or ownership interests with certain customers. Our ability to compete successfully
depends, in large part, on our success in continuing to innovate and manufacture products that have commercial success with consumers,
differentiating our products from those of our competitors, continuing to deliver quality products in the time frames required by our
customers, and maintaining best-cost production. We continue to invest in technology and innovation which we believe will be critical to
our long-term growth. Our ability to maintain and improve existing products, while successfully developing and introducing distinctive new
and enhanced products that anticipate changing customer and consumer preferences and capitalize upon emerging technologies will be
a significant factor in our ability to remain competitive. If we are unsuccessful or are less successful than our competitors in predicting the
course of market development, developing innovative products, processes, and/or use of materials or adapting to new technologies or
evolving regulatory, industry or customer requirements, we may be placed at a competitive disadvantage. For example, our customers
are increasingly focused on developing electric vehicles. If we fail to be awarded business on electric vehicle models, it will harm our
future business prospects. Our competitive environment continues to change, including increased competition from entrants outside the
traditional automotive industry, creating uncertainty about the future competitive landscape. Given the competitive nature of our business,
the amount of awards we are awarded relative to our peers may decrease over time. Additionally, OEMs rigorously evaluate our
performance and products against those of our competitors on the basis of product quality, reliability and cost-effectiveness. If one or
more of our OEM customers determine that they could achieve overall better financial results by incorporating a competitor’s new or
existing product, it could affect our ability to be competitive and may decrease our current market share. The inability to compete
successfully could have a material adverse effect on our business, results of operations, and financial condition.
The discontinuation, lack of commercial success, or loss of business with respect to a particular vehicle model for which we
are a significant supplier could reduce our sales and harm our business
A number of our customer contracts generally require us to supply a customer’s annual requirements for a particular vehicle model and
assembly facilities, rather than for manufacturing a specific quantity of products. Such contracts range from one year to the life of the
model, which is generally four to seven years. These contracts are often subject to renegotiation, sometimes as frequent as on an annual
basis, which may affect product pricing, and generally may be terminated by our customers at any time. Therefore, the discontinuation
of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model or brand for which we are a significant
supplier could reduce our sales and harm our business prospects, operating results, cash flows, or financial condition.
We are working to expand our product offerings beyond light passenger vehicles to include other mobility safety solutions. If
we are not successful in expanding our product offerings or if it takes longer or costs are more than expected, it could harm
our business
The Company is working to expand its product offerings to focus on mobility safety solutions. Because mobility safety product offerings
are currently in the development stages, it is difficult for us to anticipate the level of sales they may generate. The expansion of our
product offering will require us to invest time and resources to develop innovative products, such as wearables and helmets, that keep
pace with continuing changes in industry standards and to reach new customers who have rapidly changing preferences. Our product
offerings might not receive customer acceptance if customer preferences shift to other products, and our future success depends in part
on our ability to anticipate and respond to these changes. If we are not successful in expanding our product offerings or if it takes longer
or costs are more than expected, it could negatively impact our financial results, competitive position, and future business prospects.
11
RISKS RELATED TO OUR BUSINESS
We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against
us or our customers
We face risks related to product liability claims, warranty claims, and recalls in the event that any of our products actually or allegedly are
defective, fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage.
We may not be able to anticipate all of the possible performance or reliability problems that could arise with our products after they are
released to the market. Additionally, increasing regulation and reporting requirements regarding potentially defective products, particularly
in the U.S., may increase the possibility that we become involved in additional product liability or recall investigations or claims. See –
“Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the
automobile safety market”. Although we currently carry product liability and product recall insurance in excess of our self-insured amounts,
no assurance can be made that such insurance will provide adequate coverage against potential claims, such insurance is available or
will continue to be available in the appropriate markets, or that we will be able to obtain such insurance on acceptable terms in the future
as the cost of such insurance has risen in recent years and the cost of our self-insurance program has risen as well. Although we have
invested and will continue to invest in our engineering, design, and quality infrastructure, we cannot give any assurance that our products
will not suffer from defects or other deficiencies or that we will not experience material warranty claims or product recalls. In the future,
we could experience material warranty or product liability losses and incur significant costs to process and defend these claims. A
successful claim brought against us in excess of available insurance coverage, if any, or a requirement to participate in any product recall,
could have a material adverse effect on our operating results, cash flows, or financial condition. Future recalls could result in costs not
covered by insurance in excess of our self-insurance, further government inquiries, litigation, reputational harm, and could divert
management’s attention away from other matters. The main variables affecting the costs of a recall are the number of vehicles ultimately
determined to be affected by the issue, the cost per vehicle associated with a recall, the determination of proportionate responsibility
among the customer, the Company, and any relevant sub-suppliers, and actual insurance recoveries. Every vehicle manufacturer has its
own practices regarding product recalls and other product liability actions relating to its suppliers, and the performance and remedial
requirements vary between jurisdictions. Due to recall activity in the automotive industry over the past decade, some vehicle manufactures
have become even more sensitive to product recall risks. As suppliers become more integrally involved in the vehicle design process and
assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when
faced with recalls and product liability claims. Product recalls in our industry, even when they do not involve our products, can harm the
reputations of our customers, competitors, and us, particularly if those recalls cause consumers to question the safety or reliability of
products similar to those we produce. In addition, with global platforms and procedures, vehicle manufacturers are increasingly evaluating
our quality performance on a global basis; any one or more quality, warranty or other recall issue(s) (including issues affecting few units
and/or having a small financial impact) may cause a vehicle manufacturer to implement measures which may have a severe impact on
our operations, such as a global, temporary or prolonged suspension of new orders. In addition, as our products more frequently use
global designs and are based on or utilize the same or similar parts, components or solutions, there is a risk that the number of vehicles
affected globally by a failure or defect will increase significantly with a corresponding increase in our costs. A warranty, recall or product
liability claim brought against us in excess of our available insurance may have a material adverse effect on our business. Vehicle
manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair
and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold us responsible for some or
the entire repair or replacement costs of defective products under new vehicle warranties, when the product supplied did not perform as
represented. Accordingly, the future costs of warranty claims by our customers may be material. However, the final amounts determined
to be due related to these matters could differ materially from our recorded warranty estimates and our business prospects, operating
results, cash flows or financial condition may be materially impacted as a result. In addition, as we adopt new technology, we face an
inherent risk of exposure to the claims of others that we have allegedly violated their intellectual property rights. We cannot assure that
we will not experience any material warranty, product liability or intellectual property claim losses in the future or that we will not incur
significant costs to defend such claims. See “If our patents are declared invalid or our technology infringes on the proprietary rights of
others, our ability to compete may be impaired”.
Escalating pricing pressures from our customers may adversely affect our business
The automotive industry continues to experience aggressive pricing pressure from customers. This trend is partly attributable to the major
automobile manufacturers’ strong purchasing power. As with other automotive component manufacturers, we are often expected to quote
fixed prices or are forced to accept prices with annual price reduction commitments for long-term sales arrangements or discounted
reimbursements for engineering work. Price reductions have impacted our sales and profit margins and are expected to continue to do
so in the future. Our future profitability will depend upon, among other things, our ability to continuously reduce our cost per unit and
maintain our cost structure, enabling us to remain cost-competitive. Our profitability is also influenced by our success in designing and
marketing technological improvements in automotive safety systems, which helps us offset price reductions by our customers. If we are
unable to offset continued price reductions through improved operating efficiencies and reduced expenditures, these price reductions
may have a material adverse effect on our business prospects, operating results, cash flows or financial condition.
12
We could experience disruption in our supply or delivery chain, which could cause one or more of our customers to halt or
delay production
We, as with other component manufactures in the automotive industry, ship our products to customer vehicle assembly facilities
throughout the world on a “just-in-time” basis in order for our customers to maintain low inventory levels. Our suppliers (external suppliers
as well as our own production sites) use a similar method in providing raw materials to us. However, this “just-in-time” method makes the
logistics supply chain in our industry very complex and vulnerable to disruption. Disruptions in our supply chain may result for many
reasons, including closures of one of our own or one of our suppliers’ facilities or critical manufacturing lines due to strikes or other labor
disputes, mechanical failures, electrical outages, fires, explosions, critical pollution levels, critical health and safety and other working
conditions issues (including epidemics and pandemics, such as the coronavirus (COVID-19)), natural disasters political upheaval, as well
as logistical complications due to labor disruptions, weather or natural disasters, acts of terrorism, mechanical failures, and legislation or
regulation regarding the transport of hazardous goods. Additionally, we may experience disruptions if there are newly imposed trade
restrictions or delays in customs processing, including if we are unable to obtain government authorization to export or import certain
materials, including materials that may be viewed as dangerous such as the propellant used for our inflators. As we continue to expand
in growth markets, the risk of such disruptions is heightened. The unavailability of even a single small subcomponent necessary to
manufacture one of our products, for whatever reason, could force us to cease production of that product, possibly for a prolonged period.
Similarly, a potential quality issue could force us to halt deliveries while we validate the products. Even when products are ready to be
shipped, or have been shipped, delays may arise before they reach our customer. Also, similar difficulties for other suppliers may force
our customers to halt production, which may in turn impact our sales shipments to such customers. When we fail to timely deliver, we
may have to absorb our own costs for identifying and resolving the ultimate problem as well as expeditiously producing and shipping
replacement components or products. Generally, we must also carry the costs associated with “catching up,” such as overtime and
premium freight. If we are the cause of a customer being forced to halt production, the customer may seek to recoup all of its losses and
expenses from us. These losses and expenses could be very significant and may include consequential losses such as lost profits. Where
a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all. Thus, any
such supply chain disruptions could severely impact our operations and/or those of our customers and force us to halt production for
prolonged periods of time which could expose us to material claims for compensation and have a material adverse effect on our business
prospects, operating results, or financial condition.
Adverse developments affecting our suppliers could harm our profitability
Any significant disruption in our supplier relationships, particularly relationships with single-source suppliers, could harm our profitability.
Furthermore, some of our suppliers may not be able to sufficiently manage the currency commodity cost volatility and/or sharply changing
volumes while still performing as we expect. For example, recalls or field actions from our customers can stress the capacity of our supply
chain and may inhibit our ability to timely deliver order volumes. We may incur costs as we try to make contingency plans to manage the
risks for delivery delays, production delays, production issues or delivery of non-conforming products by our suppliers.
Changes in the source, cost, availability of and regulations pertaining to raw materials and components may adversely affect
our profit margins
Our business uses a broad range of raw materials and components in the manufacture of our products, nearly all of which are generally
available from a number of qualified suppliers. Our industry may be affected from time to time by limited supplies or price fluctuations of
certain key components and materials. Strong worldwide demand for certain raw materials has had a significant impact on prices and
short-term availability in recent years, including in 2022. Such price increases have and could materially increase our operating costs and
materially and adversely affect our profit margin, as direct material costs amounted to approximately 52% of our net sales in 2022, of
which approximately half is the raw material cost portion. Inflation is currently high world-wide and may continue for some time.
Commercial negotiations with our customers and suppliers may not always offset all of the adverse impact of higher raw material, energy,
labor, logistics, and commodity costs. Even where we are able to pass price increases along to our customer, there may be (i) a lapse of
time before we are able to do so such that we must absorb the cost increase, and (ii) a negative impact on our relationships with such
customers and suppliers which may limit our success in securing future awards from customers and securing acceptable supplies from
suppliers. In addition, no assurances can be given that the magnitude and duration of such cost increases or any future cost increases
could not have a larger adverse impact on our profitability and consolidated financial position than currently anticipated. Additionally,
various government regulators require companies that manufacture products containing certain minerals and their derivatives that are
known as “conflict minerals”, originating from the Democratic Republic of Congo or adjoining countries to diligence and report the source
of such materials. There are significant resources associated with complying with these requirements, including diligence efforts to
determine the sources of conflict minerals used in our products and potential changes to our processes or supplies as a consequence of
such diligence efforts. As there may be only a limited number of suppliers able to offer certified “conflict free” conflict minerals, there can
be no assurance that we will be able to obtain necessary conflict free minerals from such suppliers in sufficient quantities or at competitive
prices. We may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict
free or if we are unable to sufficiently verify the origins for all minerals used in our products through the procedures we may implement.
Furthermore, our customers are also increasingly requiring us to track sustainable sources of certain raw materials, which also requires
additional diligence efforts and there can be no assurance that we will be able to obtain these materials in a cost-efficient and sustainable
manner. Accordingly, these rules and customer requirements may adversely affect our business prospects, operating results, cash flows
or financial condition.
13
Our business could be materially and adversely affected if we lost any of our largest customers or if they were unable to pay
their invoices
We are dependent on a few large customers with strong purchasing power. This is the result of customer consolidation in the last few
decades. In 2022, our top five customers represented around 49% of our consolidated sales, and our largest customer contract accounted
for around 2% of our consolidated sales. Although business with any given customer is typically split into several contracts (either on the
basis of one contract per vehicle model or on a broader platform basis), the loss of business from any of our major customers (whether
by lower overall demand for vehicles, cancellation of existing contracts or the failure to award us new business) could have a material
adverse effect on our business, results of operations, and financial condition. Similarly, further consolidation of our customers in the future
could make us more reliant upon a smaller group of customers for a significant portion of our consolidated sales and negatively impact
our bargaining power when contracting with such customers. Customers may put us on a “new business hold,” which would limit our
ability to quote or be awarded all or part of their future vehicle contracts if quality or other issues arise in the vehicles for which we were
a supplier. Such new business holds range in length and scope and are generally accompanied by a certain set of remedial conditions
that must be met before we are eligible to bid for new business. Meeting any such conditions within the prescribed timeframe may require
additional Company resources. A failure to satisfy any such conditions may have a material adverse impact on our financial results in the
long term. There is a risk that one or more of our major customers may be unable to pay our invoices as they become due or that a
customer will simply refuse to make such payments given its financial difficulties. If a major customer would enter into bankruptcy
proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of legal or other
modification, or if a major customer otherwise successfully procures protection against us legally enforcing its obligations, it is likely,
absent special relief such as having a “preferred status”, that we will be forced to record a substantial loss. Additional information
concerning our major customers is included in Note 20, Segment Information, of the Consolidated Financial Statements in this Annual
Report.
Our inability to effectively manage the timing, quality and costs of new program launches could adversely affect our financial
performance
To compete effectively in the automotive supply industry, we must be able to launch new products to meet our customers’ timing,
performance, and quality standards. At times, we face an uneven number of launches and some launches, for various reasons, may have
shortened launch lead times. We cannot provide assurance that we will be able to install and certify the equipment needed to produce
products for new programs in time for the start of production, or that the transitioning of our manufacturing facilities and resources to full
production for such new programs will not impact production rates or other operational efficiency measures at our facilities. In addition,
we cannot provide assurance that our customers will execute on schedule the launch of their new product programs, for which we might
supply products. Additionally, as a Tier 1 supplier, we must effectively coordinate the activities of numerous suppliers in order to launch
programs successfully. Given the complexity of new program launches, especially involving new and innovative technologies, we may
experience difficulties managing product quality, timeliness and associated costs. In addition, new program launches require a significant
ramp up of costs; however, the sales related to these new programs generally are dependent upon the timing and success of the
introduction of new vehicles by the Company’s customers. Our inability to effectively manage the timing, quality and costs of these new
program launches could adversely affect our business prospects, operating results, cash flows, or financial condition.
Changes in our product mix may impact our financial performance
We sell products that have varying profit margins. Our financial performance can be impacted depending on the mix of products we sell
during a given period. Our earnings guidance, estimates and mid- and long-term financial targets assume a certain geographic sales mix
as well as a product sales mix. If actual results vary significantly from this projected geographic and product mix of sales, our operating
results and financial condition could be negatively impacted.
We are involved from time to time in legal proceedings and our business may suffer as a result of adverse outcomes of current
or future legal proceedings
We are, from time to time, involved in litigation, regulatory proceedings and commercial or contractual disputes that may be significant.
These matters may include, without limitation, disputes with our suppliers and customers, intellectual property claims, shareholder
litigation, government investigations, class action lawsuits, personal injury claims, product liability claims, environmental issues, antitrust,
customs and VAT disputes and employment and tax issues. In such matters, government agencies or private parties may seek to recover
from us very large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or
seek to limit our operations in some way. For example, a U.S. federal court has entered an order requiring Autoliv to pay approximately
$118 million, approximately $18 million in actual compensatory damages plus pre-judgment interest and $100 million in punitive damages,
because Autoliv manufactured the seatbelt that was involved in an accident. The Company has appealed the verdict. The possibility
exists that claims may be asserted against us and their magnitude may remain unknown for long periods of time. These types of lawsuits
could require a significant amount of management’s time and attention and a substantial legal liability or adverse regulatory outcome and
the substantial expenses to defend the litigation or regulatory proceedings may have a material adverse effect on our customer
relationships, business prospects, reputation, operating results, cash flows and financial condition. No assurances can be given that such
proceedings and claims will not have a material adverse impact on our profitability and consolidated financial position or that our
established reserves or our available insurance will mitigate such impact.
14
We may be subject to civil antitrust litigation that could negatively impact our business
The Company may be subject to civil antitrust lawsuits in the future in countries that permit such civil claims, including lawsuits or other
actions by our customers. The Company was previously the subject of an investigation by the European Commission (“EC”) regarding
possible anti-competitive behavior among certain suppliers to the automotive vehicle industry. The Company paid a fine to resolve these
matters in 2019. As a result of the outcome of the EC investigation, we are and we could be subject to subsequent civil disputes with non-
governmental third parties and civil or stockholder litigation stemming from the same facts and circumstances underlying the EC
investigation. These types of lawsuits require significant management time and attention and could result in significant expenses as well
as unfavorable outcomes that could have a material adverse impact on our customer relationships, business prospects, reputation,
operating results, cash flows or financial condition, and our insurance may not mitigate such impact. See Note 17, Contingent Liabilities,
to the Consolidated Financial Statements in this Annual Report.
Work stoppages, slow-downs or other labor issues at our customers’ facilities or at our facilities could adversely affect our
operations
Because the automotive industry relies heavily on “just-in-time” delivery of components during the assembly and manufacture of vehicles,
a work stoppage or slow-down at one or more of the Company’s facilities could have a material adverse effect on our business. Similarly,
if any of our customers were to experience a work stoppage or slow-down, that customer may halt or limit the purchase of our products.
Similarly, a work stoppage or slow-down at another supplier could interrupt production at one of our customers’ facilities which would
have the same effect. While labor contract negotiations at our facilities historically have rarely resulted in work stoppages, no assurances
can be given that we will be able to negotiate acceptable contracts with these unions or that our failure to do so will not result in work
stoppages. A work stoppage or other labor disruption at one or more of our facilities or our customers’ facilities could cause us to shut
down production facilities supplying these products, which could have a material adverse effect on our business, results of operations
and financial condition.
Our ability to operate our company effectively could be impaired if we fail to attract and retain executive officers and other key
personnel
Our ability to operate our business and implement our strategies effectively depends, in part, on the efforts of our executive officers and
other key employees. In addition, our future success will depend on, among other factors, our ability to attract, develop and retain other
qualified personnel, particularly engineers and other employees with software and technical expertise. The loss of the services of any of
our executive officers or other key employees or the failure to attract, develop or retain other qualified personnel could have a material
adverse effect on our business.
Restructuring, efficiency, and strategic initiatives and capacity alignments are complex and difficult and at any time additional
restructuring steps may be necessary, possibly on short notice and at significant cost
Our restructuring, efficiency, and strategic initiatives and capacity alignments include efforts to adjust our manufacturing capacity and
cost structure to meet current and projected operational and market requirements, including plant closures, transfer of sourcing to best
cost countries, consolidation of our supplier base, and standardization of products to reduce our overhead costs and consolidate our
operational centers. The successful implementation of our restructuring activities and capacity alignments will involve sourcing, logistics,
technology and employment arrangements. Because these restructuring, efficiency, and strategic initiatives and capacity alignments can
be complex, there may be difficulties or delays in the implementation of any such initiatives and capacity alignments or they may not be
immediately effective, resulting in an adverse material impact on our performance. In addition, there is a risk that inflation, high-turnover
rates, and increased competition may reduce the efficiencies now available in best-cost countries to levels that no longer allow for cost-
beneficial restructuring opportunities. Therefore, there can be no assurances that any future restructurings or capacity alignments will be
completed as planned or achieve the desired results. See Note 11, Restructuring, to the Consolidated Financial Statements in this Annual
Report.
A prolonged recession and/or a downturn in our industry could result in us having insufficient funds to continue our operations
and external financing may not be available to us or available only on materially different terms than what has historically been
available
Our ability to generate cash from our operations is highly dependent on automotive sales and LVP, the global economy, and the
economies of our important markets. If LVP were to remain on low levels for an extended period of time, we would experience a
significantly negative cash flow. Similarly, if cash losses for customer defaults rise sharply, we would experience a negative cash flow.
Such negative cash flow could result in our having insufficient funds to continue our operations unless we can procure external financing,
which may not be possible. Our access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient
amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors. Our
ability to obtain unsecured funding at a reasonable cost is dependent on our credit ratings or our perceived creditworthiness. Our current
credit rating could be lowered as a result of us experiencing significant negative cash flows, increasing our indebtedness and leverage,
or a dire financial outlook, which may affect our ability to procure financing. We may also for the same, or other reasons, find it difficult to
secure new long-term credit facilities, at reasonable terms, when our principal credit facility expires in 2027. Further, even our existing
unutilized credit facilities may not be available to us as agreed, or only at additional cost, if participating banks are unable to raise the
necessary funds, where, for instance, financial markets are not functioning as expected or one or more banks in our principal credit facility
syndicate were to default. As a result, we cannot assure you that we will continue to have sufficient liquidity to meet our operating needs.
In the event that we do not have sufficient external financing, we may be required to seek additional capital, sell assets, reduce or cut
back our operating activities or otherwise alter our business strategy. Information concerning our credit facilities and other financings are
included in Item 7 in this Annual Report in the section headed “Treasury Activities” and in Note 13, Debt and Credit Agreements, to the
Consolidated Financial Statements in this Annual Report.
15
Our indebtedness may harm our financial condition and results of operations
As of December 31, 2022, we have outstanding debt of $1.8 billion. We may incur additional debt for a variety of reasons. Although our
significant credit facilities and debt agreements do not have any financial covenants, our level of indebtedness will have several important
effects on our future operations, including, without limitation: a portion of our cash flows from operations will be dedicated to the payment
of any interest or could be used for amortization required with respect to outstanding indebtedness; increases in our outstanding
indebtedness and leverage will increase our vulnerability to adverse changes in general economic and industry conditions, as well as to
competitive pressure; depending on the levels of our outstanding debt, our ability to obtain additional financing for working capital,
acquisitions, capital expenditures, general corporate and other purposes may be limited; and potential future tightening of the availability
of capital both from financial institutions and the debt markets may have an adverse effect on our ability to access additional capital.
Governmental restrictions may impact our business adversely
Some of our customers are (or may be) owned by a governmental entity, receive various forms of governmental aid or support or are
subject to governmental influence in other forms, which may impact us as a supplier to these customers. As a result, they may be required
to partner with local entities or procure components from local suppliers to achieve a specific local content or be subject to other
restrictions regarding localized content or ownership. The nature and form of any such restrictions or protections, whatever their basis, is
very difficult to predict as is their potential impact. However, they are likely to be based on political rather than economical or operational
considerations and may materially impact our business.
Impairment charges relating to our assets, goodwill and other intangible assets could adversely affect our financial performance
We periodically review the carrying value of our assets, goodwill and other intangible assets for impairment indicators. If one or more of
our customers’ facilities cease production or decrease their production volumes, the assets we carry related to our facilities serving such
customers may decrease in value because we may no longer be able to utilize or realize them as intended. Where such decreases are
significant, such impairments may have a material adverse impact on our financial results. We monitor the various factors that impact the
valuation of our goodwill and other intangible assets, including expected future cash flow levels, global economic conditions, market price
for our stock, and trends with our customers. Impairment of goodwill and other identifiable intangible assets may result from, among other
things, deterioration in our performance and especially the cash flow performance of these goodwill assets, adverse market conditions
and adverse changes in applicable laws or regulations. If there are changes in these circumstances or the other variables associated with
the estimates, judgments and assumptions relating to the valuation of goodwill, when assessing the valuation of our goodwill items, we
may determine that it is appropriate to write down a portion of our goodwill or intangible assets and record related non-cash impairment
charges. In the event that we determine that we are required to write-down a portion of our goodwill items and other intangible assets
and thereby record related non-cash impairment charges, our financial condition and operating results would be adversely affected. For
additional information, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations -
Significant Accounting Policies and Critical Accounting Estimates – Goodwill and Intangibles”.
We face risks related to our defined benefit pension plans and employee benefit plans, including the need for additional funding
as well as higher costs and liabilities
Our defined benefit pension plans and employee benefit plans may require additional funding or give rise to higher related costs and
liabilities which, in some circumstances, could reach material amounts and negatively affect our operating results. We are required to
make certain year-end assumptions regarding our pension plans. Our pension obligations are dependent on several factors, including
factors outside our control such as changes in interest rates, the market performance of the diversified investments underlying the pension
plans, actuarial data and adjustments and an increase in the minimum funding requirements or other regulatory changes governing the
plans. Adverse equity market conditions and volatility in the credit market may have an unfavorable impact on the value of our pension
assets and our future estimated pension liabilities. Internal factors such as an adjustment to the level of benefits provided under the plans
may also lead to an increase in our pension liability. If these or other internal and external risks were to occur, alone or in combination,
our required contributions to the plans and the costs and net liabilities associated with the plans could increase substantially and have a
material effect on our business. Information concerning our benefit plans is included in Note 18, Retirement Plans, of the Consolidated
Financial Statements in this Annual Report.
We may not be able to, or we may decide not to, pay dividends or repurchase shares at a level anticipated by our shareholders,
which could reduce shareholder returns
The extent to which we pay dividends on our common stock and repurchase our common stock in the future is at the discretion of our
Board of Directors and depends upon a number of factors, including our earnings, financial condition, cash and capital needs,
indebtedness and leverage, and general economic or business conditions. No assurance can be given that we will be able to or will
choose to pay any dividends or repurchase any shares in the foreseeable future.
16
Cybersecurity incidents or other damage to our technology infrastructure could disrupt business operations, result in the loss
of critical and confidential information, and adversely impact our reputation and operating results
We rely extensively on information technology (“IT”) networks and systems, our global data centers and services provided over the
internet to process, transmit and store electronic information, and to manage or support a variety of business processes or activities
across our facilities worldwide. In addition, a greater number of our employees are working remotely which may increase cybersecurity
vulnerabilities and risk to our IT networks and systems. The secure operation of our IT networks and systems and the proper processing
and maintenance of this information are critical to our business operations. We have been, and likely will continue to be, subject to cyber-
attacks. To date we have seen no material impact on our business from these attacks or events. Although we seek to deploy
comprehensive security measures to prevent, detect, address and mitigate these threats, there has been an increased level of activity,
and an associated level of sophistication, in cyber-attacks against large multinational companies. The ever-evolving threats mean we and
our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes and overall
security environment, as well as those of any companies we acquire. There is no guarantee that these measures will be adequate to
safeguard against all data security breaches, system compromises or misuses of data. Our security measures may be breached due to
human or technological error, employee malfeasance, system malfunctions or attacks from uncoordinated individuals or sophisticated
and targeted measures known as advanced persistent threats, directed at the Company, its products, its customers, its third-party service
providers, and/or other entities with whom we do business. Because techniques used to obtain unauthorized access or to sabotage
systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate
these techniques or to implement adequate preventative measures. Disruptions and attacks on our IT systems or the systems of third
parties storing our data or employee malfeasance or human or technological error could result in the misappropriation, loss, destruction
or corruption of our critical data and confidential or proprietary information, personal information of our employees, the leakage of our or
our customers’ confidential information, improper use of our systems and networks, production downtimes and both internal and external
supply shortages, which could have an adverse effect on our results of operations. It may also result in the theft of intellectual property
or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations. The
potential consequences of a material cybersecurity incident include reputational damage, theft of intellectual property, litigation with third
parties, diminution in the value of our investment in research, development and engineering, diversion of the attention of management
away from the operation of our business and increased cybersecurity protection and remediation costs, legal claims and liability,
regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of
sensitive and/or confidential information, increases in operating expenses, or lost revenues which in turn could adversely affect our
competitiveness and results of operations. To the extent that any disruption or security breach results in a misappropriation, loss,
destruction or corruption of our customer’s information, it could affect our relationships with our customers, create significant expense for
us to investigate and remediate damage, lead to claims against the Company and ultimately harm our business. In addition, we may be
required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future. In addition,
as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with
new and constantly changing requirements applicable to our business, compliance with those requirements could result in additional
costs. Furthermore, our technology systems are vulnerable to damage or interruption from natural disasters, power loss and
telecommunication failures. We continuously seek to maintain a robust program of information security and controls, however, any future
significant compromise or breach of our data security, whether external or internal, or misuse of customer, associate, supplier or Company
data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation.
Third parties that maintain certain of our confidential and proprietary information could experience a cybersecurity incident
We rely on third parties to provide or maintain some of our IT systems, data centers and related services and do not exercise direct
control over these systems. Despite the implementation of security measures at third party locations, these IT systems, data centers and
cloud services are also vulnerable to security breaches or other disruptions. Additionally, we and certain of our third-party vendors, collect
and store personal information in connection with human resources operations and other aspects of our business. While we obtain
assurances that any third parties we provide data to will protect this information and, where we believe appropriate, monitor the protections
employed by these third parties, there is a risk the confidentiality of data held by us or by third parties may be compromised and expose
us to liability for such breach.
Global climate change could negatively affect our business
Increased public awareness and concern regarding global climate change will likely result in more regional and/or national requirements
to reduce or mitigate the effects of greenhouse gas emissions. In addition, our shareholders and customers also expect us to reduce our
greenhouse gas emissions. There continues to be a lack of consistent climate legislation, which creates economic and regulatory
uncertainty. Any future regulations aimed at mitigating climate change may negatively impact the prices of raw materials and energy as
well as the demand for certain of our customer’s products which could in turn impact demand for our products and impact our results of
operations. The costs of compliance and any changes to our operations mandated by new or amended laws, may be significant. We may
also face unexpected delays in obtaining permits and approvals required by such laws in connection with our manufacturing facilities,
which would hinder our operation of these facilities. Furthermore, any violations of these laws may result in substantial fines and penalties,
remediation costs, third party damages, or a suspension or cessation of our operations. We also face physical and transition risks from
climate change. The manifestations of climate change, such as extreme weather conditions or more frequent extreme weather events,
including wildfires, flooding, water stress and extreme heat, could disrupt our operations, damage our facilities, disrupt our supply chain,
including our customers or suppliers, impact the availability and cost of materials needed for manufacturing or increase insurance and
other operating costs. As a result, severe weather or a natural disaster that results in a prolonged disruption to our operations, or the
operations of our customers or suppliers, could have a material adverse effect on our operating results, cash flows or financial condition.
17
Our goals, targets and ambitions related to sustainability and emissions reduction, and our public statements and disclosures
regarding them, expose us to numerous risks
We have developed, and will continue to develop and set, goals, targets, ambitions and other objectives related to sustainability matters,
including our net-zero emission targets both for ourselves and our supply chain. Some of these are based on our internal scenario
analysis, which may not prove to be accurate and carries inherent uncertainties. Statements related to these goals, targets, ambitions
and objectives reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research, establish,
accomplish, and accurately report on these goals, targets, and objectives expose us to numerous operational, reputational, financial,
legal, and other risks. Additionally, greenhouse gas emissions, particular emissions that come from individuals and entities up and down
the value chain (otherwise known as Scope 3 emissions), are very difficult to estimate and our estimates may be materially different than
actual emissions. The manner in which we estimate and disclose Scope 3 emissions may differ from other companies, and currently, we
do not include downstream Scope 3 emissions in our targets and ambitions. If future governmental regulations require us to modify the
basis of our Scope 3 emissions disclosure, our historically disclosed Scope 3 emissions may change materially. Our ability to achieve
any stated goal, target, ambition or objective, including with respect to emissions reduction, is subject to numerous factors and conditions,
some of which are outside of our control. For example, we have announced that we are collaborating with Polestar to develop a climate
neural car. Such an endeavor requires the innovation and collaboration with a number of partners and is subject to certain inherent risks,
including the timetable in which it is achieved. We may also have to purchase carbon offsets in order to meet our targets and objectives,
which may not be available or may no longer be considered acceptable to use to meet such targets.
Our business may face increased scrutiny from investors and other stakeholders related to our sustainability activities, including the goals,
targets, and objectives that we announce, and our methodologies and timelines for pursuing them. If our sustainability practices do not
meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain
employees, and our attractiveness as an investment or business partner could be negatively affected. Similarly, our failure or perceived
failure to pursue or fulfill our sustainability-focused goals, targets, ambitions and objectives, to comply with ethical, environmental, or other
standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we
announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and
private litigation.
Our business is exposed to risks inherent in international operations
RISKS RELATED TO INTERNATIONAL OPERATIONS
We currently conduct operations in various countries and jurisdictions, including locating certain of our manufacturing and distribution
facilities internationally, which subjects us to the legal, political, regulatory and social requirements and economic conditions in these
jurisdictions. Some of these countries are considered growth markets and emerging markets. International sales and operations,
especially in growth markets, subject us to certain risks inherent in doing business abroad, including: exposure to local economic
conditions; unexpected changes in laws, regulations, trade, or monetary or fiscal policy, including interest rates, foreign currency
exchange rates, and changes in inflation rates; foreign tax consequences; inability to collect, or delays in collecting, value-added taxes
and/or other receivables associated with remittances and other payments by subsidiaries; exposure to local political turmoil and
challenging labor conditions; changes in general economic and political conditions in countries where we operate, particularly in emerging
markets; expropriation and nationalization; enforcing legal agreements or collecting receivables through foreign legal systems; wage
inflation; currency controls, including lack of liquidity in foreign currency due to governmental restrictions, trade protection policies and
currency controls, which may create difficulty in repatriating profits or making other remittances; compliance with the requirements of an
increasing body of applicable anti-bribery laws; reduced intellectual property protection in various markets; investment restrictions or
requirements; and the imposition of product tariffs and the burden of complying with a wide variety of international and U.S. export laws.
The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. The Organization for Economic Co-operation and
Development (“OECD”) continues its base erosion and profit shifting (“BEPS”) project begun in 2015 with new proposals for a global
minimum tax, further development of a coordinated set of rules for taxation and the allocation of taxing rights between jurisdictions. These
proposals, if adopted by countries in which we operate, could result in changes to tax policies, including transfer pricing policies, that
could ultimately impact our tax liabilities. On December 12, 2022, the European Union member states agreed to implement the OECD’s
Pillar 2 global corporate minimum tax at a rate of 15% on companies with revenues of at least $790 million, which would go into effect in
2024. Similarly, the United States passed the Inflation Reduction Act of 2022, which also imposes, among other things, a 15% corporate
minimum tax for taxable years beginning after December 31, 2022, on certain U.S. based companies that have average revenues over
a three-year period of at least $1 billion. Other countries including the United Kingdom, Switzerland, Canada, Australia and South Korea
are also actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. The timing or impact of these
proposals and recommendations is unclear at this point.
Changes in tax laws or policies by the U.S. or foreign jurisdictions could result in a higher effective tax rate on our worldwide earnings,
and any such change could have a material adverse effect on our business prospects, cash flows, operating results and financial
condition. Our international operations also depend upon favorable trade relations between the countries where we manufacture and sell
products and those foreign countries in which our customers and suppliers have operations. Changes in national policy, other
governmental action related to tariffs or international trade agreements, changes in social, political regulatory, and economic conditions
or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where the
Company currently manufactures and sells products, and any resulting negative sentiments towards the Company as a result of such
changes could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our
cash flows, operating results and financial condition. Increasing our manufacturing footprint in the growth markets and our business
relationships with automotive manufacturers in these markets are particularly important elements of our strategy. As a result, our exposure
to the risks described above may be greater in the future, and our exposure to risks associated with developing countries, such as the
risk of political upheaval and reliability of local infrastructure, may increase.
18
Our foreign operations may subject us to risks relating to laws governing international relations
Due to our global operations, we are subject to many laws governing international relations (including, but not limited to, the Foreign
Corrupt Practices Act, and other anti-bribery regulations in foreign jurisdictions where we do business), which prohibit improper payments
to government officials and restrict where and how we can do business, what information or products we can supply to certain countries
and what information we can provide to authorities in governmental authorities. We also export components and products that are subject
to certain trade-related U.S. laws, including the U.S. Export Administration Act and various economic sanctions programs administered
by the U.S. Treasury’s Office of Foreign Assets Control. Although we have procedures and policies in place that should mitigate the risk
of violating these laws, there is no guarantee that they will be sufficiently effective. If and when we acquire new businesses, we may not
be able to ensure that the pre-existing controls and procedures meant to prevent violations of these laws were effective, and violations
may occur if we are unable to timely implement corrective and effective controls and procedures when integrating newly acquired
businesses. Any allegations of noncompliance with these laws could harm our reputation, divert management attention and result in
significant expenses, and could therefore materially harm our business prospects, operating results and financial condition.
Our business in Asia is subject to aggressive competition and is sensitive to economic, market, and political conditions
We operate in the automotive supply market throughout Asia including the highly competitive markets in China, South Korea, and India.
In each of these markets we face competition from both international and smaller domestic manufacturers. Due to the significance of the
Asian markets for our profit and growth, we are exposed to risks in China, South Korea, and India. We anticipate that additional
competitors, both international and domestic, may seek to enter the Chinese, South Korean, and/or Indian markets resulting in increased
competition. Increased competition may result in lower sales volumes, price reductions, reduced margins and our inability to gain or hold
market share. There have been periods of increased market volatility and moderation in the levels of economic growth in China, which
resulted in periods of lower automotive production growth rates in China than those previously experienced. Our business in Asia is
sensitive to economic and market conditions that drive automotive sales volumes in China, South Korea, and India and may be impacted
if there are reductions in vehicle demand in those markets. Additionally, the COVID-19 pandemic has created significant volatility
throughout Asia, particularly in China, which has led to significant reduced economic activity and employment and has disrupted, and
may continue to disrupt, the global automotive industry and customer sales, production volumes, and purchases of light vehicles by end-
consumers. Although the Chinese government began rolling back its “Zero-Covid” policies and re-opening its economy in late 2022, if
COVID-19 continues to spread or re-emerges in China, or other major markets in Asia, it may cause disruptions in the manufacturing,
delivery, and overall supply chains of automobile manufacturers and suppliers. There are also trade and political tensions between China
and other countries in the western world. If we are unable to maintain our position in the Asian markets, the pace of growth slows, or
vehicle sales in these markets decrease, our business prospects, operating results and financial condition could be materially adversely
affected.
Our business in Europe is sensitive to economic and market conditions
We operate in the automotive supply market throughout Europe and are increasingly subject to the risks arising from adverse changes
in the European economy. A significant deterioration in economic conditions, increased volatility, further declines in the European credit,
equity, and foreign currency markets or geopolitical disruptions, including the war in Ukraine, could have negative impacts on our business
operations in Europe and may lead to delays in or cancellations of customer orders. We also face competition from both international and
smaller domestic manufacturers who may seek to enter the European markets resulting in increased competition. Increased competition
may result in lower sales volumes, price reductions, reduced margins, and our inability to gain or hold market share.
Global integration may result in additional risks
Because of our efforts to manage costs by integrating our operations globally, we face the additional risk that, should any of the other
risks discussed herein materialize, the negative effects could be more pronounced. For example, while supply delays of a component
have typically only affected a few customer vehicle models, such a delay could now affect several vehicle models of several customers
in several geographic areas. Similarly, any recall or warranty issue we face due to a product defect or failure is now more likely to involve
a larger number of units in several geographic areas.
Exchange rate risks
As a result of our global presence, a significant portion of our revenues and expenses are denominated in currencies other than the U.S.
dollar. We are therefore subject to foreign currency risks and foreign exchange exposure. Such risks and exposures include: transaction
exposure, which arises because the cost of a product originates in one currency and the product is sold in another currency; revaluation
effects, which arise from valuation of assets denominated in other currencies than the reporting currency of each unit; translation exposure
in the income statement, which arises when the income statements of non-U.S. subsidiaries are translated into U.S. dollars; translation
exposure in the balance sheet, which arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars; and
changes in the reported U.S. dollar amounts of cash flows. We cannot predict exchange rate volatility or the extent of its impact on our
future financial results. We typically denominate foreign transactions in foreign currencies to achieve a natural hedge. However, a natural
hedge cannot be achieved for all our currency flows; therefore, a net transaction exposure remains within the group. The net exposure
can be significant and creates a transaction exposure risk for the Company. The Company does not hedge translation exposure. However,
we do engage in foreign exchange rate hedging from time to time related to foreign currency transactions. For additional information, see
Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk - Currency risks.
19
RISKS RELATED TO ACQUISITIONS
We face risks in connection with acquisitions, joint ventures, partnerships, and other strategic transactions
Our growth has been enhanced through strategic transactions, including acquisitions of businesses, products and technologies,
partnerships, strategic alliances, and joint development agreements that we believe will complement our business. We regularly evaluate
acquisition opportunities, frequently engage in acquisition discussions, conduct due diligence activities in connection with possible
acquisitions, and, where appropriate, engage in acquisition negotiations. We may not be able to successfully identify suitable acquisition
and joint venture candidates or complete transactions on acceptable terms, integrate acquired operations into our existing operations or
expand into new markets. Our failure to identify suitable strategic transactions may restrict our ability to grow our business. These strategic
transactions also involve numerous additional risks to us and our investors, including: risks related to retaining acquired management
and employees; difficulties in integrating acquired technologies, products, operations, services and personnel with our existing
businesses; diversion of our management’s attention from other business concerns; assumption of contingent liabilities; potential adverse
financial impacts, including from the amortization of expenses related to intangible assets and from potential impairment of goodwill;
incurrence of indebtedness; and potential damage to existing customer relationships or lack of customer acceptance or inability to attract
new customers as a result of these transactions. In the future, we may pursue acquisitions of businesses or products that are
complementary to our business but for which we have historically had little or no direct experience. These transactions can involve
significant challenges and risks as well as significant time and resources that may divert management’s attention from other business
activities. If we fail to adequately manage these risks, the acquisitions and other strategic transactions may not result in revenue growth,
operational synergies or service or technology enhancements, which could adversely affect our financial condition.
RISKS RELATED TO INTELLECTUAL PROPERTY
If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability to compete may be
impaired
We have developed a considerable amount of proprietary technology related to automotive safety systems and rely on a number of
patents to protect such technology. Our intellectual property plays an important role in maintaining our competitive position in a number
of the markets we serve. At present, we hold more than 6,600 patents and patent applications covering a large number of innovations
and product ideas, mainly in the fields of seatbelt and airbag technologies. In addition to our in-house research and development efforts,
we seek to acquire rights to new intellectual property through corporate acquisitions, asset acquisitions, licensing and joint venture
arrangements. Our patents and licenses expire on various dates during the period from 2023 to 2042. We do not expect the expiration of
any single patent or license to have a material adverse effect on our business, operating results and financial condition. Developments
or assertions by or against us relating to intellectual property rights could negatively impact our business. We primarily protect our
innovations with patents and vigorously protect and defend our patents, trademarks and know-how against infringement and unauthorized
use. If we are not able to protect our intellectual property and our proprietary rights and technology, we could lose those rights and incur
substantial costs policing and defending those rights. We also generate license revenue from these patents, which we may lose if we do
not adequately protect our intellectual property and proprietary rights. Our means of protecting our intellectual property, proprietary rights
and technology may not be adequate, and our competitors may independently develop technologies that are similar or superior to our
proprietary technologies, duplicate our technologies, or design around the patents we own or license. In addition, the laws of some foreign
countries do not protect our proprietary rights to as great an extent as the laws of the U.S. and we may encounter significant problems in
protecting and defending our intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the
infringement of our patents or misappropriation of our other intellectual property rights. Proceedings to enforce our patent rights in foreign
jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our
efforts to protect our intellectual property rights in such countries may be inadequate.
We may not be able to protect our proprietary technology and intellectual property rights, which could result in the loss of our
rights or increased costs.
Although we believe that our products and technology do not infringe the proprietary rights of others, third parties may assert infringement
claims against us in the future. Additionally, we license from third parties proprietary technology covered by patents, and we cannot be
certain that any such patents will not be challenged, invalidated, or circumvented. Such licenses may also be non-exclusive, meaning our
competition may also be able to access such technology. Further, we expect to continue to expand our products and services and expand
into new businesses, including through developing new products, acquisitions, joint ventures and joint development agreements, which
could increase our exposure to patent and other intellectual property claims from competitors and other parties. If claims alleging patent,
copyright or trademark infringement are brought against us and are successfully prosecuted against us, they could result in substantial
costs. If a successful claim is made against us and we fail to develop non-infringing technology, our business, operating results and
financial condition could be materially adversely affected. In addition, certain of our products utilize components that are developed by
third parties and licensed to us. If claims alleging patent, copyright or trademark infringement are brought against such licensors and
successfully prosecuted, they could result in substantial costs, and we may not be able to replace the functions provided by these
licensors. Alternate sources for the technology currently licensed to us may not be available in a timely manner, may not provide the
same functions as currently provided or may be more expensive than products currently used. We may develop proprietary information
through our in-house research and development efforts, consulting arrangements or research collaborations with other entities or
organizations. We may seek to protect this proprietary information by entering into confidentiality agreements or consulting, services or
employment agreements that contain non-disclosure and non-use provisions with our employees, consultants, scientific advisors and
other third parties. However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be
breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information.
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We may not be able to respond quickly enough to changes in technology and technological risks and to develop our intellectual
property into commercially viable products
Changes in legislative, regulatory, or industry requirements or in competitive technologies may render certain of our products obsolete or
less attractive to our customers. We currently license certain proprietary technology to third parties and, if such technology becomes
obsolete or less attractive, those licensees could terminate our license agreements, which could adversely affect our results of operations.
Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced
products on a timely basis will be a significant factor in our ability to remain competitive. We cannot provide assurance that we will be
able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not
become obsolete. We are also subject to the risks generally associated with new product introductions and applications, including lack of
market acceptance, delays in product development and failure of products to operate properly. As part of our business strategy, we may
from time to time seek to acquire businesses or assets that provide us with additional intellectual property. We may experience problems
integrating acquired technologies into our existing technologies and products, and such acquired intellectual property may be subject to
known or contingent liabilities such as infringement claims.
Some of our products and technologies may use “open source” software, which may restrict how we use or distribute our
products or require that we release the source code of certain products subject to those licenses
Some of our products and technologies may incorporate software licensed under so-called “open source” licenses. In addition to risks
related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as
open source licensors generally do not provide warranties or controls on origin of the software. Additionally, open source licenses typically
require that source code subject to the license be made available to the public and that any modifications or derivative works to open
source software continue to be licensed under open source licenses. These open source licenses typically mandate that proprietary
software, when combined in specific ways with open source software, become subject to the open source license. If we combine our
proprietary software in such ways with open source software, we could be required to release the source code of our proprietary software.
We take steps to ensure that our proprietary software is not combined with, and does not incorporate, open source software in ways that
would require our proprietary software to be subject to an open source license. However, few courts have interpreted open source
licenses; therefore the manner in which these licenses may be interpreted and enforced is subject to some uncertainty.
RISKS RELATED TO GOVERNMENT REGULATIONS AND TAXES
Our business may be adversely affected by laws or regulations, including environmental, occupational health and safety, and
other governmental regulations
We are subject to various federal, state, local and foreign laws and regulations, including those related to the requirements of
environmental, occupational health and safety, financial, and other matters. We cannot predict the substance or impact of pending or
future legislation or regulations, or the application thereof. The introduction of new laws or regulations or changes in existing laws or
regulations, or the interpretations thereof, could increase the costs of doing business for us or our customers or suppliers or restrict our
actions and adversely affect our business prospects, operating results, cash flows or financial condition. Our operations are subject to
environmental and safety laws and regulations governing, among other things, emissions to air, discharges to waters and the generation,
handling, storage, transportation, treatment and disposal of waste and other materials. The operation of automotive parts manufacturing
facilities entails risks in these areas, and we cannot assure that we will not incur material costs or liabilities as a result. Additionally,
environmental laws, regulations, and permits and the enforcement thereof change frequently and have tended to become increasingly
stringent over time, which may necessitate substantial capital expenditures or operating costs or may require changes of production
processes. Although we have no known pending material environmental issues, there is no assurance that we will not be adversely
impacted by any environmental costs, liabilities, or claims in the future either under present laws and regulations or those that may be
adopted or imposed in the future. Our costs, liabilities, and obligations relating to environmental matters may have a material adverse
effect on our business, operating results, cash flows, or financial condition. Our facilities in the U.S. are subject to regulation by the
Occupational Safety and Health Administration (“OSHA”), which regulates the protection of the health and safety of workers. In addition,
the OSHA hazard communication standard requires that we maintain information about hazardous materials used or produced in our
operations and that we provide this information to employees, state and local governmental authorities and local residents. We are also
subject to occupational safety regulations in other countries. Our failure to comply with government occupational safety regulations,
including OSHA requirements, or general industry standards relating to employee health and safety, keep adequate records or monitor
occupational exposure to regulated substances could expose us to liability, enforcement, and fines and penalties, and could have a
material adverse effect on our business, operating results, cash flows, or financial condition. Although we employ safety procedures in
the design and operation of our facilities, there is a risk that an accident or injury to one of our employees could occur in one of our
facilities. Any accident or injury to our employees could result in litigation, manufacturing delays and harm to our reputation, which could
negatively affect our business, operating results, and financial condition.
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Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation
of the automobile safety market
Government vehicle safety regulations are a key driver in our business. Historically, these regulations have imposed ever more stringent
safety regulations for vehicles. Safety regulations have a positive impact on driver awareness and acceptance of automotive safety
products and technology. These more stringent safety regulations often require vehicles to have more safety content per vehicle and
more advanced safety products, which has thus been a driver of growth in our business. However, these regulations are subject to change
based on a number of factors that are not within our control, including new scientific or medical data, adverse publicity regarding the
industry recalls and safety risks of airbags or seatbelts (for instance, to children and small adults), domestic and foreign political
developments or considerations, and litigation relating to our products and our competitors’ products. Changes in government regulations
in response to these and other considerations could have a severe impact on our business. Although we believe that over time safety will
continue to be a regulatory priority, if government priorities shift and we are unable to adapt to changing regulations, our business may
suffer material adverse effects. The regulatory obligation of complying with safety regulations could increase as federal and local
regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in our industry.
We are subject to existing stringent requirements under the National Traffic and Motor Vehicle Safety Act of 1966 (the “Vehicle Safety
Act”), including a duty to report, subject to strict timing requirements, safety defects with our products. The Vehicle Safety Act imposes
potentially significant civil penalties for violations including the failure to comply with such reporting actions. We are also subject to the
existing U.S. Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act, which requires equipment
manufacturers, such as Autoliv, to comply with “Early Warning” requirements by reporting certain information to the National Highway
Traffic Safety Administration (“NHTSA”) such as: information related to defects or reports of injury related to our products. TREAD imposes
criminal liability for violating such requirements if a defect subsequently causes death or bodily injury. In addition, the Vehicle Safety Act
authorizes NHTSA to require a manufacturer to recall and repair vehicles that contain safety defects or fail to comply with U.S. federal
motor vehicle safety standards. Sales into foreign countries may be subject to similar regulations. Due to the record recall of airbag
inflators of one of our competitors, NHTSA has become more active in requesting information from suppliers and vehicle manufactures
regarding potential product defects and we expect that to continue or increase under the current U.S. presidential administration.
Negative or unexpected tax developments could adversely affect our effective tax rate, operating results and financial condition
Changes in, or changes in the application of, U.S. or foreign tax laws, regulations or accounting principles with respect to matters such
as tax base, tax rates, transfer pricing, dividends and restrictions on certain forms of tax relief or limitations on favorable tax treatment
could affect the calculation of our income taxes and other tax liabilities, our effective tax rate, and the carrying value of our deferred tax
assets. Our annual tax rate is based on our income and the tax laws in the jurisdictions in which we operate. Because of our global
operations we face uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. Significant
judgment and estimation is required in determining our effective tax rate and in evaluating our tax positions, in many cases where the
ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, the final determination of our tax
liability may be different from what is reflected in our historical income tax provisions and accruals. We are regularly examined by tax
authorities around the world and in a number of jurisdictions, we are currently under examination, which inherently creates uncertainty.
Although we periodically assess the likelihood of adverse outcomes, negative or unexpected results from one or more of such reviews
and audits, including any related interest or penalties imposed by governmental authorities, could increase our effective tax rate and
adversely impact our operating results, cash flows or financial condition. The effective tax rates used for interim reporting are based on
our projected full-year geographic earnings mix and take into account projected tax costs on intercompany dividends from lower tier
subsidiaries. Changes in currency exchange rates, earnings mix among taxing jurisdictions, or the ability of our subsidiaries to pay
dividends could impact our reported effective tax rates, or cause fluctuations in the tax rate from quarter to quarter. Certain anti-trust
judgements or settlements may not be tax deductible, which could have a material negative impact to our annual tax rate. A number of
other factors may also increase our effective tax rate, which could have an adverse impact on our profitability and operating results. Due
to our numerous foreign operations, our tax rate may be impacted by our global mix of earnings if our pre-tax income is lower than
anticipated in countries with lower statutory tax rates and/or is higher than anticipated in countries with higher statutory tax rates. Based
on U.S. regulatory rules, we do not record current or deferred tax liabilities on permanent investments in our foreign subsidiaries. See
Note 5, Income Taxes, to the Consolidated Financial Statements in this Annual Report.
We may not be able to fully realize our deferred tax assets
We currently carry deferred tax assets, net of valuation allowances, resulting from deductible temporary differences and tax loss carry-
forwards, both of which will reduce taxable income in the future. However, deferred tax assets may only be realized against taxable
income. The amount of our deferred tax assets could be reduced, from time to time, due to adverse changes in our operations or in
estimates of future taxable income from operations during the carry-forward period as a result of a deterioration in market conditions or
other circumstances. Any such reduction would adversely affect our income in the period of the adjustment. Additional information on our
deferred tax assets is included in Note 5, Income Taxes, to the Consolidated Financial Statements in this Annual Report.
We could incur significant liability if the separation is determined to be a taxable transaction
RISKS RELATED TO THE SEPARATION OF VEONEER
We have received an opinion of outside counsel to the effect that, for U.S. federal income tax purposes, the separation should qualify, for
both Autoliv and its stockholders, as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue
Code of 1986, as amended. The opinion is based on and relies on, among other things, certain facts and assumptions, as well as certain
representations, statements and undertakings of Autoliv and Veoneer, Inc. ("Veoneer") including those relating to the past and future
conduct of Autoliv and Veoneer. If any of these facts, assumptions, representations, statements or undertakings is, or becomes,
inaccurate or incomplete, reliance on the opinion may be affected. An opinion of outside counsel represents their legal judgment but is
not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will not challenge the conclusions reflected in
the opinion or that a court would not sustain such a challenge.
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Potential indemnification obligations to Veoneer or a refusal of Veoneer to indemnify us pursuant to the agreements executed
in connection with the internal reorganization and spin-off could materially adversely affect us
The transaction agreements we entered into with Veoneer in connection with the internal reorganization and the spin-off provide for cross-
indemnities that require Autoliv and Veoneer to bear financial responsibility for each company’s business prior to the internal
reorganization or spin-off, as applicable, and to indemnify the other party in connection with a breach of such party of the transaction
agreements; provided, however, certain warranty, recall and product liabilities for electronics products manufactured prior to the
completion of the internal reorganization have been retained by us and we will indemnify Veoneer for any losses associated with such
warranty, recall or product liabilities pursuant to the distribution agreement entered into as part of the spin-off. Any indemnities that we
are required to provide to Veoneer may be significant and could negatively affect our business. In addition, there can be no assurance
that the indemnities from Veoneer will be sufficient to protect us against the full amount of any potential liabilities. Even if we do succeed
in recovering from Veoneer any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.
Additionally, Veoneer was acquired by SSW Partners on April 1, 2022 which may impact our ability to recover any amounts from Veoneer
pursuant to the transaction agreements. Each of these risks could have a material adverse effect on our business, operating results and
financial condition.
Item 1B. Unresolved Staff Comments
Not applicable.
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Item 2. Properties
Autoliv’s principal executive offices are located at Klarabergsviadukten 70, Section B7, SE-111 64, Stockholm, Sweden. Autoliv’s various
businesses operate in a number of production facilities and offices. Autoliv believes that its properties are adequately maintained and
suitable for their intended use and that the Company’s production facilities have adequate capacity for the Company’s current and
foreseeable needs. All of Autoliv’s production facilities and offices are owned or leased by operating (either subsidiary or joint venture)
companies.
AUTOLIV MANUFACTURING FACILITIES
Location of Facility
Items produced at Facility
Owned/Leased
Country/Company
Brazil
Autoliv do Brasil Ltda.
Canada
Autoliv Canada, Inc.
VOA Canada, Inc.
China
Autoliv (Baoding) Vehicle Safety Systems Co., Ltd
Autoliv (Changchun) Vehicle Safety Systems Co., Ltd.
Autoliv (China) Steering Wheel Co., Ltd.
Autoliv (Guangzhou) Vehicle Safety Systems Co., Ltd.
Autoliv (Nanjing) Vehicle Safety Systems Co., Ltd.
Autoliv Shenda (Nanjing) Automotive Components Co., Ltd.
Autoliv (Shanghai) Vehicle Safety Systems Co., Ltd.
Autoliv Shenda (Tai Cang) Automotive Safety Systems Co.,
Ltd.
Autoliv (Jiangsu) Automotive Safety Components Co., Ltd.
Autoliv (China) Automotive Safety Systems Co., Ltd.
Mei-An Autoliv Co., Ltd.
Estonia
AS Norma
France
Autoliv France SNC
Autoliv Isodelta SAS
Livbag SAS
N.C.S. Pyrotechnie et Technologies SAS
Germany
Autoliv B.V. & Co. KG
Hungary
Autoliv Kft.
India
Autoliv India Private Ltd.
Indonesia
P.T. Autoliv Indonesia
Japan
Autoliv Japan Ltd.
Malaysia
Autoliv-Hirotako Sdn Bhd
Taubaté
Seatbelts, airbags, steering
wheels and seatbelt webbing
Tilbury
Collingwood
Airbag cushions
Seatbelt webbing
Baoding
Changchun
Fengxian/Shanghai
Guangzhou
Nanjing
Nanjing
Shanghai
Shanghai
Airbags
Airbags and seatbelts
Steering wheels
Airbags and seatbelts
Seatbelts
Seatbelt webbing
Airbags
Seatbelt webbing
Jintan
Nantong
Taipei
Propellant, Airbag initiators and
Airbag inflators
Airbag cushions
Seatbelts and airbags
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Tallinn
Seatbelts and belt components
Owned
Gournay-en-Bray
Chiré-en-Montreuil
Pont-de-Buis
Survilliers
Airbags
Steering wheels and covers
Airbag inflators
Airbag initiators and seatbelt
micro gas generators
Elmshorn
Seatbelts
Sopronkövesd
Seatbelts
Bangalore
Mysore
Badli
Seatbelts, airbags
Seatbelt webbing and Airbag
Cushions
Airbags and steering wheels
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Jakarta
Seatbelts and steering wheels
Owned
Atsugi
Hiroshima
Taketoyo
Tsukuba
Steering wheels
Airbags and steering wheels
Airbag inflators
Airbags and seatbelts
Kuala Lumpur
Seatbelts, airbags and steering
wheels
Leased
Owned
Leased
Owned
Owned
24
Mexico
Autoliv Mexico East S.A. de C.V.
Autoliv Mexico S.A. de C.V.
Autoliv Safety Technology de Mexico S.A. de C.V.
Autoliv Steering Wheels Mexico S. de R.L. de C.V.
Autoliv Steering Wheels Mexico S. de R.L. de C.V.
Autoliv Mexico S.A. de C.V.
Philippines
Autoliv Cebu Safety Manufacturing, Inc.
Poland
Autoliv Poland Sp. zo.o.
Romania
Autoliv Romania S.R.L.
Russia
OOO Autoliv
South Africa
Autoliv Southern Africa (Pty) Ltd.
South Korea
Autoliv Corporation
Spain
Autoliv BKI S.A.U.
Sweden
Autoliv Sverige AB
Thailand
Autoliv Thailand Ltd.
Tunisia
STE ASW3 Nadour
STE ASW3 Nadour
Matamoros
Lerma
Tijuana
Querétaro
Querétaro
Aguascalientes
Steering wheels
Seatbelts
Seatbelts
Airbag cushions
Airbags
Steering wheels
Cebu
Steering wheels
Olawa
Jelcz-Laskowice
Airbag cushions
Airbags
Brasov
Lugoj
Resita
Sfantu Georghe
Onesti
Rovinari
Seatbelts, seatbelt webbing,
seatbelt components, airbag
inflators, steering wheels
Airbag cushions
Airbag cushions
Steering wheels
Steering wheels
Seatbelts
Togliatti
Airbags, seatbelts and steering
wheels
Krügersdorp
Seatbelts and airbags
Hwasung
Airbags
Valencia
Airbags
Vårgårda
Airbag inflators
Chonburi
Chonburi
El Fahs
Nadhour
Seatbelts, Airbags and
Steering wheels
Seatbelt components
Steering wheels
Steering wheels
Turkey
Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve
Ticaret A.S.
Autoliv Cankor Otomotiv Emniyet Sistemleri Sanayi Ve
Ticaret A.S. Gebze-Subesi
Gebze-Kocaeli
Seatbelts
Gebze-Kocaeli
Airbags, Steering wheels and
Seatbelt components
United Kingdom
Airbags International Ltd
USA
Autoliv ASP, Inc.
Congleton
Airbag cushions
Brigham City
Ogden
Ogden
Promontory
Tremonton
Airbag inflators
Airbags
Airbags and service parts
Propellant
Airbag initiators and seatbelt
micro gas generators
25
Owned
Owned
Leased
Leased
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Leased
Owned &
Leased
Owned
Owned
Leased
Owned
Owned
Owned
Leased
Owned
Owned
AUTOLIV TECHNICAL CENTERS AND CRASH TEST TRACKS
Country/Company
China
Autoliv (Shanghai) Vehicle Safety System Technical
Center Co., Ltd.
Location
Shanghai
Product(s) supported
Inflators and pyrotechnics customer
applications, airbags, steering wheels and
seatbelts customer applications and platform
development with full-scale test laboratory
France
Autoliv France SNC
Livbag SAS
Autoliv Isodelta SAS
Germany
Autoliv B.V. & Co. KG
India
Autoliv India Private Ltd.
Japan
Autoliv Japan Ltd.
Poland
Autoliv Poland Sp. zo.o.
Romania
Autoliv Romania S.R.L.
South Korea
Autoliv Corporation
Sweden
Autoliv Development AB
Autoliv Sverige AB
USA
Autoliv ASP, Inc.
Gournay-en-Bray
Pont-de-Buis
Chiré-de-Montreuil
Airbags and seatbelts customer applications
and platform development with full-scale test
laboratory
Inflator and pyrotechnic development
Steering wheels development and customer
applications
Dachau
Elmshorn
Customer applications and platform
development, airbags with full-scale test
laboratory
Seatbelts with full-scale test laboratory
Bangalore
Airbags and seatbelts with sled testing
Tsukuba
Jelcz
Brasov
Seoul
Vårgårda
Vårgårda
Airbags and seatbelts customer applications
and platform development with sled test
laboratory
Airbags applications and platform development
Seatbelts with sled test laboratory
Airbags and seatbelts customer applications
and platform development with sled test
laboratory
Research center
Airbags customer applications, inflator and
special safety products development with full-
scale test laboratory
Auburn Hills
Ogden
Airbags, steering wheels, and seatbelts
customer applications and platform
development with sled test laboratory
Airbags, inflators and pyrotechnics customer
applications and platform development
26
Item 3. Legal Proceedings
In the ordinary course of its business, the Company is subject to legal proceedings brought by or against the Company and its
subsidiaries.
See Note 17, Contingent Liabilities, to the Consolidated Financial Statements in this Annual Report for a summary of certain ongoing
legal proceedings. Such information is incorporated into this Part I, Item 3 – “Legal Proceedings” by reference.
Item 4. Mine Safety Disclosures
Not applicable.
27
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Shareholder information
The primary exchange market for Autoliv’s securities is the New York Stock Exchange (NYSE) where Autoliv’s common stock trades
under the symbol “ALV”. Autoliv’s Swedish Depositary Receipts (SDRs) are traded on NASDAQ Stockholm’s list for large market cap
companies under the symbol “ALIV SDB”. Options in SDRs trade on Nasdaq Stockholm under the name “Autoliv SDB”. Options in Autoliv
shares are traded on NASDAQ OMX PHLX and on NYSE Amex Options under the symbol “ALV”.
Stock Performance Graph
The graph and table below show the cumulative total shareholder return for our common stock since December 31, 2017. The graph
compares our performance to that of the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones US Auto Parts Index. The
Dow Jones US Auto Parts Index is our newly chosen and replaces the OMX Auto Index we used in prior reports. We believe the Dow
Jones US Auto Parts Index is a better representation of our peer companies than the OMX Auto Index which is composed of a smaller
number of public Swedish companies.
The comparison assumes $100 was invested at the closing price of our common stock on the NYSE on December 31, 2017. Each of the
returns shown assumes that all dividends paid were reinvested.
Autoliv, Inc.
SP500TR
Dow Jones US Auto Parts Index
$
100 $
100
100
78.45 $
95.62
68.30
97.57 $
125.72
85.56
107.32 $
148.85
99.27
122.89 $
191.58
118.94
12-31-2017
12-31-2018
12-31-2019
12-31-2020
12-31-2021
12-31-2022
94.13
156.88
86.35
28
The following graph and table below show the cumulative total shareholder return for our Swedish Depository Receipts ("SDRs") since
December 31, 2017. The graph compares our performance to that of the Nasdaq OMX All Share Index ("OMX Index") and the OMX Auto
Component Index ("OMX Auto Index"). The comparison assumes 100 Swedish Kronor was invested at the closing price of our SDRs on
the OMX on December 31, 2017. Each of the returns shown assumes that all dividends paid were reinvested. This graph and table will
be discontinued in the future.
(SEK)
Autoliv SDRs
OMX Index
OMX Auto Index
12-31-2017
100
100
100
12-31-2018
85.92
95.84
77.52
12-31-2019
111.65
128.98
83.18
12-31-2020
108.86
147.75
89.35
12-31-2021
136.43
206.01
134.26
12-31-2022
119.53
159.87
82.92
29
Number of shares
As of December 31, 2022, the number of shares outstanding, net of treasury shares, was 86.2 million, compared to 87.5 million as of
December 31, 2021.
During 2022, the weighted average number of shares outstanding (excluding dilution and treasury shares) decreased to 87.1 million from
87.5 million in 2021. Assuming dilution, the weighted average number of shares outstanding for the full year 2022 decreased to 87.2
million from 87.7 million in 2021.
Stock options (if exercised) and granted Restricted Stock Units (RSUs) and Performance Shares (PSs) could increase the number of
shares outstanding as of December 31, 2022 by 0.3 million shares in the aggregate. Combined, this would add 0.4% to the number of
shares outstanding as of December 31, 2022. In November 2021, the Board of Directors approved a new stock repurchase program that
authorizes the Company to repurchase up to $1.5 billion or up to 17 million shares (whichever comes first) between January 2022 and
the end of 2024. On December 15, 2022, the Board of Directors approved the retirement of 10.0 million treasury shares. On December
31, 2022, the Company had 5.0 million treasury shares.
Shareholders
Of the shares held by institutional investors, Autoliv estimates that around 47% were held by Sweden-based shareholders, around 31%
by US-based shareholders and around 9% by UK-based shareholders. Most of the remaining Autoliv shares were held in Switzerland,
Norway, Germany and France.
Dividends
Autoliv has a history of paying quarterly cash dividends. Declared dividends are announced in press releases and published on Autoliv’s
corporate website. The Board of Directors revisits dividends on a quarterly basis. There can be no assurance that the Board of Directors
will declare dividends in the future. See Autoliv’s corporate website for additional details regarding historical dividends.
Stock incentive plan
Autoliv employees participate in the Autoliv, Inc. 1997 Stock Incentive Plan, as amended (the “Stock Incentive Plan”) and receive Autoliv
stock-based awards from time to time. Additional information regarding the securities authorized for issuance under the Stock Incentive
Plan is included in Item 12 of this Annual Report.
Autoliv has adopted a Stock Ownership Policy for Executives requiring the Company’s Chief Executive Officer (CEO) to accumulate and
hold the number of Autoliv shares having a value of twice his annual base salary. For other executives, the minimum requirement is, over
time, a holding equal to each executive’s annual base salary.
Stock repurchase program
The following table provides information with respect to common stock repurchases by the Company during the three months period
ended December 31, 2022.
Period
October 1-31, 2022
November 1-30, 2022
December 1-31, 2022
New York Stock Exchange (NYSE)
Total Number of
Shares Purchased
(1)
Average Price
Paid per Share
(USD) (2)
249,090
400,591
$
$
— $
80.31
87.38
—
Total Number of Shares
Purchased as Part of
Publicly Announced Plans or
Programs (3)
Maximum Number of Shares
that May Yet Be Purchased
Under the Plans or Programs
(3)
1,039,981
1,440,572
1,440,572
15,960,019
15,559,428
15,559,428
(1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through
open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. For accounting purposes, shares repurchased under
our stock repurchase programs are recorded based upon the settlement date of the applicable trade.
(2) Average price paid per share includes costs associated with the repurchases.
(3) On November 16, 2021, the Company announced that its Board of Directors approved a new stock repurchase program that authorizes the Company
to repurchase up to $1.5 billion or up to 17 million common shares, whichever comes first, between January 2022 and the end of 2024.
Item 6. [RESERVED]
30
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
IMPORTANT TRENDS
The discussions and analysis in this section are focused on the Company’s results of operations for the year ended December 31, 2022
compared to the year ended December 31, 2021. Discussions of the Company's results of operations for the year ended December 31,
2021 compared to the year ended December 31, 2020 can be found in Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Company's Form 10-K for the year ended December 31, 2021, which was filed with the United
States Securities and Exchange Commission on February 22, 2022.
Autoliv, Inc. (the “Company”) provides automotive safety systems to the automotive industry with a broad range of product offerings,
primarily passive safety systems. In the year ended December 31, 2022, a number of factors influenced the Company’s results of
operations, including:
•
•
•
•
•
•
•
Industry supply chain disruptions and the global semiconductor shortage limited the light vehicle production (LVP) recovery
and caused high customer call-off volatility
Raw material price increases and corresponding inflation compensation negotiations with customers
COVID-19 pandemic
Continued growth above LVP driven by price, higher content per vehicle, and execution of strong order book
Order intake adding to an already strong customer base
Strategic and structural initiatives
Continued focus on operational excellence and quality
2022
2021
YEARS ENDED DEC. 31 (DOLLARS IN MILLIONS, EXCEPT EPS)
Global light vehicle production (in thousands)
Consolidated net sales
Operating income
Operating margin, %
Net income attributable to controlling interest
Earnings per share2)
Net cash provided by operating activities
Return on capital employed, %
1) Reported figures impacted by costs for capacity alignments and antitrust related matters. See section Items affecting comparability and Note 11 to the
Consolidated Financial Statements included herein.
2) Assuming dilution and net of treasury shares.
Reported1)
74,136
8,230
675
8.2
435
4.96
754
18.3
Reported1)
79,289
8,842
659
7.5
423
4.85
713
17.5
6.9 %
7.4 % $
(2.3) %
(0.7) pp
(2.8) %
(2.2) %
(5.4) %
(0.7) pp
3.6 %
11 %
77 %
3.1 pp
133 %
132 %
(11) %
7.9 pp
change
change
$
SUPPLY CHAIN
LVP in 2022 was limited by the global semiconductor shortage and other industry supply chain disruptions. 2022 saw global LVP growth
year-over-year by around 6.9% (according to S&P Global January 2023). Supply chain disruptions led to low customer demand visibility
and material changes to customer call-offs with short notice which negatively impacted our production efficiency and profitability in 2022.
Rising raw material costs amounted to around 4.5pp in operating margin headwind in 2022, which to a large extent was offset by
commercial customer recoveries.
The Company expects the current industry-wide supply chain disruptions to be a limiting factor for the global LVP in the first half year of
2023, while the Company expects that demand and supply will be in better balance in the second half of 2023.
COVID-19
Direct COVID-19 related costs, such as personal protective equipment, quarantine costs and similar items, were around $15 million in
2022. Governmental support in connection with furloughing, short-term work weeks, and other similar activities were around $8 million in
2022.
INFLATION
The Company expects the raw material price changes in 2023 will to a large extent be reflected in price changes in the Company's
products, albeit with delays of several months. The Company also expects significant cost pressure from broad based inflation relating to
labor, logistics, utilities and other items. The Company continues to execute on productivity and cost reduction activities to offset this
inflation, and the Company has also initiated challenging discussions with its customers on non-raw material cost inflation. The Company
believes price adjustments will gradually offset the non-raw material cost inflation as the market digests these new realities, with limited
positive effects in the first quarter and gradual improvement as the year progresses.
THE WAR IN UKRAINE
The direct impact of the war in Ukraine on our business has been relatively limited. In 2021, sales in Russia were less than 1.0% of the
Company's total sales, declining to less than 0.1% in 2022. Autoliv has one facility with fewer than 20 employees in Russia, down from
close to 200 employees before the start of the war. Our operations in Russia are currently suspended. Autoliv net assets in Russia
consists of USD cash items, which amount to around $8 million. Autoliv has no operations in Ukraine.
31
GROWTH IMPACTED BY LIGHT VEHICLE PRODUCTION, SAFETY CONTENT PER VEHICLE, AND STRONG ORDER BOOK
The most important driver for Autoliv’s sales is the LVP. During the past ten years, LVP has shown year-over-year growth with the
exception of the years 2018-2020. Despite strong end-consumer demand for new vehicles, global LVP only grew by 6.9% in 2022 - much
below the 8.9% expected by S&P Global in the beginning of the year. For Europe, the LVP growth of 18% that was expected in the
beginning of the year became a decline of 1%. This was mainly a result of distressed global automotive supply chains and limited
semiconductor availability impacted by the COVID-19 pandemic.
During 2022, the Company experienced a limited improvement in global LVP in the second half of the year, compared to a relatively
weaker first half of the year, indicating a somewhat improved availability of semiconductors and stability of global automotive supply
chains in the second half of the year.
Light Vehicle Production1)
Americas
Europe
Asia
North America
South America
China
Japan
South Korea
India
Other Asia
Other
Global Total
1) Source: S&P Global
2022
2021
Change 2022 vs 2021
(000´)
units
% global
(000´)
units
% global
(000´)
units
%
15,879
13,078
2,801
15,561
45,638
25,229
7,290
3,695
5,078
4,345
2,210
79,289
20%
16%
4%
20%
58%
32%
9%
5%
6%
5%
2%
14,518
11,933
2,585
15,765
41,840
23,290
7,307
3,407
4,139
3,698
2,013
74,136
20%
16%
3%
21%
56%
31%
10%
5%
6%
5%
3%
1,361
1,145
216
(204)
3,798
1,939
(17)
288
939
647
197
5,153
9%
10%
8%
(1)%
9%
8%
(0)%
8%
23%
17%
10%
7%
Chinese LVP, the world’s largest automotive market, increased by 2.0 million units or by 8% from 2021 to 2022. In Europe, an important
market for automotive safety systems, LVP decreased by 1% or by approximately 0.2 million light vehicles during the same period. In
North America, LVP increased by 1.1 million units, or by 10% compared to 2021.
During 2022, Europe’s share of global LVP has declined to 20% from 21% while Americas' share was unchanged at 20% and China’s
share increased to 32%. Japan’s share declined to 9% from 10% while India's share remained at 6%.
Despite macro-economic uncertainties in parts of the world, we expect light vehicle markets to grow both in the short and long term,
driven by pent-up end user demand and a rebuilding of new vehicle inventories. The growth is expected to take place in all regions.
Due to more stringent crash test rating requirements, by institutes such as Euro NCAP, increased government regulations and increasing
consumer demand for more safety in emerging markets, the Company sees vehicle manufacturers installing more airbags and more
advanced seatbelt systems in vehicles. This generally takes place when new models are introduced. The safety standards of vehicles
are increasing in China, India, and other growth markets such as Brazil, partially due to new government regulations and crash test rating
programs. For example, the Indian government has decided on a new traffic regulation that mandates more rigid crash test standards for
light vehicles. This is supporting higher installation rates of airbags and more advanced seatbelts, impacting CPV positively. Commercial
customer recoveries compensating for increased raw material costs also added to CPV in 2022, partly offset by negative effects from
continued productivity related pricing pressure from vehicle manufacturers. The trend of increasing CPV was negatively impacted in 2022
by the unfavorable regional LVP mix development, as more than 75% of global LVP growth came from lower safety content regions such
as China, India, Other Asia, and South America. This negative regional mix effect was more than offset by the overall increase in global
CPV of more than 6% and the execution of the Company's strong order book, which supported an organic growth (see section Non-U.S.
GAAP Performance Measures) of 6.6 percentage points above growth in global LVP. The average global safety CPV (airbags, pedestrian
safety, seatbelts, and steering wheels) amounted to around $255 in 2022.
The more stringent crash rating requirements and consumer demand for more safety should enable the global automotive safety market
to grow around 2-3 percentage points per year faster than the global LVP during the next two years. This excludes the impact from cost
inflation related price increases.
The past years’ high order intake share has resulted in the Company's sales development outperforming the underlying LVP significantly
in the past three years. In 2022, the Company's organic sales development outpaced global LVP by around 6.6 percentage points, due
to increased safety content per vehicle and as an effect of recent years high order intake share.
The Company estimates that the sales to Electric Vehicles (not including PHEVs) amounted to more than $1 billion in 2022, decreasing
our dependency on ICE vehicles.
32
WELL BALANCED GLOBAL FOOTPRINT
The Company's regional sales mix continues to be balanced with 27% of sales in Europe, 33% in the Americas and 40% in Asia in 2022,
compared to 28%, 31% and 41%, respectively, in 2021. In Asia, the Company's sales in the important Chinese market remained at 21%
of total sales in 2022. The Company's sales in India increased to 4% of total sales in 2022 from 3% in 2021.
The balanced regional sales mix has been achieved through timely investments and strengthening of technical and support capabilities
in growth markets.
ORDER INTAKE ADDING TO AN ALREADY STRONG CUSTOMER BASE
The Company's order intake in 2022, with high win rates for new EV platforms with both new and traditional OEMs, added to the
Company's already strong base, which includes supplying products to more than 1,300 vehicle models and around 100 car brands. The
order intake in 2022 supports the Company's estimate that the Company's sales market share is moving towards around 45% in the next
few years. The Company estimates that its sales market share was unchanged at around 43% in 2022. The lead time from order intake
to start of production is typically 1-3 years. During this period the products are engineered into the vehicle to provide the expected
protection for occupants in case of a crash and to meet legal and regulatory requirements, as well as other requirements from the vehicle
manufacturer. This investment in new products is the main reason for the high level of RD&E expenses, net. Additionally, the Company
has to build up production capacity, in the form of new lines, to meet future product launches.
The Company's order intake share for 2022 continued on a high level. The estimated life-time sales for all orders booked in 2022 is
around $10.7 billion, almost unchanged compared to around $10.8 billion in 2021, despite currency headwinds and lower LVP outlook in
2022. The 2022 order intake included high win rates with relatively new automakers and for new EV platforms. New order intake is defined
as the sales value of awards for future business, received within that year. The life time value is calculated using detailed assumptions of
price and volumes over the years of production and the exchange rates prevailing at the time of receiving the order.
Our sales growth has outperformed the change in global LVP by around 5-7 percentage points every year in the past five years. In 2022,
the outperformance was 6.6 percentage points. During 2022, growth was positively affected through recent launches of several new
models, including GMC Sierra/Chevrolet Silverado, Toyota Tundra, and Toyota Yaris as well as steering wheels sales to a number of
Mercedes models.
STRATEGIC INITIATIVES AND STRUCTURAL IMPROVEMENTS
2022 light vehicle market was hampered by an industry wide shortage of semi-conductors, a distressed global automotive supply chain
and a raw material inflation which resulted in significant increases in cost for purchased material. In response, Autoliv management
continued to implement strict cost control measures, including footprint and capacity alignments in Europe, Japan, South Korea as well
as moving overhead functions to Best Cost Countries.
Additionally, the Company has introduced several initiatives in previous years, such as the Structural Efficiency Program 1 and 2. The
first program was fully implemented in 2020 and the second program was fully implemented by 2022.
The provision, net of reversals, for restructuring activities in 2022 amounted to $13 million compared to $8 million in 2021. As of December
31, 2022, the Company had $31 million reserved in its balance sheet related to restructuring compared to $88 million last year. For more
information, see Note 11, Restructuring, to the Consolidated Financial Statements included herein.
In addition to the structural improvements outlined above, the Company continues to implement the strategic initiatives to improve the
efficiency of its value chain from end to end, not least through the Autoliv Production System and increased digitalization and automation.
With several hundred projects in implementation or undergoing development, the Company has a high pace in the planning and
implementation of the strategic initiatives and structural improvements. These initiatives are key drivers to the Company's medium-term
targets and building the foundation to continue to create shareholder value.
33
IMPROVED EFFICIENCIES THROUGH OPERATIONAL EXCELLENCE
Pricing pressure is an inherent part of the automotive supplier business. Price reductions are generally higher on newer products with
strong volume growth compared to older products, where both the possibilities to re-design the product to reduce costs and market growth
are less. Price reductions can also depend on the business cycle and raw material price development. For the five-year period 2017-
2021, the Company estimates the average reduction of product prices on existing programs to have been in the range of around 2-4%
annually. In 2022, the pricing environment changed to some extent due to high raw material price and cost increases, which led to
renegotiations with customers regarding commercial terms. These discussions resulted in a net positive price development, gradually
implemented throughout the year.
A key strategy for Autoliv to be and to remain cost competitive is to reduce labor costs, through continuously implementing productivity
improvement programs, optimizing the Company's production footprint, and instituting restructuring and capacity alignment activities as
well as other actions to address the Company's cost structure.
The Company's productivity improvement target is to achieve at least 5% savings per year. To meet this target, Autoliv has developed a
set of strategies to reduce costs in manufacturing:
•
•
•
Autoliv production system (APS) is based on lean manufacturing methodology which aims to continuously increase output
with less resources. APS provides the target conditions and tools to achieve the delivery of goods and services at the right
time, in the right amount, at the required quality and at the lowest cost possible to all the Company's customers.
Autoliv One Product One Process (1P1P) strategy focuses on product and process standardization and reducing cost and
complexity. The 1P1P strategy, combined with initiatives to reduce costs for components from external suppliers, ensures
that the Company continuously optimize its supply base footprint, consolidate purchase volumes to fewer suppliers, improve
productivity in the Company's supply chain, standardize components and redesign its products.
Strategic Initiatives, including Automation, Digitalization, Supply Chain Management Effectiveness and RD&E Effectiveness.
The Company's historic experience is that the continuous improvement strategies have enabled productivity improvement at or above
its target of 5%. However, this was not the case in the past three years due to the COVID-19 pandemic related decline in LVP in 2020
and the high volatility in customer call-offs in 2021 and 2022 driven by the industry wide supply chain instability, especially for
semiconductors.
The Company foresees opportunities for further productivity on gains from LVP recovery and increased call-off stability when supply of
semiconductors eventually improves, but also from increasing use of automation in its assembly for lean manufacturing processes.
Additionally, automated cells typically perform the manufacturing process with reduced variability. This results in greater control and
consistency of product quality.
FOCUS ON QUALITY
The number of vehicle recalls in the automotive industry continues on a relatively high level. The Company expects overall recall numbers
to remain high for years to come and, although the Company strives for the highest quality in its processes, it cannot be ruled out that the
Company may also be adversely impacted by a future recall.
Quality has been and always will be the Company's number one priority, and the Company continues to sharpen its focus in this area.
The Company now holds a global market share in passive safety of around 43%, while the Company has been involved in less than 2%
of recalls in the industry in the past ten years. This indicates that the Company is delivering on its quality strategy. For more information
see product warranty and recalls in Note 12, Product Related Liabilities, to the Consolidated Financial Statements in this Annual Report.
CHANGES IN COMPETITIVE LANDSCAPE
During the past eight years, Autoliv experienced significant changes in its competitive landscape. In 2015, TRW, a key competitor in
passive safety, was acquired by German group ZF Friedrichshafen. In 2016, Key Safety Systems (“KSS”) was acquired by Ningbo Joyson
Electronic Corp. Beginning in 2014, Takata, Autoliv's largest competitor at the time, experienced severe issues and recalls related to
malfunctioning airbag inflators, leading the company to file for bankruptcy protection in the U.S. and Japan. In 2018, Joyson substantially
acquired all of Takata's global assets and operations and combined it with KSS, forming the new company JSS.
34
CAPITAL STRUCTURE
The Company’s net debt stood at $1,184 million on December 31, 2022. This was an increase of $132 million compared to December
31, 2021. Total interest-bearing debt at December 31, 2022 amounted to $1,766 million, a decrease of $242 million compared to
December 31, 2021.
Cash flow from operations was $713 million in 2022 and $754 million in 2021. Capital expenditures, net amounted to $485 million in 2022
and $454 million in 2021. During 2022 and 2021 the Company paid dividends of $224 million and $165 million, respectively.
It is the Company’s policy to maintain a financial leverage commensurate with a “strong investment grade credit rating”. The long-term
target is to have a leverage ratio (see section Non-U.S. GAAP Performance Measures) of around 1.0x and to be within the range of 0.5x
to 1.5x. At December 31, 2022, the current leverage ratio is 1.4x. The Company monitors its capital structure and the financial markets
closely and intends to maintain a high level of financial flexibility while being shareholder friendly.
As part of the adjustment of the capital structure, the Company historically has repurchased shares of its common stock. During 2022,
the Company repurchased and retired 1.44 million shares, under the stock repurchase program authorized by the Board of Directors in
November 2021. This stock repurchase program authorizes the Company to repurchase up to $1.5 billion or up to 17 million shares
(whichever comes first) between January 2022 and the end of 2024. In addition, in 2022, the Company retired 10 million shares of
common stock that has been held in treasury. These shares were acquired between 2008 and 2014 under the prior stock repurchase
program. After the retirement, the Company continues to hold around 5 million shares of common stock in treasury.
OUTLOOK FOR 2023
The Company's outlook indications for 2023 are mainly based on our customer call-offs, a full year 2023 global LVP growth of around
3%, that we achieve our targeted cost compensation effects and that customer call-off volatility is reduced.
Financial measure
Organic sales growth
Foreign exchange impact on net sales
Adjusted operating margin1)
Tax rate 2)
Operating cash flow3)
Capital expenditures, net % of sales
1) Excluding costs for capacity alignments, anti-trust related matters and other discrete items.
2) Excluding unusual tax items.
3) Excluding unusual items.
Full year indication
Around 15%
Around 1% negative
Around 8.5-9%
Around 32%
Around $900 million
Around 6%
The forward-looking non-U.S. GAAP financial measures above are provided on a non-U.S. GAAP basis. Autoliv has not provided a U.S.
GAAP reconciliation of these measures because items that impact these measures, such as costs related to capacity alignments and
antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable
efforts and Autoliv is unable to determine the probable significance of the unavailable information.
SIGNIFICANT LEGAL MATTERS
See Item 3. Legal Proceedings and Note 17 Contingent Liabilities to the Consolidated Financial Statements in this Annual Report.
35
RESULTS OF OPERATIONS
Consolidated net sales in 2022 increased by 7.4% compared to 2021. Excluding negative currency translation effects of 6.1%, the organic
sales increased (Non-U.S. GAAP measure, see reconciliation table below) by 14.0%.
Sales by Product
Airbags, Steering Wheels and Other2)
Seatbelt products2)
Total
1) Effects from currency translations.
2) Including Corporate and Other sales.
2022
2021
$
$
5,807
3,035
8,842
$
$
5,380
2,850
8,230
Reported
change
7.9%
6.5%
7.4%
Components of Change in Net Sales
Currency effects1)
Organic
(5.9)%
(6.4)%
(6.1)%
14.0%
13.0%
14.0%
The largest contributor to the organic growth within Airbags, Steering Wheels and Other were inflatable curtains and steering wheels,
followed by passenger airbags and side airbags.
The main contributors to the organic growth were Europe and Americas, followed by Asia excluding China, and China.
Sales by Region
Asia
Whereof: China
Japan
Rest of Asia
Americas
Europe
Global
1) Effects from currency translations.
2022
2021
3,521
1,883
686
952
2,967
2,355
8,842
$
$
3,407
1,766
733
908
2,535
2,289
8,230
$
$
Components of Change in Net Sales
Reported
change
Currency effects1)
Organic
3.3%
6.6%
(6.4)%
4.8%
17%
2.9%
7.4%
(7.9)%
(4.4)%
(16)%
(8.6)%
0.5%
(11)%
(6.1)%
11%
11%
9.2%
13%
17%
13%
14%
Autoliv’s global sales increased organically (Non-U.S. GAAP measure, see reconciliation table above) by 14.0% compared to 2021, which
was 6.6 percentage points better than global LVP (according to S&P Global, January 2023). Sales increased organically in all regions.
The 6.6pp outperformance was driven by price increases and new product launches, partly offset by negative geographical mix effects.
Autoliv outperformed LVP by around 15pp in Europe, by around 9pp in Japan, by around 7pp in Americas and by around 3pp in China,
while we underperformed LVP by around 3pp in rest of Asia.
2022 Organic growth1)
Autoliv
Americas
17%
Europe
13%
China
11%
Main growth drivers
GM, Ford,
Stellantis
VW, Stellantis,
Toyota
Toyota, Geely,
BYD
Japan
9.2%
Subaru,
Mitsubishi,
Nissan
Rest of Asia
13%
Global
14%
Tata, Suzuki,
Hyundai
Stellantis,
Toyota, Ford
Main decline drivers
Nissan
1) Non-U.S. GAAP Measure
Nissan,
Mitsubishi,
Volvo
Great Wall,
Hyundai, Mazda
n/a
Nissan, Mitsubishi
Great Wall,
Nissan
36
Condensed Statement of Income
(Dollars in millions, except per share data)
Net Sales
Gross profit
% of sales
S,G&A
% of sales
R,D&E net
% of sales
Other income (expense), net
Operating income
% of sales
Adjusted operating income3)
% of sales
Years ended December 31
2021
2022
$
8,842
1,396
$
8,230
1,511
Change
15.8%
(437)
(4.9)%
(390)
(4.4)%
93
659
7.5%
598
6.8%
(56)
603
29.5%
425
4.85
4.40
18.4%
(432)
(5.2)%
(391)
(4.7)%
(3)
675
8.2%
683
8.3%
(61)
614
28.9%
437
4.96
5.02
7.4%
(7.6)%
(2.6)pp
1.2%
0.3pp
(0.1)%
0.3pp
n/a
(2.3)%
(0.7)pp
(12)%
(1.5)pp
(7.9)%
(1.8)%
0.7pp
(2.7)%
(2.2)%
(12)%
Financial and non-operating items, net
Income before taxes
Tax rate
Net income
Earnings per share, diluted1, 2)
Adjusted earnings per share, diluted1, 2), 3)
1) Assuming dilution and net of treasury shares.
2) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.
3) Non-U.S. GAAP Measure.
Gross Profit
In 2022, Gross profit decreased by $115 million and the gross margin decreased by 2.6 pp compared to 2021. The gross profit decrease
was primarily driven by adverse effects from higher costs for raw material and premium freight and adverse currency translation effects,
partly offset by price increases.
Operating Income
Operating income decreased in 2022 by $16 million, mainly as a consequence of lower gross profit, partly offset by improved Other
income (expense).
Selling, General and Administrative (S,G&A) expenses increased in 2022 by $5 million, or by 1.2%, mainly relating to investments in
personnel and IT and improvement projects, partly offset by positive currency translation effects.
Research, Development & Engineering (R,D&E) expenses, net decreased in 2022 by $1 million, or by 0.1%. In relation to sales, R,D&E
costs declined from 4.7% to 4.4%.
Other income (expense), net decreased by $96 million in 2022 compared to the previous year, mainly due to around $80 million gain from
the sale of a property in Japan and around $20 million from a patent litigation settlement partly offset by around $10 million in capacity
alignment provision for the closure of a plant in South Korea.
Financial and Non-operating Items, net
Financial and non-operating items, net, costs increased by $5 million in 2022 compared to previous year, mainly due to lower interest net
and improved other non-operating items, net.
Income Taxes
The tax rate for 2022 was 29.5%, compared to 28.9% in 2021, mainly due to unfavorable country mix. In addition, discrete tax items, net,
decreased the tax rate this year by 2.5pp. Discrete tax items, net increased the tax rate last year by 0.6pp.
Net Income and Earnings Per Share
Net income in 2022 decreased by $12 million compared to 2021.
Earnings per share, diluted decreased by $0.11 compared to a year earlier, where the main driver was $0.19 from lower operating income,
partly mitigated by $0.04 from financial items.
The weighted average number of shares outstanding assuming dilution in 2022 was 87.2 million compared to 87.7 million in 2021.
37
NON-U.S. GAAP PERFORMANCE MEASURES
In this annual report, the Company sometimes refers to non-U.S. GAAP measures that the Company and securities analysts use in
measuring Autoliv’s performance.
The Company believes that these measures assist management and investors in analyzing trends in the Company’s business for the
reasons given below. Investors should not consider these non-U.S. GAAP measures as substitutes for, but rather as additions to, financial
reporting measures prepared in accordance with U.S. GAAP.
These non-U.S. GAAP measures have been identified, as applicable, in each section of this annual report with tabular presentations
provided below, reconciling them to U.S. GAAP.
It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.
Organic Sales
The Company analyzes its sales trends and performance as changes in “organic sales growth” or “organic sales decline”, because the
Company currently generates approximately three quarters of net sales in currencies other than the reporting currency (i.e. U.S. dollars)
and currency rates have proven to be rather volatile. Organic sales present the increase or decrease in the overall U.S. dollar net sales
on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates.
See tabular reconciliations above, that present changes in “organic sales growth” as reconciled to the change in total U.S. GAAP net
sales.
Trade working capital
Due to the need to optimize cash generation to create value for the Company's shareholders, management focuses on operationally
derived trade working capital as defined in the table below.
The reconciling items used to derive this measure are, by contrast, managed as part of the Company's overall management of cash and
debt, but they are not part of the responsibilities of day-to-day operations management.
Reconciliation of U.S. GAAP measure to “Trade working capital” (dollars in millions)
DECEMBER 31
Receivables, net
Inventories, net
Accounts payable
Trade working capital
Net debt
2022
2021
1,907
969
(1,693)
1,183
$
$
1,699
777
(1,144)
1,332
$
$
As part of efficiently managing the Company’s overall cost of funds, the Company routinely enter into “debt-related derivatives” (DRD) as
part of its debt management.
Creditors and credit rating agencies use net debt adjusted for DRD in their analyses of the Company’s debt and therefore the Company
provides this non-U.S. GAAP measure. See reconciliation table below. DRD are fair value adjustments to the carrying value of the
underlying debt. Also included in the DRD is the unamortized fair value adjustment related to discontinued fair value hedges, which will
be amortized over the remaining life of the debt. By adjusting for DRD, the total financial liability of net debt is disclosed without grossing
debt up with currency or interest fair values.
Reconciliation of U.S. GAAP measure to “Net debt” (dollars in millions)
DECEMBER 31
Short-term debt
Long-term debt
Total debt
Cash and cash equivalents
Debt issuance cost/Debt-related derivatives, net
Net debt
2022
2021
$
$
711
1,054
1,766
(594)
12
1,184
$
$
346
1,662
2,008
(969)
13
1,052
38
Adjusted operating income, adjusted operating margin and adjusted EPS
Adjusted operating margin and adjusted EPS are non-U.S. GAAP measures the Company uses to evaluate its business, because the
Company believes it assists investors and analysts in comparing the Company's performance across reporting periods on a consistent
basis by excluding items that are non-operational or non-recurring in nature (such as costs related to capacity alignments, costs related
to antitrust matters and for EPS unusual tax items) and that the Company does not believe are indicative of its core operating performance
and underlying business trends. Adjusted operating margin and adjusted EPS, as shown in the table below, should be considered in
addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. GAAP, including
operating margin and EPS.
Items affecting comparability
2022
2021
Adjust-
ments1)
Non-
U.S.
GAAP
Adjust-
ments1)
$
(DOLLARS IN MILLIONS, EXCEPT EPS)
Operating income
Operating margin, %
Income before income taxes
Net income attributable to controlling interest
Capital employed
Return on capital employed, % 2)
Return on total equity, % 3)
Earnings per share, diluted 4, 5)
$
1) Represents costs for capacity alignments and antitrust related matters. See table below for a disaggregation of these costs.
2) Operating income and income from equity method investments, relative to average capital employed.
3) Net Income relative to average total equity for the year.
4) Assuming dilution and net of treasury shares.
5) Participating share awards with right to receive dividend equivalents are (under the two-class method) excluded from the EPS calculation.
Reported
659
$
7.5
603
423
3,810
17.5
16.3
4.85
Reported
675
$
8.2
614
435
3,700
18.3
17.1
4.96
(61)
(0.7)
(61)
(39)
(39)
(1.5)
(1.3)
(0.45)
598
6.8
542
384
3,771
16.0
15.0
4.40
8
0.1
8
5
5
0.2
0.2
0.06
$
$
$
$
$
$
Non-
U.S.
GAAP
$
$
683
8.3
622
440
3,705
18.5
17.3
5.02
Items included in Non-U.S. GAAP adjustments
2022
2021
Adjustment
Millions
Adjustment
Per share
Adjustment
Millions
Capacity alignment
Total adjustments to Operating income
Tax on Non-U.S. GAAP adjustments1)
Total adjustments to Net Income
Weighted average number of shares outstanding - diluted2)
Adjustment Return on capital employed
Adjustment Return on capital employed, %
$
$
$
(0.70)
(0.70)
0.25
(0.45)
87.2
(61) $
(61)
22
(39) $
(61)
(1.5)
Adjustment Return on total equity
Adjustment Return on total equity, %
1) The tax is calculated based on the tax laws in the respective jurisdiction(s) of the adjustment(s).
2) Annualized average number of outstanding shares.
(39)
(1.3)
$
$
$
$
$
8
8
(3)
5
8
0.2
5
0.2
Adjustment
Per share
0.10
$
0.10
(0.04)
0.06
$
87.7
39
LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL POSITION
(DOLLARS IN MILLIONS)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
NET CASH PROVIDED BY OPERATING ACTIVITIES
Years ended December 31
2021
2022
713
(485)
(531)
(73)
(375)
969
594
$
$
754
(454)
(469)
(39)
(209)
1,178
969
$
$
Cash flow from operations, together with available financial resources and credit facilities, are expected to be sufficient to fund the
Company’s anticipated working capital requirements, capital expenditures and future dividend payments.
Net cash provided by operating activities was $713 million in 2022 compared to $754 million in 2021. The decrease of $41 million was
mainly due to lower net income excluding the gain on property divestiture, lower depreciation and amortization and adverse effects from
changes in deferred income taxes partly offset by positive working capital effects.
At December 31, 2022, trade working capital (see section Non-U.S. GAAP Performance Measures above) amounted to $1,183 million
corresponding to 13% of net sales compared to $1,332 million and 16% at December 31, 2021.
Receivables outstanding in relation to sales (see Glossary and Definitions for definition) were 20% at December 31, 2022, compared to
20% at December 31, 2021. Factoring agreements did not have any material impact on receivables outstanding for 2022 or 2021.
Inventory in relation to sales (see Glossary and Definitions for definition) was 10% at December 31, 2022, compared to 9% at December
31, 2021.
Payables outstanding in relation to sales (see Glossary and Definitions for definition) were 18% at December 31, 2022 compared to 14%
at December 31, 2021.
NET CASH USED IN INVESTING ACTIVITIES
In 2022 and 2021, net cash used in investing activities amounted to $485 million and $454 million, respectively. The Company's investing
activities primarily consist of investments in property, plant and equipment. Net cash generated by operating activities continued to
sufficiently cover capital expenditures for property, plant and equipment.
The net increase of $31 million compared to previous year was mainly due to increased investments of $126 million, mainly related to
footprint and capacity expansions, partly offset by $95 million in proceeds from the sale of property in Japan. In relation to net sales,
capital expenditures, net was unchanged at 5.5%.
Depreciation and amortization totaled $363 million in 2022 compared to $394 million in 2021.
During the years 2022 and 2021, a majority of the Company's investments were for production capacity to support new product launches
and automation projects for improved efficiency. Major investments were mainly made in China, Europe, and North America.
NET CASH USED IN FINANCING ACTIVITIES
Net cash used in financing activities amounted to $(531) million and $(469) million for the years 2022 and 2021, respectively.
In 2022, the Company paid dividends of $224 million. In 2021, the Company paid dividends of $165 million after reinstating the dividends
in the second quarter of 2021.
INCOME TAXES
The Company has reserves for taxes that may become payable in future periods as a result of tax audits. At any given time, the Company
is undergoing tax audits covering multiple years in several tax jurisdictions. Ultimate outcomes are uncertain but could, in future periods,
have a significant impact on the Company’s cash flows. See discussions of income taxes under Significant Accounting Policies in this
section, Note 2, Summary of Significant Accounting Policies, and Note 5, Income Taxes, to the Consolidated Financial Statements
included herein.
40
PENSION ARRANGEMENTS
The Company has defined benefit pension plans covering nearly half of the U.S. employees. As of December 31, 2021, the main U.S
defined benefit plan was frozen for further benefits. Many of the Company’s non-U.S. employees are also covered by pension
arrangements.
At December 31, 2022, the Company’s net pension liability (i.e. the actual funded status) for its U.S. and non-U.S. plans was $154 million
compared to $197 million at December 31, 2021. The decrease in the total net pension liability in 2022 of $43 million was mainly due to
the increase in discount rates, partly offset by lower performance than expected of the plan assets.
The plans had a net unamortized actuarial loss before tax of $44 million recorded in Accumulated Other Comprehensive (Loss) Income
in the Consolidated Balance Sheets at December 31, 2022, compared to $68 million at December 31, 2021. The decrease in the actuarial
loss was mainly due to settlement and curtailment gains in the non-U.S. plans during 2022. The amortization of the loss is expected to
be $1 million in 2023.
Pension expense associated with the defined benefit plans was $11 million in 2022 and $24 million in 2021, and is expected to be $19
million in 2023. The $13 million decrease in 2022 pension expense was mainly due to the benefit freeze of the U.S. plan and settlement
and curtailment gains in the non-U.S. plans.
The Company contributed $22 million to its defined benefit plans in 2022 and $25 million in 2021. The Company expects to contribute $9
million to these plans in 2023 and is currently projecting a yearly funding at approximately the same level in the subsequent years.
For further information about retirement plans see Note 18, Retirement Plans, to the Consolidated Financial Statements included herein.
SHAREHOLDER RETURNS
In 2022, the Company paid cash dividends of $224 million. The Company paid $165 million in dividends in 2021, after reinstating the
dividend in the second quarter of 2021.
The Company repurchased shares to an amount of $115 million in 2022.
EQUITY
During 2022, total equity decreased by $22 million to $2,626 million as of December 31, 2022. The change was mainly due to dividends
paid of $224 million, share repurchases of $115 million and negative foreign exchange effects of $136 million, partly offset by $425 million
from net income.
TREASURY ACTIVITES
DEBT AND CREDIT ARRANGEMENTS
The Company's total debt as of December 31, 2022 and 2021 was $1,766 million and $2,008 million, respectively. The Company had a
net debt position (see section Non-U.S. GAAP Performance Measures) at December 31, 2022 and 2021 of $1,184 million and $1,052
million, respectively.
In May 2022, the Company refinanced its existing revolving credit facility (RCF) of $1,100 million. The facility, syndicated among 11
banks, matures in May 2027 and has two extension options, each for an additional year. The Company pays a commitment fee on the
undrawn amount of 0.15%, representing 35% of the applicable margin, which is 0.425% (given the Company’s rating of “BBB” from S&P
Global Ratings). Borrowings under the facility are unsecured. As of December 31, 2022, the facility was not utilized.
In June 2020, the Company utilized its SEK 3,000 million facility with Swedish Export Credit Corporation which was signed in May 2020.
The SEK 3,000 million loan mature in 2025 carrying a floating interest rate of 3M STIBOR +1.85%.
In June 2018, the Company priced and issued 5-year notes for a total of €500 million in the Eurobond market. The notes carry a coupon
of 0.75% and matures in 2023.
In 2014, the Company issued and sold long-term debt securities in a U.S. Private Placement pursuant to a Note Purchase and Guaranty
Agreement dated April 23, 2014, by and among Autoliv ASP Inc., the Company and the purchasers listed therein. As of December 31,
2022, $767 million remains outstanding from the 2014 issuance.
The Company has a €3,000 million Euro Medium Term Note Program in place for being able to issue notes to be traded on the Global
Exchange Market of Euronext Dublin. On December 31, 2022, no notes had been issued under this program.
At December 31, 2022, Autoliv’s long-term credit rating from S&P Global Ratings was BBB with stable outlook. The Company aims to
maintain a strong investment grade credit rating.
For additional information about the Company's debt and credit arrangements, see Note 13, Debt and Credit Agreements, to the
Consolidated Financial Statements included herein.
41
FACTORING
During 2022 and 2021, the Company sold receivables and discounted notes related to selected customers. These factoring arrangements
increase cash while reducing accounts receivable and customer risks. At December 31, 2022, the Company had received $174 million
for sold receivables without recourse and discounted notes with a discount cost of $2 million during the year, compared to $159 million
at December 31, 2021 with a discount cost of $2 million recorded in Other non-operating items, net.
NUMBER OF SHARES
At December 31, 2022, 86.2 million shares were outstanding (net of 5.0 million treasury shares), a 1.5% decrease from 87.5 million one
year earlier.
The number of shares outstanding is expected to increase by 0.3 million when all Restricted Stock Units (RSU) and Performance Shares
(PSs) vest and if all stock options (SOs) to key employees are exercised, see Note 16, Stock Incentive Plans, to the Consolidated
Financial Statements included herein.
In 2022, the Company retired 10 million shares of common stock that had been repurchased under a prior stock repurchase program and
since held in treasury. These shares were acquired between 2008 and 2014. During 2022, Autoliv repurchased and retired 1.44 million
shares, equal to $115 million, under the current stock repurchase program authorized by the Board to repurchase up to $1.5 billion, or
17 million common shares (whichever comes first), between January 2022 and the end of 2024.
Contractual Obligations and Commitments
Contractual obligations include debt, sponsored defined benefit plans, lease and purchase obligations that are enforceable and legally
binding on the Company.
For material contractual debt obligations as of December 31, 2022, see Note 13, Debt and Credit Agreements, to the Consolidated
Financial Statements included herein.
Operating lease obligations represent the payment obligations (undiscounted cash flows) under leases classified as operating leases.
Capital lease obligations are not material. See Note 3, Leases, to the Consolidated Financial Statements included herein.
There are no unconditional purchase obligations other than short-term obligations related to inventory, services, tooling, and property,
plant and equipment purchased in the ordinary course of business. Purchase agreements with suppliers entered into in the ordinary
course of business do not generally include fixed quantities. Quantities and delivery dates are established in “call off plans” accessible
electronically for all customers and suppliers involved. Communicated “call off plans” for production material from suppliers are normally
reflected in equivalent commitments from Autoliv customers.
The Company sponsors defined benefit plans that cover a significant portion of the Company's U.S. employees and certain non-U.S.
employees. The pension plans in the U.S. are funded in conformity with the minimum funding requirements of the Pension Protection Act
of 2006. Funding for the Company's pension plans in other countries is based upon plan provisions, actuarial recommendations and/or
statutory requirements. Due to volatility associated with future changes in interest rates and plan asset returns, the Company cannot
predict with reasonable reliability the timing and amounts of future funding requirements. The Company may elect to make contributions
in excess of the minimum funding requirements for the U.S. plans in response to investment performance and changes in interest rates,
or when the Company believes that it is financially advantageous to do so and based on other capital requirements. See Note 18,
Retirement Plans, to the Consolidated Financial Statements included herein.
Risks and Risk Management
The Company is exposed to several categories of risks. They can broadly be categorized as operational risks, strategic risks and financial
risks. Some of the major risks in each category are described below. There are also other risks that could have a material effect on the
Company’s results and financial position, and the description below is not complete but should be read in conjunction with the discussion
of risks described in Item 1A above, which contains a description of the Company's material risks.
As described below, the Company has taken several mitigating actions, applied numerous strategies, adopted policies, and introduced
control and reporting systems to reduce and mitigate these risks. In addition, the Company from time to time identifies and evaluates
emerging or changing risks to the Company in order to ensure that identified risks and related risk management are updated in this fast-
moving environment.
42
Operational Risks
LIGHT VEHICLE PRODUCTION
Around 30% of Autoliv’s costs are fixed; therefore, short-term earnings are dependent on sales volumes and highly dependent on capacity
utilization in the Company’s plants.
Global LVP is an indicator of the Company’s sales development. Ultimately, however, sales are determined by the production levels for
the individual vehicle models for which Autoliv is a supplier (see Dependence on Customers). The Company’s sales are split over several
hundred contracts covering more than 1,300 vehicle models. This moderates the effect of changes in vehicle demand of individual
countries and regions as well as production issues. The risk of fluctuating sales has also been mitigated by Autoliv’s rapid expansion in
Asia and other growth markets, which has reduced the Company’s former high dependence on sales in Europe to a diversified mix with
Europe, the Americas and Asia each accounting for roughly 27%, 33% and 40%, respectively, of the Company's 2022 total sales.
It is the Company’s strategy to reduce the risks associated with fluctuating LVP by using temporary personnel in direct production, when
appropriate. During 2022 and 2021, the level of temporary personnel in relation to total personnel in direct production was 13% and 9%,
respectively. To reduce the potential impact of unusual fluctuations in the production of vehicle models supplied by the Company such
as during the financial crisis in 2008-2009 and the COVID-19 pandemic in 2020-2021 – it is also necessary for the Company to be
prepared to quickly adapt the level of permanent employees as well as fixed cost production capacity.
PRICING PRESSURE
Pricing pressure from customers is an inherent part of the automotive components business. The historical extent of price reductions
varies from year to year and takes the form of one time give backs, reductions in direct sales prices and/or discounted reimbursements
for engineering work.
In response, Autoliv is continuously engaged in efforts to reduce costs and to provide customers added value by developing new products.
Generally, the speed by which these cost-reduction programs generate results will, to a large extent, determine the future profitability of
the Company. The various cost-reduction programs are, to a considerable extent, interrelated. This interrelationship makes it difficult to
isolate the impact of costs on any single program, therefore, the Company monitors key measures such as costs in relation to sales and
productivity.
In 2022, due to unprecedented raw material price increases the Company engaged in extensive negotiations with its customers regarding
price compensation and an increased element of tying pricing to raw material prices.
COMPONENT COSTS AND RAW MATERIAL PRICES
The cost of direct materials was approximately 52% of sales in 2022.
The main raw materials being used as input material for the Company's operations are steel, textiles, plastic and non-ferrous metals.
The Company still sees effects coming from import tariffs and trade barriers across borders. These barriers are impacting the raw material
market and creating pricing and availability uncertainties.
Inflation was significant across raw materials and services in 2022. The Company took action including pricing discussions with customers
and suppliers, competitive sourcing and exploring alternative materials.
LEGAL
The Company is involved from time to time in regulatory, commercial, and contractual legal proceedings that may be significant, and the
Company’s business may suffer as a result of adverse outcomes of current or future legal proceedings. These claims may include, without
limitation, commercial or contractual disputes, including disputes with the Company’s suppliers and customers, intellectual property
matters, alleged violations of laws, rules or regulations, governmental investigations, personal injury claims, product liability claims,
environmental issues, tax and customs matters, and employment matters.
A substantial legal liability or adverse regulatory outcome and the substantial cost to defend the litigation or regulatory proceedings may
have an adverse effect on the Company’s business, operating results, financial condition, cash flows and reputation.
No assurances can be given that such proceedings and claims will not have a material adverse impact on the Company’s profitability and
consolidated financial position, or that reserves or insurance will mitigate such impact. See Note 17, Contingent Liabilities, to the
Consolidated Financial Statements included herein and Item 3 – Legal Proceedings.
43
PRODUCT WARRANTY AND RECALLS
If our products are alleged to fail to perform as expected or are defective, the Company may be exposed to various claims for damages
and compensation. Such claims may result in costs and other losses to the Company even where the relevant product is eventually found
to have functioned properly. If a product (actually or allegedly) fails to perform as expected or is defective, we may face warranty and
recall claims. If such actual or alleged failure or defect results, or is alleged to result, in bodily injury and/or property damage, we may
also face product liability and other claims. The Company may experience material warranty, recall, product or other liability claims or
losses in the future, and the Company may incur significant cost to defend against such claims. The Company may be required to
participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product
liability actions relating to its suppliers. Government safety regulators also have policies and practices with respect to recalls. As suppliers
become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers
are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. In addition, with global
platforms and procedures, vehicle manufacturers are increasingly evaluating our quality performance on a global basis. Any one or more
quality, warranty or other recall issue(s), including the ones affecting few units and/or having a small financial impact, may cause a vehicle
manufacturer to implement measures which may have a severe impact on the Company’s operations, such as a temporary or prolonged
suspension of new orders or the Company’s ability to bid for new business.
In addition, over time, there is a risk that the number of vehicles affected by a failure or defect will increase significantly (as would the
Company’s costs), since our products often use global designs and are increasingly based on or utilize the same or similar parts,
components, or solutions.
Although quality has always been a central focus in the automotive industry, especially for safety products, our customers and regulators
have become increasingly attentive to quality with even less tolerance for any deviations, which has resulted in an increase in the number
of automotive recalls. This trend is likely to continue as automobile manufacturers introduce even stricter quality requirements and
regulating agencies and other authorities increase the level of scrutiny given to vehicle safety issues. A warranty recall or a product liability
claim brought against the Company in excess of the Company’s insurance may have a material adverse effect on its business and/or
financial results. Vehicle manufacturers are also increasingly requiring their external suppliers to guarantee or warrant their products and
bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the
Company responsible for some or all of the repair or replacement costs of defective products under new vehicle warranties when the
product supplied did not perform as represented. Additionally, a customer may not allow us to bid for expiring or new business until certain
remedial steps have been taken. Accordingly, the future costs of warranty claims by the Company’s customers may be material.
The Company’s warranty reserves are based upon management’s best estimates of amounts necessary to settle future and existing
claims. Management regularly evaluates the appropriateness of these reserves and adjusts them when we believe it is appropriate to do
so. However, the final amounts determined to be due could differ materially from the Company’s recorded estimates. We believe our
established reserves are adequate to cover potential warranty settlements typically seen in our business.
The Company’s strategy is to follow a stringent procedure when developing new products and technologies and to apply a proactive
“zero-defect” quality policy (see section Quality Management). In addition, the Company maintains a program of insurance, which may
include commercial insurance, self-insurance, or a combination of both approaches, for potential recall and product liability claims in
amounts and on terms that it believes are reasonable and prudent based on our prior claims experience. However, such insurance may
not be sufficient to cover every possible claim that can arise in the Company’s businesses, now or in the future, or may not always will be
available should the Company, now or in the future, wish to extend, renew, increase or otherwise adjust such insurance. In recent years,
the cost of recall and product liability insurance as well as the Company’s level of self-insurance and deductibles has increased.
Management’s decision regarding what insurance to procure is also impacted by the cost for such insurance. As a result, the Company
may face material losses in excess of the insurance coverage procured. A substantial recall or liability in excess of coverage levels could
therefore have a material adverse effect on the Company.
ENVIRONMENTAL
Most of the Company’s manufacturing processes consist of the assembly of components. As a result, the environmental impact from the
Company’s plants is generally modest. While the Company’s businesses from time to time are subject to environmental investigations,
there are no material environmental-related cases pending against the Company. Therefore, Autoliv does not incur (or expect to incur)
any material costs or capital expenditures associated with maintaining facilities compliant with U.S. or non-U.S. environmental
requirements. To reduce environmental risk, the Company has implemented an environmental management system in all plants globally
and has adopted an environmental policy (see corporate website www.autoliv.com).
Autoliv is subject to a number of environmental and occupational health and safety laws and regulations. Such requirements are complex
and are generally becoming more stringent over time. There can be no assurance that these requirements will not change in the future,
or that the Company will at all times be in compliance with all such requirements and regulations, despite its intention to be. The Company
may also find itself subject, possibly due to changes in legislation or other regulation, to environmental liabilities based on the activities
of its predecessor entities or of businesses acquired. Such liability could be based on activities which are not related to the Company’s
current activities.
TRADE
Autoliv is subject to various international trade regulations and regimes and changes in these regimes could lead to increased compliance
costs and costs of raw materials and other components. In addition, political conditions leading to trade conflicts and the imposition of
tariffs or other trade barriers between countries in which the Company does business could increase its costs of doing business.
44
Strategic Risks
REGULATIONS
In addition to vehicle production, the Company’s market is driven by the safety content per vehicle, which is affected by new regulations
and new vehicle rating programs, in addition to consumer demand for new safety technologies.
The most important regulations are the seatbelt installation laws that exist in all vehicle-producing countries. Many countries also have
strict enforcement laws on the wearing of seatbelts. Another significant vehicle safety regulation is the U.S. federal law that, since 1997,
requires frontal airbags for both the driver and the front-seat passenger in all new vehicles sold in the U.S.
In 2007, the U.S. adopted new regulations for head impact and enhanced thorax protection in side impact crashes, which now have been
fully phased-in. China introduced a vehicle rating program in 2006 and during the past 16 years this China NCAP, together with the
additional Chinese rating program, CIASI, from 2017, drive Chinese vehicle safety performance and safety content with regards to
crashworthiness and occupant protection. Latin America introduced a basic rating program in 2010 followed by ASEAN NCAP in
Southeast Asia in 2011, and Global NCAP is rating vehicles sold in significant emerging markets. Several countries, e.g., Malaysia and
Thailand, are increasingly adopting the UN Regulations regarding vehicle safety under the UN 1958 agreement, and Malaysia started a
world first motorcycle safety rating program in 2021.
The United States upgraded its vehicle rating program, US NCAP, in 2010, which now is in the process of being updated by the U.S.
National Highway Traffic Safety Administration. Europe upgraded the Euro NCAP rating system during 2018, and is now completing a
new upgrade, intended to be fully implemented by 2025. Japan and South Korea are continuously upgrading their respective vehicle
rating programs, JNCAP and KNCAP respectively. India requires frontal airbags for the driver from July 2019, and passenger airbags
from 2021 for all new passenger vehicles (M1), moreover has announced that side airbags shall become mandatory in 2023. In addition,
India has announced that its Bharat NCAP shall start in 2023.
Vehicles with automated driving systems (ADS) are expected to provide additional opportunities through integration of protective safety
systems with ADAS technologies, as well as new vehicle interior layouts and seating configurations. This development is likely to become
subject to legal requirements.
There are also other plans for improved automotive safety through new or changed regulations, both in these countries and others that
could affect the Company’s market. However, there can be no assurance that changes in regulations will not adversely affect the demand
for the Company’s products or, at least, result in a slower increase in the demand for them.
DEPENDENCE ON CUSTOMERS
As a result of this highly consolidated market, the Company is dependent on a relatively small number of customers with strong purchasing
power. In 2022, the five largest vehicle manufacturers accounted for around 48% of global LVP and the ten largest manufacturers
accounted for around 70% of global LVP. In 2022, the Company’s five largest customers accounted for around 49% of consolidated
sales and the ten largest customers accounted for around 80% of consolidated sales. The Company's largest customer contract
accounted for around 2% of consolidated sales in 2022.
Customer
Renault/Nissan/Mitsubishi
Stellantis
VW
Toyota
Honda
Ford
Hyundai
General Motors
Major EV maker
BMW
1) Source: S&P Global
% of Autoliv sales
% of Global LVP1)
11%
11%
10%
9%
8%
8%
7%
7%
5%
4%
8%
7%
11%
13%
5%
4%
9%
6%
2%
3%
Although business with every major customer is split into at least several contracts (usually one contract per vehicle platform) and although
the customer base has become more balanced and diversified as a result of the Company's significant expansion in China and other
rapidly-growing markets, the loss of all business from a major customer (whether by a cancellation of existing contracts or not awarding
Autoliv new business), the consolidation of one or more major customers or a bankruptcy of a major customer could have a material
adverse effect on the Company. In addition, a quality issue, shortcomings in the Company's service to a customer or uncompetitive prices
or products could result in the customer not awarding the Company new business, which will gradually have a negative impact on the
Company's sales when current contracts start to expire.
See also Note 20, Segment Information, to the Consolidated Financial Statements included herein.
45
CUSTOMER PAYMENT RISK
Another risk related to the Company's customers is the risk that one or more of its customers will be unable to pay their invoices that
become due. The Company seeks to limit this customer payment risk by invoicing its major customers through their local subsidiaries in
each country, even for global contracts. By invoicing this way, the Company attempts to avoid having the receivables with a multinational
customer group exposed to the risk that a bankruptcy or similar event in one country would put all receivables with such customer group
at risk. In each country, the Company also monitors invoices becoming overdue.
Even so, if a major customer is unable to fulfill its payment obligations, it is likely that the Company would be forced to record a substantial
loss on such receivables.
DEPENDENCE ON SUPPLIERS
The Company relies on internal and/or external suppliers in order to meet its delivery commitments to the customers. In some cases,
suppliers are dictated by the customers. The Company's supply chain organization continually reviews sourcing risks and actively works
on mitigating related supply chain risks.
The Company’s ambition is to maintain an optimal number of suppliers in all significant component technologies.
NEW COMPETITION
Increased competition may result in price reductions, reduced margins and the Company's inability to gain or hold market share. OEMs
rigorously evaluate suppliers on the basis of product quality, price, reliability and delivery as well as engineering capabilities, technical
expertise, product innovation, financial viability, application of lean principles, operational flexibility, customer service, and overall
management. To maintain the Company's competitiveness and position as a market leader, it is important to focus on all of these aspects
of supplier evaluation and selection.
Although the market for occupant restraint systems has undergone a significant consolidation during the past ten years, the passive
safety market remains very competitive. It cannot be excluded that additional competitors, both global and local, will seek to enter the
market or grow beyond their current Keiretsu group or traditional customer base. Particularly in China, South Korea, and Japan there are
numerous small domestic competitors often supplying just one OEM group.
PATENTS AND PROPRIETARY TECHNOLOGY
The Company’s strategy is to protect its innovations with patents, and to vigorously protect and defend its patents, trademarks, and know-
how against infringement and unauthorized use. At the end of 2022, the Company held more than 6,600 patents and patents applications.
These patents expire on various dates during the period from 2023 to 2042. The expiration of any single patent is not expected to have
a material adverse effect on the Company’s financial results.
Although the Company believes that its products and technology do not infringe upon the proprietary rights of others, there can be no
assurance that third parties will not assert infringement claims against the Company in the future. Also, there can be no assurance that
any patent now owned by the Company will afford protection against competitors that develop similar technology. As the Company
continues to expand its products and expand into new businesses, it will increase its exposure to intellectual property claims.
Financial Risks
The Company is exposed to financial risks through its operations. To reduce the financial risks and to take advantage of economies of
scale, the Company has a central treasury department supporting operations and management. The treasury department handles
external financial transactions and functions as the Company’s in-house bank for its subsidiaries.
The Board of Directors monitors compliance with the financial risk policy on an on-going basis. For information about specific financial
risks, see Item 7A – Quantitative and Qualitative Disclosures about Market Risk.
46
Significant Accounting Policies and Critical Accounting Estimates
NEW ACCOUNTING STANDARDS
The Company has considered all applicable recently issued accounting standards. The Company has summarized in Note 2, Summary
of Significant Accounting Policies, to the Consolidated Financial Statements each of the recently issued accounting standards and stated
the impact or whether management is continuing to assess the impact.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company’s significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, to the Consolidated
Financial Statements included herein. Senior management has discussed the development and selection of critical accounting estimates
and disclosures with the Audit Committee of the Board of Directors. The application of accounting policies necessarily requires judgments
and the use of estimates by a Company’s management. Actual results could differ from these estimates. By their nature, these judgments
are subject to an inherent degree of uncertainty. These judgments are based on the Company's historical experience, terms of existing
contracts, and management’s evaluation of trends in the industry, information provided by the Company's customers and information
available from other outside sources, as appropriate. The Company considers an accounting estimate to be critical if:
•
•
It requires management to make assumptions about matters that were uncertain at the time of the estimate, and
Changes in the estimate or different estimates that could have been selected would have had a material impact on the
Company's financial condition or results of operations. The accounting estimates that require management’s most significant
judgments include the estimation of variable considerations, assessment of recoverability of goodwill and intangible assets,
estimation of pension benefit obligations based on actuarial assumptions, estimation of accruals for warranty and recalls,
restructuring charges, uncertain tax positions, valuation allowances and legal proceedings.
The Company has summarized its critical accounting policies requiring judgment below. These might change over time based on the
current facts and circumstances.
REVENUE RECOGNITION
In accordance with ASC 606, Revenue from Contracts with Customers, revenue is measured based on consideration specified in a
contract with a customer, adjusted for any variable consideration (i.e. price concessions) and estimated at contract inception. The
estimated amount of variable consideration that will be received by the Company are based on historical experience and trends,
management´s understanding of the status of negotiations with customers and anticipated future pricing strategies. The Company
recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.
In addition, from time to time, the Company may make payments to customers in connection with ongoing and future business. These
payments to customers are generally recognized as a reduction to revenue at the time of the commitment to make these payments unless
the payment concession can be clearly linked to the future business award. If the payments are capitalized, the amounts are amortized
to revenue as the related goods are transferred.
INVENTORY RESERVES
Inventories are evaluated based on individual or, in some cases, groups of inventory items. Reserves are established to reduce the value
of inventories to the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of
business, less reasonably predictable costs of completion, disposal and transportation. Excess inventories are quantities of items that
exceed anticipated sales or usage for a reasonable period. The Company has guidelines for calculating provisions for excess inventories
based on the number of months of inventories on hand compared to anticipated sales or usage. Management uses its judgment to
forecast sales or usage and to determine what constitutes a reasonable period.
There can be no assurance that the amount ultimately realized for inventories will not be materially different than that assumed in the
calculation of the reserves.
GOODWILL
The Company performs an annual impairment test of goodwill in the fourth quarter of each year following the Company’s annual
forecasting process. As of October 2022 the Company concluded that there were no impairments of goodwill. For further information, see
Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements.
47
RECALL PROVISIONS AND WARRANTY OBLIGATIONS
The Company records liabilities for product recalls when probable claims are identified and when it is possible to reasonably estimate
costs. Recall costs are costs incurred when the customer decides to formally recall a product due to a known or suspected safety concern.
Product recall costs are estimated based on the expected cost of replacing the product and the customer´s cost of carrying out the recall,
which is affected by the number of vehicles subject to recall and the cost of labor and materials to remove and replace the defective
product. The Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a combination of
both approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent
based on our prior claims experience. The Company’s insurance policies generally include coverage of the costs of a recall, although
costs related to replacement parts are generally not covered. Actual costs incurred could differ from the amounts estimated, requiring
adjustments to these reserves in future periods. It is possible that changes in our assumptions or future product recall issues could
materially affect our financial position, results of operations or cash flows.
Estimating warranty obligations requires the Company to forecast the resolution of existing claims and expected future claims on products
sold. The Company bases the estimate on historical trends of units sold and payment amounts, combined with our current understanding
of the status of existing claims and discussions with our customers. These estimates are re-evaluated on an ongoing basis. Actual
warranty obligations could differ from the amounts estimated requiring adjustments to existing reserves in future periods. Due to the
uncertainty and potential volatility of the factors contributing to developing these estimates, changes in our assumptions could materially
affect our results of operations.
RESTRUCTURING PROVISIONS
The Company defines restructuring expense to include costs directly associated with capacity alignment programs, plus exit or disposal
activities. Estimates of restructuring charges are based on information available at the time such charges are recorded. In general,
management anticipates that restructuring activities will be completed within a time frame such that significant changes to the exit plan
are not likely.
Due to inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts
initially estimated.
DEFINED BENEFIT PENSION PLANS
The Company has defined benefit pension plans in thirteen countries. The most significant plans exist in the U.S. These U.S. plans
represent approximately 54% of the Company’s total pension benefit obligation. See Note 18, Retirement Plans to the Consolidated
Financial Statements included herein.
The Company, in consultation with its actuarial advisors, determines certain key assumptions to be used in calculating the projected
benefit obligation and annual pension expense. For the U.S. plans, the assumptions used for calculating the 2022 pension expense were
a discount rate of 2.77% and an expected long-term rate of return on plan assets of 5.05%.
The assumptions used in calculating the U.S. benefit obligations disclosed as of December 31, 2022 were a discount rate of 5.41%. The
discount rate for the U.S. plans has been set based on the rates of return of high-quality fixed-income investments currently available at
the measurement date and are expected to be available during the period the benefits will be paid. The expected rate of long-term return
on plan assets are determined based on a number of factors and must take into account long-term expectations and reflect the financial
environment in the respective local markets. At December 31, 2022, 23% of the U.S. plan assets were invested in equities, which is below
the target of 40%.
The table below illustrates the sensitivity of the U.S. net periodic benefit cost and projected U.S. benefit obligation to a 1pp change in the
discount rate and decrease in return on plan assets for the U.S. plans (in millions). The use of actuarial assumptions is an area of
management’s estimate.
Assumption
(in millions)
Discount rate
Discount rate
Return on plan assets
2022 net
periodic
benefit
cost increase
(decrease)
2022 projected
benefit
obligation
increase
(decrease)
$
2
(1)
3
(18)
21
n/a
Change
1pp increase
1pp decrease
1pp decrease
$
48
INCOME TAXES
Significant judgment is required in determining the worldwide provision for income taxes. In the ordinary course of a global business,
there are many transactions for which the ultimate tax outcome is uncertain. Many of these uncertainties arise as a consequence of
intercompany transactions.
Although the Company believes that its tax return positions are supportable, no assurance can be given that the final outcome of these
matters will not be materially different than that which is reflected in the historical income tax provisions and accruals. Such differences
could have a material effect on the income tax provisions or benefits in the periods in which such determinations are made. See also the
discussion of reserves for uncertain tax positions, and the determinations of valuation allowances on the Company's deferred tax assets
in Note 5, Income Taxes, to the Consolidated Financial Statements.
CONTINGENT LIABILITIES
Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters
that arise in the ordinary course of its business activities with respect to commercial, product liability or other matters.
The Company diligently defends itself in such matters and, in addition, carries insurance coverage to the extent reasonably available
against insurable risks.
The Company records liabilities for claims, lawsuits and proceedings when they are probable and it is possible to reasonably estimate
the cost of such liabilities. Legal costs expected to be incurred in connection with a loss contingency are expensed as such costs are
incurred.
A loss contingency is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and
the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued management evaluates, among
other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.
Changes in these factors could materially impact the Company's consolidated financial statements.
49
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to several markets risks in the ordinary course of business including risks related to currencies, interest rates,
financing, capital structure and credit ratings and impairment. See also Note 2, Summary of Significant Accounting Policies to the
Consolidated Financial Statements included with this Annual Report for information about how these risks are quantified.
CURRENCY RISKS
1. Transaction Exposure and Revaluation effects
Transaction exposure arises because the cost of a product originates in one currency and the product is sold in another currency.
Revaluation effects come from valuation of assets denominated in other currencies than the reporting currency of each unit.
The Company's net transaction exposure in 2022 was approximately $2.1 billion. The four largest net exposures are U.S. dollars (sell)
against the Mexican Peso, U.S. dollars (sell) against Canadian dollar, Romanian Lei (buy) against the Euro and U.S. dollars (buy) against
Korean Won. Together these currencies accounted for approximately 50% of the Company’s net currency transaction exposure.
Since the Company can only effectively hedge these currency flows in the short term, periodic hedging would only reduce the impact of
fluctuations temporarily. Over time, periodic hedging would postpone but not reduce the impact of fluctuations. In addition, the net
exposure is limited to only around one quarter of net sales and is made up of around 50 different currency pairs with exposures of more
than $1 million each. The Company generally does not hedge these flows.
2. Translation Exposure in the Income Statement and Balance Sheet
Another effect of exchange rate fluctuations arises when the income statements of non-U.S. subsidiaries are translated into U.S. dollars.
Outside the U.S., the Company’s most significant currency is the Euro. The Company estimates that 26% of its consolidated net sales
will be denominated in Euro or other European currencies during 2023, while 21% of its consolidated net sales are estimated to be
denominated in U.S. dollars.
The Company estimates that a 1% increase in the value of the U.S. dollar versus European currencies will decrease reported U.S. dollar
annual net sales in 2023 by $27 million or by 0.3%, while operating income for 2023 will decline by approximately 0.3% or by about $2
million, assuming reported corporate average margin.
The Company’s policy is not to hedge this type of translation exposure.
A translation exposure also arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars. The policy of the
Company is to finance major subsidiaries in the country’s local currency and to minimize the amounts held by subsidiaries in foreign
currency accounts.
Consequently, changes in currency rates relating to funding and foreign currency accounts normally have a small impact on the
Company’s income. In 2022 and 2021, the impact from the Company’s currency exposure were not material.
INTEREST RATE RISK
Interest rate risk refers to the risk that interest rate changes will affect the Company’s borrowing costs. The Company's interest rate risk
policy states that the average interest rate fixing period should be minimum 1 year and maximum 5 years.
At December 31, 2022, the average interest rate fixing period for the Company’s outstanding debt was 1.6 years, and at December 31,
2021, the average interest rate fixing period for the Company’s outstanding debt was 2.1 years.
Given the Company’s current capital structure, the Company estimates that a one-percentage point interest rate increase would decrease
net interest expense by approximately $4 million in 2023. This is based on the capital structure at the end of 2022 when the gross fixed-
rate debt was $767 million while the Company had a net debt position of $1,184 million (see section Non-U.S. GAAP Performance
Measures). Thus, a change in the interest rate environment would not have a notable impact on the Company’s interest expense. As of
December 31, 2022, the Company had $594 million in cash and cash equivalents of which the majority were subject to a floating interest
rate. Taking the cash and cash equivalents of $594 million (which is primarily subject to floating interest rates) minus the portion of debt
carrying floating interest rates, the Company estimated that a one-percentage point interest rate increase would decrease net interest
expense by approximately $4 million, both in 2023 and 2024.
Fixed interest rate debt is achieved both by issuing fixed rate notes and through interest rate swaps. The most notable debt carrying fixed
interest rates is the $767 million U.S. private placement notes issued in 2014. For additional information, see Note 13, Debt and Credit
Agreements, to the Consolidated Financial Statements included herein.
50
FINANCING RISK
Financing risk refers to the risk that it will be difficult and/or expensive to finance new or existing debt to meet the financing needs of the
Autoliv Group.
The management of the financing risk ensures access to funding in a cost-efficient way by diversification of funding sources and debt
maturities.
Autoliv has diversified its long-term funding sources by issuing notes in the USPP and Eurobond markets, and by signing a long-term
credit agreement with 11 banks. The Company also has a lending facility with the Swedish Export Credit Corporation.
The Company has Medium Term Note Program in place for being able to issue notes to be traded on the Global Exchange Market of
Euronext Dublin. The Company also has established programs for short-term issuance of commercial papers in the Swedish and US
markets and short-term credit agreements, e.g. bank overdrafts and money market loans.
To ensure diversification of debt maturities, no more than 20% of the Autoliv Group’s total debt may mature the next 12 months, unless
such maturities (in excess of 20%) are covered by unutilized committed credit facilities with maturity in excess of 12 months. Per
December 31, 2022, 40% corresponding to $711 million of the Autoliv Group’s total debt had maturity less than 12 months. This amount
was fully covered by unutilized committed credit facilities with maturity in excess of 12 months.
CAPITAL STRUCTURE AND CREDIT RATING
The overall objective relating to Autoliv’s target capital structure and credit rating is to provide the Company with sufficient flexibility to
manage the inherent risks and cyclicality in Autoliv’s business and allow the Company to realize strategic opportunities and fund growth
initiatives while creating shareholder value.
Autoliv is committed to maintain a “strong investment grade credit rating." As of December 31, 2022, the Company had a long-term credit
rating from S&P Global Ratings (“S&P”) of BBB.
The amount of interest-bearing debt held impacts the future financial flexibility as well as the credit rating. Management uses the non-
U.S. GAAP measure “Leverage Ratio” to analyze the amount of debt the Company can incur under its debt policy. Management believes
that this policy also provides guidance to credit and equity investors regarding the extent to which the Company would be prepared to
leverage its operations. Autoliv’s long-term target for the leverage ratio (sum of net debt plus pension liabilities divided by EBITDA) is
1.0x with the aim to operate within the range of 0.5x to 1.5x. At December 31, 2022, the leverage ratio (non-U.S. GAAP measure, see
calculation table below) was 1.4x. For details and calculation of leverage ratio, refer to the table below.
CALCULATION OF LEVERAGE RATIO (DOLLARS IN MILLIONS)
December 31,
2022
2021
Net debt1)
Pension liabilities
Debt per the Policy
$
1,184
154
1,338
Net income2)
Income taxes2)
Interest expense, net2,3)
Other non-operating items, net2)
Income from equity method investments2)
Depreciation and amortization of intangibles2)
Capacity alignments costs and antitrust related matters2)
EBITDA per the Policy (Adjusted EBITDA)
Leverage ratio
1) Net debt is short- and long-term debt and debt-related derivatives less cash and cash equivalents (non-U.S. GAAP measure).
2) Latest 12 months.
3) Interest expense, net is interest expense including cost for extinguishment of debt, if any, less interest income.
425
178
54
5
(3)
363
(61)
961
1.4
$
$
$
1,052
197
1,248
437
177
57
7
(3)
394
8
1,077
1.2
51
CREDIT RISK IN FINANCIAL MARKETS
Credit risk refers to the risk of a financial counterparty being unable to fulfill an agreed-upon obligation.
In the Company’s financial operations, credit risk arises when cash is deposited with banks and when entering into forward exchange
agreements, swap contracts or other financial instruments.
The policy of the Company is to work with banks that have a high credit rating and that participate in Autoliv’s financing.
To further reduce credit risk, deposits and financial instruments can only be entered into with core banks up to a calculated risk amount
of $200 million per bank for banks rated A- or above and up to $50 million for banks rated BBB+. In addition, deposits can be made in
U.S. and Swedish government short-term notes and certain AAA rated money market funds, as approved by the Company’s Board of
Directors. At December 31, 2022, the Company held $237 million in AAA rated money market funds.
IMPAIRMENT RISK
Impairment risk refers to the risk that the Company will write down a material amount of its goodwill of close to $1.4 billion as of December
31, 2022. This risk is assessed at least annually in the fourth quarter each year when the Company performs its impairment testing.
In 2022, the Company performed a quantitative impairment testing by calculating the fair value of its goodwill. The estimated fair market
value of goodwill is determined by the discounted cash flow method. The Company discounts projected operating cash flows using its
weighted average cost of capital. Estimating the fair value requires the Company to make judgments about appropriate discount rates,
growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows.
It has been concluded that presently the Company is not “at risk” of failing the goodwill impairment test. However, there can be no
assurance that goodwill will not be impaired due to future significant declines in LVP, due to the Company's technologies or products
becoming obsolete or for any other reason. The Company could also acquire companies where goodwill could turn out to be less resilient
to deteriorations in external conditions. See also discussion under Goodwill and Intangible Assets in Note 2, Summary of Significant
Accounting Policies, and Note 10, Goodwill and Intangible Assets, to the Consolidated Financial Statements included herein.
Item 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheets of Autoliv as of December 31, 2022 and 2021 and the Consolidated Statements of Income,
Comprehensive Income, Cash Flows and Total Equity for each of the three years in the period ended December 31, 2022, the Notes to
the Consolidated Financial Statements, and the Reports of the Independent Registered Public Accounting Firm are included below.
All of the schedules specified under Regulation S-X to be provided by Autoliv have been omitted either because they are not applicable,
are not required or the information required is included in the financial statements or notes thereto.
52
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Autoliv, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Autoliv, Inc. (the Company) as of December 31, 2022 and 2021, the
related consolidated statements of income, comprehensive income, total equity and cash flows for each of the three years in the period
ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and
2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our
report dated February 16, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to
the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures
to which they relate.
Description of the
Matter
Revenue recognition – Variable consideration related to price concessions
As discussed in Note 2 to the consolidated financial statements, the Company measures revenue based on
consideration specified in a contract with a customer, adjusted for any variable consideration. Variability in
consideration typically results from price concessions. The estimated amount of variable consideration that will be
received by the Company related to price concessions is based on assumptions that include historical experience
and trends, management’s assessment of the probable outcome of its negotiations with customers and anticipated
future pricing strategies. Estimating variable consideration to be received related to price concessions requires
significant judgments by management that affect the amount of revenue recorded in the financial statements.
Auditing the amount of variable consideration expected to be received related to price concessions was complex
because of the uncertainty inherent in the factors discussed above that management uses in its assumptions and
calculations.
How We
Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls
related to variable consideration, including controls related to management’s review of ongoing negotiations with
customers.
To test the estimated amount of variable consideration expected to be received related to price concessions, our
audit procedures included, among others, evaluating the Company’s estimation methodology and testing the
significant factors used in the calculations, as discussed above. These procedures included obtaining information
from management and sales department representatives who were responsible for negotiations with customers to
assess the reasonableness of assumptions related to variable considerations relative to current negotiations. We
evaluated the Company’s ability to estimate by comparing actual results to previous estimates and judgments
made by management. We also performed journal entry testing focused on unusual and manual entries affecting
revenue and on entries that could be indicative of price concessions that may not have been considered in the
Company’s assumptions and calculations.
53
Description of the
Matter
Product recall liabilities
As discussed in Notes 2 and 12 to the consolidated financial statements, the Company is exposed to product
liability claims in the event its products fail to perform as represented and such failure results, or is alleged to result,
in bodily injury, and/or property damage or other loss. The Company records liabilities for product recalls when
probable claims are identified and when it is possible to reasonably estimate costs. Actual costs incurred could
differ from the amounts estimated, requiring adjustments to these reserves in future periods. Provisions for product
recalls are estimated based on the expected cost of replacing the product and the customer’s cost of carrying out
the recall, which is affected by the number of vehicles subject to recall and the cost of labor and materials to
remove and replace the defective product.
Auditing the product recall liabilities was complex due to the uncertainty inherent in the assumptions and estimates
management uses to calculate these liability balances. These significant assumptions and estimates include the
nature, likelihood, timing, and anticipated cost of known and potential claims.
How We
Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls
over the Company’s product recall process, including controls related to management’s review of the estimation
calculations and significant assumptions discussed above.
To test product recall liabilities, our audit procedures included, among others, evaluating the Company’s estimation
methodology and testing the significant assumptions discussed above. We obtained information from Company
personnel who are responsible for monitoring the status of product recalls with customers to assess the
reasonableness of assumptions used. We evaluated the Company’s ability to estimate by comparing actual results
to previous estimates and judgments made by management. We also obtained letters from the Company’s external
legal counsel addressing material claims against the Company, if any, and examined relevant third-party
automotive safety regulatory information to identify potential unrecorded product recall liabilities.
/s/ Ernst & Young AB
We have served as the Company´s auditor since 1984.
Stockholm, Sweden
February 16, 2023
54
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Autoliv, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Autoliv, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
(the COSO criteria). In our opinion, Autoliv, Inc. (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of income,
comprehensive income, total equity and cash flows for each of the three years in the period ended December 31, 2022, and the related
notes and our report dated February 16, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our
audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young AB
Stockholm, Sweden
February 16, 2023
55
Consolidated Statements of Income
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Research, development and engineering expenses, net
Amortization of intangibles
Other income (expense), net
Operating income
Income from equity method investment
Interest income
Interest expense
Other non-operating items, net
Income before income taxes
Income tax expense
Net income
Less: Net income attributable to non-controlling interest
Net income attributable to controlling interest
Earnings per share - basic1)
Earnings per share - diluted 1)
Weighted average number of shares outstanding, net of
treasury shares (in millions)
Weighted average number of shares outstanding, assuming
dilution and net of treasury shares (in millions)
Cash dividend per share - declared
Cash dividend per share - paid
See Notes to the Consolidated Financial Statements.
Note 20 $
Note 10
Notes 11, 17
Note 8
Note 13
Note 5
$
$
$
$
$
Years ended December 31
2021
2020
2022
8,842
(7,446)
1,396
(437)
(390)
(3)
93
659
3
6
(60)
(5)
603
(178)
425
2
423
4.86
4.85
87.1
87.2
2.58
2.58
$
$
$
$
$
$
8,230
(6,719)
1,511
(432)
(391)
(10)
(3)
675
3
4
(60)
(7)
614
(177)
437
2
435
4.97
4.96
87.5
87.7
1.88
1.88
$
$
$
$
$
$
7,447
(6,201)
1,247
(389)
(376)
(10)
(90)
382
2
5
(73)
(25)
291
(103)
188
1
187
2.14
2.14
87.3
87.5
—
0.62
1) Participating share awards with the right to receive dividend equivalents are (under the two class method) excluded from the earnings per share
calculation (see Note 21 in this Annual Report).
56
Consolidated Statements of Comprehensive Income
(DOLLARS IN MILLIONS)
Net income
Other comprehensive (loss) income before tax:
Change in cumulative translation adjustments
Net change in unrealized components of defined benefit plans
Other comprehensive (loss) income, before tax
Tax effect allocated to other comprehensive (loss) income
Other comprehensive (loss) income, net of tax
Comprehensive income
Less: Comprehensive income attributable to non-controlling interest
Comprehensive income attributable to controlling interest
See Notes to the Consolidated Financial Statements.
Years ended December 31
2021
2020
2022
$
425
$
437
$
(136)
29
(108)
(9)
(116)
309
0
309
$
(86)
37
(49)
(11)
(60)
377
2
375
$
$
188
97
8
104
(2)
103
291
2
289
57
Consolidated Balance Sheets
(DOLLARS AND SHARES IN MILLIONS)
Assets
Cash and cash equivalents
Receivables, net
Inventories, net
Income tax receivable
Prepaid expenses and accrued income
Related party receivable
Other current assets
Total current assets
Property, plant and equipment, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Other non-current assets
Total assets
Liabilities and equity
Short-term debt
Accounts payable
Accrued expenses
Related party liabilities
Income tax payable
Operating lease liabilities, current
Other current liabilities
Total current liabilities
Long-term debt
Pension liability
Operating lease liabilities, non-current
Other non-current liabilities
Total non-current liabilities
Commitments and contingencies
Common stock1)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock (5.0 and 15.3 million shares, respectively)
Total controlling interest’s equity
Non-controlling interest
Total equity
Total liabilities and equity
At December 31
2022
2021
594
1,907
969
55
160
—
29
3,714
1,960
160
1,375
7
502
7,717
711
1,693
915
—
75
39
207
3,642
1,054
154
119
121
1,450
91
1,113
2,310
(522)
(379)
2,613
13
2,626
7,717
$
$
969
1,699
777
45
164
1
20
3,675
1,855
132
1,387
8
481
7,537
346
1,129
987
24
81
38
216
2,821
1,662
197
94
115
2,067
103
1,329
2,742
(408)
(1,133)
2,633
15
2,648
7,537
$
Note 6
Note 7
Note 19
Note 12, 17
Note 9
Note 3
Note 10
Note 10
Note 8, 17
Note 13
Notes 11, 12
Note 19
Note 3
Note 13
Note 18
Note 3
Note 17
Note 14
$
1) Number of shares: 350 million authorized for both years, 91.2 and 102.8 million issued, and 86.2 and 87.5 million outstanding, net of treasury shares,
for 2022 and 2021, respectively.
See Notes to the Consolidated Financial Statements.
58
Consolidated Statements of Cash Flows
(DOLLARS IN MILLIONS)
Operating activities
Net income
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
Gain on divestiture of property
Deferred income taxes
Undistributed earnings from equity method investments, net of dividends
Other, net
Net change in operating working capital:
Receivables and other assets, gross
Inventories, gross
Accounts payable and accrued expenses
Income taxes
Net cash provided by operating activities
Investing activities
Expenditures for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
Financing activities
Repayment of short-term part of long-term debt
Net increase (decrease) in other short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Dividends paid to non-controlling interest
Dividends paid
Stock repurchases
Common stock options exercised
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
See Notes to the Consolidated Financial Statements.
Years ended December 31
2021
2020
2022
$
425
$
437
$
363
(80)
(40)
(1)
(13)
(297)
(243)
596
2
713
(585)
101
(485)
(302)
167
—
(55)
(2)
(224)
(115)
0
(531)
(73)
(375)
969
594
$
394
—
(20)
(3)
8
283
(19)
(314)
(12)
754
(458)
4
(454)
(275)
(11)
—
(20)
(1)
(165)
—
3
(469)
(39)
(209)
1,178
969
$
$
188
371
—
(24)
0
37
(415)
(34)
672
54
849
(344)
4
(340)
(235)
(5)
1,177
(723)
(1)
(54)
—
1
160
64
734
445
1,178
59
Consolidated Statements of Total Equity
Number of
shares
Common
stock
Additional
paid in
capital
Retained
earnings
103
$
103
$
1,329
$
2,284
187
1
Accumulated
other com-
prehensive
(loss) income1)
(449)
$
96
6
187
96
6
289
11
10
Treasury
stock
Total parent
shareholders’
equity
Non-
controlling
interest
Total
equity
$
(1,158)
$
2,109
$
13
$
2,122
103
$
103
$
1,329
$
2,471
$
(347)
$
(1,147)
$
2,409
$
435
(165)
(87)
26
15
435
(87)
26
375
15
(165)
103
$
103
$
1,329
$
2,742
$
(408)
$
(1,133)
$
2,633
$
(11)
(11)
(216)
423
(631)
(224)
(134)
20
744
10
423
(134)
20
309
(115)
10
(224)
91
$
91
$
1,113
$
2,310
$
(522)
$
(379)
$
2,613
$
1
1
2
188
97
6
291
11
(1)
14
$
(1)
2,423
2
0
2
(1)
15
2
(1)
0
437
(86)
26
377
15
(165)
(1)
2,648
$
425
(136)
20
309
(115)
10
(224)
(2)
13
$
(2)
2,626
(DOLLARS AND SHARES
IN MILLIONS)
Balance at December 31, 2019
Comprehensive Income:
Net income
Foreign currency translation
Pension liability
Total Comprehensive Income
Stock-based compensation
Dividends paid to non-controlling
interest on subsidiary shares
Balance at December 31, 2020
Comprehensive Income:
Net income
Foreign currency translation
Pension liability
Total Comprehensive Income
Stock-based compensation
Cash dividends declared
Dividends paid to non-controlling
interest on subsidiary shares
Balance at December 31, 2021
Comprehensive Income:
Net income
Foreign currency translation
Pension liability
Total Comprehensive Income
Retired and repurchased shares
Stock-based compensation
Cash dividends declared
Dividends paid to non-controlling
interest on subsidiary shares
Balance at December 31, 2022
1) See Note 14 for further details – includes tax effects where applicable.
See Notes to the Consolidated Financial Statements.
60
Notes to the Consolidated Financial Statements
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. Basis of Presentation
NATURE OF OPERATIONS
Through its operating subsidiaries, the Company is a leading developer, manufacturer and supplier of passive safety systems to the
automotive industry with a broad range of product offerings.
Passive safety systems are primarily meant to improve safety for occupants in a vehicle. Passive safety systems include modules and
components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels and inflator
technologies.
The Company also develops and manufactures mobility safety solutions such as pedestrian protection, battery cut-off switches, connected
safety services, and safety solutions for riders of powered two wheelers.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements have been prepared in accordance with United States (U.S.) Generally Accepted Accounting
Principles (GAAP) and include Autoliv, Inc. and all companies over which Autoliv, Inc. directly or indirectly exercises control, which as a
general rule means that the Company owns more than 50% of the voting rights.
Consolidation is also required when the Company has both the power to direct the activities of a variable interest entity (VIE) and the
obligation to absorb losses or the right to receive benefits from the VIE that could be significant to the VIE.
All intercompany accounts and transactions within the Company have been eliminated from the consolidated financial statements.
Investments in affiliated companies in which the Company exercises significant influence over the operations and financial policies, but
does not control, are reported using the equity method of accounting. Generally, the Company owns between 20-50% of such
investments.
SEGMENT REPORTING
In accordance with ASC 280, Segment Reporting, the operating segments are determined based on the information provided to the Chief
Operating Decision Maker (CODM) on a regular basis and used for the purpose of assessing performance and allocating resources within
the Company. The CEO is deemed to be the CODM of Autoliv since he is the person who makes all major decisions on how to allocate
the resources and assess the performance of the Company for both strategic and operational initiatives.
ASC 280 indicates that a component is an operating segment if it meets the following criteria:
•
•
•
It engages in business activities from which it may earn revenues and incur expenses.
Its operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment
and assess its performance.
Its discrete financial information is available.
The Company as a whole has met the definition of an operating segment as it engages in business activities from which it may earn
revenues and incur expenses, the consolidated operating results are regularly reviewed by the CEO/CODM to allocate resources and
assess performance, and discrete financial information is available. Additionally, as Autoliv supplies customers on a global basis it also
manages the business on a global basis. Therefore, based on the above analysis, the Company has concluded that the Company is the
single operating and reportable segment under ASC 280, Segment Reporting. For more information on the Company's segment, see
Note 20.
RECLASSIFICATIONS AND ROUNDINGS
Certain prior-year amounts have been reclassified to conform to current year presentation.
Certain amounts in the consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have
been calculated using unrounded amounts.
61
2. Summary of Significant Accounting Policies
EQUITY METHOD INVESTMENT
Investments accounted for under the equity method, means that a proportional share of the equity method investment’s net income
increases the investment, and a proportional share of losses and payment of dividends decreases it. In the Consolidated Statements of
Income, the proportional share of the net income (loss) is reported as Income from equity method investment.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of net sales and expenses during the reporting period. The accounting
estimates that require management’s most significant judgments include the estimation of variable consideration for the Company's
contracts with customers, valuation of stock-based compensation payments, assessment of recoverability of goodwill and intangible
assets, estimation of pension benefit obligations based on actuarial assumptions, estimation of accruals for warranty and recalls,
restructuring charges, uncertain tax positions, valuation allowances and legal proceedings. Actual results could differ from those
estimates.
REVENUE RECOGNITION
In accordance with ASC 606, Revenue from Contracts with Customers, revenue is measured based on consideration specified in a
contract with a customer, adjusted for any variable consideration (i.e. price concessions) and estimated at contract inception. The
estimated amount of variable consideration that will be received by the Company is based on historical experience and trends,
management´s understanding of the status of negotiations with customers and anticipated future pricing strategies. The Company
recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.
In addition, from time to time, the Company may make payments to or receive additional consideration from customers in connection with
ongoing and future business. These payments to or cash receipts from customers are generally recognized to revenue at the time of the
commitment unless the payments to customers can be clearly linked to the future business. If the payments to customers are capitalized,
the amounts are amortized to revenue as the related goods are transferred.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and
collected by the Company from a customer, are excluded from revenue.
Shipping and handling costs associated with outbound freight before control of a product has transferred to a customer are accounted for
as a fulfillment cost and are included in cost of sales.
Nature of goods and services
The Company generates revenue from the sale of parts, which includes airbag and seatbelt products and components, to original
equipment manufacturers (“OEMs”).
The Company accounts for individual products separately if they are distinct (i.e., if a product is separately identifiable from other items
and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration for
each of the products, including any price concessions, is based on their stand-alone selling prices. The stand-alone selling prices are
determined based on the cost-plus margin approach.
The Company recognizes revenue for parts primarily at a point in time. For parts with revenue recognized at a point in time, the Company
recognizes revenue upon shipment to the customers and transfer of title and risk of loss under standard commercial terms (typically FOB
shipping point).
There are certain contracts where the criteria to recognize revenue over time have been met (e.g., there is no alternative use to the
Company and the Company has an enforceable right to payment). In such cases, at period end, the Company recognizes revenue and
a related asset and associated cost of goods sold and reduction in inventory. However, the financial impact of these contracts is immaterial
considering the very short production cycles and limited inventory days on hand. The contract balances with customers, included in other
current assets, amounted to $20 million as of December 31, 2022 and 2021.
The amount of revenue recognized is based on the purchase order price and adjusted for variable consideration (i.e. price concessions).
Customers typically pay for the parts based on customary business practices.
GOVERNMENT ASSISTANCE
The Company’s operations are impacted by various government incentives, grants, programs, rebates, and other arrangements.
Government assistance received is recorded in our consolidated financial statements in accordance with their purpose, either as a
reduction of expense or an offset to the related capital asset. The benefit is recorded when all performance obligations attached to the
assistance have been met or are expected to be met and there is reasonable assurance of their receipt. Government assistance received
by the Company is immaterial in all periods presented since the adoption of ASU 2021-10.
62
RESEARCH, DEVELOPMENT AND ENGINEERING, NET (R,D&E)
Research and development and most engineering expenses are expensed as incurred. These expenses are reported net of expense
reimbursements from contracts to perform engineering design and product development fulfillment activities related to the production of
parts. For the years 2022, 2021 and 2020 total reimbursements from customers were $204 million, $205 million and $181 million,
respectively.
Certain engineering expenses related to long-term supply arrangements are capitalized when defined criteria, such as the existence of a
contractual guarantee for reimbursement, are met. The aggregate amount of such assets is not significant in any period presented.
Tooling is generally agreed upon as a separate contract or a separate component of an engineering contract, as a pre-production project.
Capitalization of tooling costs is made only when the specific criteria for capitalization of customer funded tooling is met or the criteria for
capitalization as Property, Plant & Equipment (P,P&E) for tools owned by the Company are fulfilled. Depreciation on the Company’s own
tooling is recognized in the Consolidated Statements of Income as Cost of sales.
STOCK-BASED COMPENSATION
The compensation costs for all of the Company’s stock-based compensation awards are determined based on the fair value method as
defined in ASC 718, Compensation - Stock Compensation. The Company records the compensation expense for awards under the Stock
Incentive Plan, including Restricted Stock Units (RSUs), Performance Shares (PSUs) and stock options (SOs), over the respective vesting
period. For further details, see Note 16.
INCOME TAXES
Current tax liabilities and assets are recognized for the estimated taxes payable or refundable on the tax returns for the current year. In
certain circumstances, payments or refunds may extend beyond twelve months, in such cases amounts would be classified as non-
current taxes payable or receivable. Deferred tax liabilities or assets are recognized for the estimated future tax effects attributable to
temporary differences and carryforwards that result from events that have been recognized in either the financial statements or the tax
returns, but not both. The measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax laws.
Deferred tax assets are reduced by the amount of any tax benefits that are not expected to be realized. A valuation allowance is
recognized if, based on the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax asset
will not be realized. Evaluation of the realizability of deferred tax assets is subject to significant judgment requiring careful consideration
of all facts and circumstances. The Company classifies deferred tax assets and liabilities as non-current in the Consolidated Balance
Sheet. Tax assets and liabilities are not offset unless attributable to the same tax jurisdiction and netting is possible according to law and,
as it relates to payables and receivables, expected to take place in the same period.
Tax benefits associated with tax positions taken in the Company’s income tax returns are initially recognized when it is more likely than
not that those tax positions will be sustained upon examination by the relevant taxing authorities. The Company’s evaluation of its tax
benefits is based on the probability of the tax position being upheld if challenged by the taxing authorities (including through negotiation,
appeals, settlement and litigation). Whenever a tax position does not meet the initial recognition criteria, the tax benefit is subsequently
recognized if there is a substantive change in the facts and circumstances that cause a change in judgment concerning the sustainability
of the tax position upon examination by the relevant taxing authorities. In cases where tax benefits meet the initial recognition criterion,
the Company continues, in subsequent periods, to assess its ability to sustain those positions. A previously recognized tax benefit is
derecognized when it is no longer more likely than not that the tax position would be sustained upon examination. Liabilities for
unrecognized tax benefits are classified as non-current unless the payment of the liability is expected to be made within the next 12
months.
63
EARNINGS PER SHARE
The Company calculates basic earnings per share (EPS) by dividing net income attributable to controlling interest by the weighted-
average number of shares of common stock outstanding for the period (net of treasury shares). The Company’s unvested RSUs and
PSUs, of which some include the right to receive non-forfeitable dividend equivalents, are considered participating securities. The diluted
EPS reflects the potential dilution that could occur if common stock was issued for awards under the Stock Incentive Plan and is calculated
using the more dilutive method of either the two-class method or the treasury stock method. The treasury stock method assumes that the
Company uses the proceeds from the exercise of stock option awards to repurchase ordinary shares at the average market price during
the period. For unvested restricted stock, assumed proceeds under the treasury stock method will include unamortized compensation
cost and windfall tax benefits or shortfalls. Post spin-off assumed proceeds under the treasury stock method related to RSUs will only
include unamortized compensation cost related to Autoliv employees holding Autoliv RSUs. Calculations of EPS under the two-class
method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to
be attributable to participating securities. The related participating securities are similarly excluded from the denominator. For further
details, see Notes 16 and 21.
CASH EQUIVALENTS
The Company considers all highly liquid investment instruments purchased with a maturity of three months or less to be cash equivalents.
RECEIVABLES AND ALLOWANCE FOR EXPECTED CREDIT LOSSES
In addition to individually assess overdue customer balances for expected credit losses, the Company also calculates an allowance that
reflects the expected credit losses on receivables considering both historical experience as well as forward looking assumptions. The
method calculates the expected credit loss for a group of customers by using the customer groups’ average short-term default rates
based on officially published credit ratings and the Company’s historical experience. These default rates are considered the Company’s
best estimate of the customer’s ability to pay. The Company regularly reassess the customer groups and the applied customer group’s
default rates by using its best judgement when considering changes in customer’s credit ratings, customer’s historical payments and loss
experience, current market and economic conditions and the Company’s expectations of future market and economic conditions.
There can be no assurance that the amount ultimately realized for receivables will not be materially different than that assumed in the
calculation of the allowance for expected credit losses.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
All derivatives are recognized at fair value.
Hedge accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does
not meet the hedge accounting requirements, although entered into applying the same rationale concerning mitigating market risk that
occurs from changes in interest and foreign exchange rates.
For further details on the Company’s financial instruments, see Note 4.
INVENTORIES
The cost of inventories is computed according to the first-in first-out method (FIFO). Cost includes the cost of materials, direct labor and
the applicable share of manufacturing overhead. Inventories are evaluated based on individual or, in some cases, groups of inventory
items. Reserves are established to reduce the value of inventories to the lower of cost or net realizable value. Net realizable value is the
estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.
Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company calculates
provisions for excess inventories based on the number of months of inventories on hand compared to anticipated sales or usage.
Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. There can be no
assurance that the amount ultimately realized for inventories will not be materially different than that assumed in the calculation of the
reserves.
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment is recorded at historical cost. Construction in progress generally involves short-term projects for which
capitalized interest is not significant. The Company provides for depreciation of property, plant and equipment computed under the
straight-line method over the assets’ estimated useful lives, or in the case of leasehold improvements over the shorter of the useful life
or the lease term. Amortization on finance leases is recognized with depreciation expense in the Consolidated Statements of Income over
the shorter of the assets’ expected life or the lease contract term. Repairs and maintenance are expensed as incurred.
64
LEASES
In accordance with ASC 842, Leases, the Company recognizes contracts that is, or contains, a lease when the contract conveys the right
to control the use of a physically identified asset for a period of time in exchange for consideration in the balance sheet as a right-of-use
asset and lease liability. The Company recognizes a right-of-use asset and a lease liability at lease commencement. The lease liability
for both finance and operating leases is measured at the present value of the remaining lease payments, discounted at the Company's
incremental borrowing rate (if the implicit interest rate in the lease contract is not readily determinable). The right-of-use asset (ROU) for
finance and operating leases is initially measured at the sum of the initial lease liability plus initial direct costs plus prepaid lease payments
minus lease incentives received. Lease payments include undiscounted fixed payments plus optional payments that are reasonably
certain to be owed. Lease payments do not include variable lease payments other than those that depend on an index or rate. Variable
lease payments that depend on an index or a rate are included in the calculation of lease payments and in the measurement of the lease
liability.
If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The
Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would
have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.
The Company has elected the practical expedient of not separating lease components from non-lease components for all its classes of
underlying assets. The Company has also elected to recognize the lease payments for short-term leases in its consolidated statement of
income on a straight-line basis over the lease term and recognize the variable lease payments in the period in which the obligation for
those payments is incurred.
Finance lease right-of-use assets are presented together with other property, plant and equipment assets and finance lease liabilities are
presented together with other current and non-current liabilities in the Consolidated Balance Sheets. Finance leases were not material
as of December 31, 2022.
For further details on the Company’s leases, see Note 3.
LONG-LIVED ASSET IMPAIRMENT
The Company evaluates the carrying value and useful lives of long-lived assets, other than goodwill and intangible assets, when
indications of impairment are evident or it is likely that the useful lives have decreased, in which case the Company depreciates the assets
over the remaining useful lives. Impairment testing is primarily done by using the cash flow method based on undiscounted future cash
flows. Estimated undiscounted cash flows for a long-lived asset being evaluated for recoverability are compared with the respective
carrying amount of that asset. If the estimated undiscounted cash flows exceed the carrying amount of the assets, the carrying amounts
of the long-lived asset are considered recoverable and an impairment cannot be recorded. However, if the carrying amount of a group of
assets exceeds the undiscounted cash flows, an entity must then measure the long-lived assets’ fair value to determine whether an
impairment loss should be recognized, generally using a discounted cash flow model. Generally, the lowest level of cash flows for
impairment assessment is customer platform level.
GOODWILL AND INTANGIBLE ASSETS
Goodwill represents the excess of the fair value of consideration transferred over the fair value of net assets of businesses acquired.
Goodwill is not amortized but subject to at least an annual review for impairment. Other intangible assets, principally related to acquired
technology, are amortized over their useful lives which range from 3 to 25 years.
The Company performs its annual impairment testing in the fourth quarter of each year. Impairment testing is required more often than
annually if an event or circumstance indicates that an impairment, or decline in value, may have occurred. The Company uses either a
qualitative assessment or a quantitative calculation for its impairment testing. The qualitative assessment permits the Company to assess
whether it is more than likely than not (i.e. a likelihood of greater than 50%) that goodwill or an indefinite-lived intangible asset is impaired.
If the Company concludes based on the qualitative assessment that it is not more likely than not that the fair value of goodwill or an
indefinite-lived intangible asset is less than its carrying amount, it would not have to quantitatively determine the asset’s fair value. The
Company also consider external factors that could affect the significant inputs used to determine fair value.
In 2022, the Company performed a quantitative impairment test by calculating the fair value of its goodwill. The estimated fair market
value of goodwill is determined by the discounted cash flow method. The Company discounts projected operating cash flows using its
weighted average cost of capital. Estimating the fair value requires the Company to make judgments about appropriate discount rates,
growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows. If the estimated
fair value of a reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value of a reporting unit
exceeds its estimated fair value, an impairment loss is recognized for the excess of carrying amount over the fair value of the respective
reporting unit. To supplement this analysis, the Company compares the market value of its equity, calculated by reference to the quoted
market prices of its shares, with the book value of its equity.
There were no impairments of goodwill from 2020 through 2022.
65
WARRANTIES AND RECALLS
The Company records liabilities for product recalls when probable claims are identified and when it is possible to reasonably estimate
costs. Recall costs are costs incurred when the customer decides to formally recall a product due to a known or suspected safety concern.
Product recall costs are estimated based on the expected cost of replacing the product and the customer´s cost of carrying out the recall,
which is affected by the number of vehicles subject to recall and the cost of labor and materials to remove and replace the defective
product. Insurance receivables, related to recall issues covered by the insurance, are included within other current and non-current assets
in the Consolidated Balance Sheets. Provisions for warranty claims are estimated based on prior experience, likely changes in
performance of newer products and the mix and volume of products sold. The provisions are recorded on an accrual basis.
RESTRUCTURING PROVISIONS
The Company defines restructuring expense to include costs directly associated with rightsizing, exit or disposal activities. Estimates of
restructuring charges are based on information available at the time such charges are recorded. In general, management anticipates that
restructuring activities will be completed within a timeframe such that significant changes to the exit plan are not likely. Due to inherent
uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially
estimated.
PENSION OBLIGATIONS
The Company provides for both defined contribution plans and defined benefit plans. A defined contribution plan generally specifies the
periodic amount that the employer must contribute to the plan and how that amount will be allocated to the eligible employees who perform
services during the same period. A defined benefit pension plan is one that contains pension benefit formulas, which generally determine
the amount of pension benefits that each employee will receive for services performed during a specified period of employment.
The amount recognized as a defined benefit liability is the net total of projected benefit obligation (PBO) minus the fair value of plan
assets (if any) (see Note 18).
CONTINGENT LIABILITIES
Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters
that arise in the ordinary course of its business activities with respect to commercial, product liability or other matters (see Note 12). The
Company diligently defends itself in such matters and, in addition, carries insurance coverage to the extent reasonably available against
insurable risks. The Company records liabilities for claims, lawsuits and proceedings when they are probable and it is possible to
reasonably estimate the cost of such liabilities. Legal costs expected to be incurred in connection with a loss contingency are expensed
as such costs are incurred.
The Company believes, based on currently available information, that the resolution of outstanding matters, other than any antitrust
related matters described in Note 17 after taking into account recorded liabilities and available insurance coverage, should not have a
material effect on the Company’s financial position or results of operations. However, due to the inherent uncertainty associated with such
matters, there can be no assurance that the final outcomes of these matters will not be materially different than currently estimated.
TRANSLATION OF NON-U.S. SUBSIDIARIES
The balance sheets of subsidiaries with functional currency other than U.S. dollars are translated into U.S. dollars using year-end
exchange rates. The Statements of Income of these subsidiaries is translated into U.S. dollars using monthly average exchange rates.
Translation differences are reflected in equity as a component of OCI.
RECEIVABLES AND LIABILITIES IN NON-FUNCTIONAL CURRENCIES
Receivables and liabilities not denominated in functional currencies are converted at year-end exchange rates. Net transaction losses,
reflected in the Consolidated Statements of Income, amounted to $(25) million in 2022, $(29) million in 2021 and $(24) million in 2020,
and are recorded in operating income if they relate to operational receivables and liabilities or are recorded in other non-operating items,
net if they relate to financial receivables and liabilities.
66
NEW ACCOUNTING STANDARDS
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards
updates (“ASUs”) to the FASB’s Accounting Standards Codification (ASC). The Company considers the applicability and impact of all
ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on
the Company’s consolidated financial statements.
Adoption of New Accounting Standards
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about
Government Assistance, which increases the transparency of government assistance, including the disclosure of (1) the types of
assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. ASU
2021-10 is effective for business entities for annual periods beginning after December 15, 2021, and early adoption is permitted. The
amendments in this update should be applied either (1) prospectively to all transactions within the scope of the amendments that are
reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial
application or (2) retrospectively to those transactions. The Company adopted this standard prospectively on January 1, 2022, and the
adoption of this standard did not have a material impact on our Consolidated Financial Statements or related disclosures. For further
information, see this Note 2 above.
Accounting Standards Issued But Not Yet Adopted
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50), Disclosure of Supplier
Finance Program Obligations, which requires that a buyer in a supplier finance program disclose sufficient information about the program
to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and
potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance
programs. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations
covered by supplier finance programs. The amendments in this update are effective for fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years
beginning after December 15, 2023, with early adoption permitted. During the fiscal year of adoption, the information on the key terms of
the programs and the balance sheet presentation of the program obligations, which are annual disclosure requirements, should be
disclosed in each interim period. The amendments in this update should be applied retrospectively to each period in which a balance
sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. The Company is currently
assessing the impact that ASU 2022-04 will have on its consolidated financial statements and will adopt the amendments in this update
upon the effective dates.
67
3. Leases
The Company has operating leases for offices, manufacturing and research buildings, machinery, cars, data processing and other
equipment. The Company’s leases have remaining lease terms of 1-45 years, some of which include options to extend the leases for up
to 25 years, and some of which include options to terminate the leases within one year.
As of December 31, 2022, the Company has no additional material operating leases that have not yet commenced.
The following tables provide information about the Company’s operating leases. The Company has not identified any material finance
leases as of December 31, 2022; therefore, the finance lease cost components have not been disclosed in the tables below.
Lease cost
(Dollars in millions)
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total lease cost
Other information
(Dollars in millions)
Cash paid for amounts included in the measurement
$
of operating lease liabilities
Right-of-use assets obtained in exchange for new
operating lease liabilities
Weighted-average remaining lease term - operating
leases
Weighted-average discount rate - operating leases
Year ended December 31
2022
2021
$
$
50 $
9
4
(1)
62 $
44
10
4
(2)
57
Year ended or as of
December 31,
2022
2021
42 $
74
46
41
9.7 years
6.7 years
2.8%
2.1%
Maturities of operating lease liabilities (undiscounted cash
flows) are as follows:
(Dollars in millions)
2023
2024
2025
2026
2027
Thereafter
Total operating lease payments
Less imputed interest
Total operating lease liabilities
Maturities
41
27
22
16
13
67
186
(27)
159
$
$
68
4. Fair Value Measurements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, other current liabilities and short-term debt
approximate their fair value because of the short-term maturity of these instruments.
The Company uses derivative financial instruments, “derivatives”, as part of its debt management to mitigate the market risk that occurs
from its exposure to changes in interest and foreign exchange rates. The Company does not enter into derivatives for trading or other
speculative purposes. The Company’s use of derivatives is in accordance with the strategies contained in the Company’s overall financial
policy. All derivatives are recognized in the consolidated financial statements at fair value. Certain derivatives are from time to time
designated either as fair value hedges or cash flow hedges in line with the hedge accounting criteria. For certain other derivatives hedge
accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does not meet
the hedge accounting requirements, although entered into applying the same rationale concerning mitigating market risk that occurs from
changes in interest and foreign exchange rates.
The degree of judgment utilized in measuring the fair value of the instruments generally correlates to the level of pricing observability.
Pricing observability is impacted by several factors, including the type of asset or liability, whether the asset or liability has an established
market and the characteristics specific to the transaction. Instruments with readily active quoted prices or for which fair value can be
measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized
in measuring fair value. Conversely, assets rarely traded or not quoted will generally have less, or no, pricing observability and a higher
degree of judgment utilized in measuring fair value.
Under U.S. GAAP, there is a disclosure framework hierarchy associated with the level of pricing observability utilized in measuring assets
and liabilities at fair value. The three broad levels defined by the hierarchy are as follows:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported
date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items
that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level 3 - Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets
and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant
management judgment or estimation.
The Company’s derivatives are all classified as Level 2 of the fair value hierarchy.
The tables below present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis for
the continuing operations as of December 31, 2022 and December 31, 2021. The carrying value is the same as the fair value as these
instruments are recognized in the consolidated financial statements at fair value. Although the Company is party to close-out netting
agreements (ISDA agreements) with all derivative counterparties, the fair values in the tables below and in the Consolidated Balance
Sheets at December 31, 2022 and December 31, 2021 have been presented on a gross basis. According to the close-out netting
agreements, transaction amounts payable to a counterparty on the same date and in the same currency can be netted. The amounts
subject to netting agreements that the Company choose not to offset are presented below.
DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS
There were no derivatives designated as hedging instruments as of December 31, 2022 and December 31, 2021 related to the continuing
operations.
69
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Derivatives not designated as hedging instruments, relate to economic hedges and are marked to market with all amounts recognized in
the Consolidated Statements of Income. The derivatives not designated as hedging instruments outstanding at December 31, 2022 and
December 31, 2021 were foreign exchange swaps.
For 2022, the Company recognized a gain of $2 million in other non-operating items, net for derivative instruments not designated as
hedging instruments. For 2021, the Company recognized a loss of $33 million. For 2020, the Company recognized a gain of $19 million.
The realized part of the losses referred to above are reported under financing activities in the statement of cash flows. For 2022, 2021
and 2020, the gains and losses recognized as interest expense were immaterial.
DECEMBER 31, 2022
Fair Value Measurements
Derivative asset
(Other current
assets)
Derivative liability
(Other current
liabilities)
Nominal
volume
DECEMBER 31, 2021
Fair Value Measurements
Derivative asset
(Other current
assets)
Derivative liability
(Other current
liabilities)
Nominal
volume
$
(Dollars in millions)
DERIVATIVES NOT DESIGNATED
AS HEDGING INSTRUMENTS
Foreign exchange swaps, less
than 6 months
TOTAL DERIVATIVES NOT
DESIGNATED AS HEDGING
INSTRUMENTS
1) Net nominal amount after deducting for offsetting swaps under ISDA agreements is $2,616 million.
2) Net amount after deducting for offsetting swaps under ISDA agreements is $22 million.
3) Net amount after deducting for offsetting swaps under ISDA agreements is $15 million.
4) Net nominal amount after deducting for offsetting swaps under ISDA agreements is $1,326 million.
5) Net amount after deducting for offsetting swaps under ISDA agreements is $5 million.
6) Net amount after deducting for offsetting swaps under ISDA agreements is $16 million.
2,616 1) $
22 2) $
15 3) $
2,616
15
22
$
$
$
$
1,348 4) $
5 5) $
16 6)
1,348
$
5
$
16
FAIR VALUE OF DEBT
The fair value of long-term debt is determined either from quoted market prices as provided by participants in the secondary market or
for long-term debt without quoted market prices, estimated using a discounted cash flow method based on the Company’s current
borrowing rates for similar types of financing. The fair value and carrying value of debt is summarized in the table below. The Company
has determined that each of these fair value measurements of debt reside within Level 2 of the fair value hierarchy.
The fair value and carrying value of debt for the continuing operations are summarized in the table below (dollars in millions).
LONG-TERM DEBT
Bonds
Loans
TOTAL
SHORT-TERM DEBT
Short-term portion of long-term debt
Overdrafts and other short-term debt
TOTAL
1) Debt as reported in balance sheet.
DECEMBER 31, 2022
DECEMBER 31, 2021
CARRYING
VALUE1)
FAIR
VALUE
CARRYING
VALUE1)
FAIR
VALUE
$
$
$
$
767
287
1,054
533
178
711
$
$
$
$
735
292
1,027
527
178
705
$
$
$
$
1,330
332
1,662
332
14
346
$
$
$
$
1,400
347
1,747
333
14
348
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS
In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also has assets and liabilities in its
balance sheet that are measured at fair value on a nonrecurring basis including certain long-lived assets, including equity method
investments, goodwill and other intangible assets, typically as it relates to impairment.
The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-
specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not
available. The Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. To
determine the fair value of long-lived assets as of the reporting date, the Company utilizes the projected cash flows expected to be
generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets.
For the period 2020-2022, the Company did not record any material impairment charges on its long-lived assets for its continuing
operations.
70
5. Income Taxes
INCOME BEFORE INCOME TAXES (Dollars in millions)
U.S.
Non-U.S.
Total
PROVISION FOR INCOME TAXES (Dollars in millions)
Current
U.S. federal
Non-U.S.
U.S. state and local
Deferred
U.S. federal
Non-U.S.
U.S. state and local
Total income tax expense
EFFECTIVE INCOME TAX RATE (%)
U.S. federal income tax rate
Non-Deductible Expenses
Foreign tax rate variances
Tax credits
Change in Valuation Allowances
Changes in tax reserves
Provision to Return
Earnings of equity investments
Withholding taxes
State taxes, net of federal benefit
Tax Audits
U.S. GILTI Tax
Impact of Translation Rates
Other, net
Effective income tax rate
2022
2021
2020
$
$
$
$
(3) $
606
603
2022
32
181
5
(20)
(17)
(3)
178
$
$
$
(38) $
652
614
$
(102)
393
291
2021
2020
$
8
191
(2)
(8)
(10)
(2)
177
$
(41)
169
(2)
(6)
(17)
(2)
103
2022
2021
2020
21.0 %
0.5
3.6
(3.5)
(1.7)
(0.2)
0.6
(0.1)
4.0
0.4
1.0
3.4
0.2
0.3
29.5 %
21.0 %
(0.1)
3.1
(2.2)
(0.1)
0.6
(0.2)
(0.1)
4.5
(0.5)
0.6
1.1
—
1.2
28.9 %
21.0 %
3.0
8.4
(3.2)
7.1
1.7
(8.8)
(0.2)
8.5
(0.7)
0.0
—
—
(1.5)
35.3 %
71
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. On December 31, 2022, the Company had net operating
loss carryforwards (NOL’s) of approximately $453 million, of which approximately $373 million have no expiration date. The remaining
losses expire on various dates through 2037. The Company also has $25 million of U.S. Foreign Tax Credit carry forwards, which begin
to expire in 2026.
Valuation allowances have been established which partially offset the related deferred assets. Such allowances are primarily provided
against NOL’s of companies that have perennially incurred losses, as well as the NOL’s of companies that are start-up operations and
have not established a pattern of profitability. The Company assesses all available evidence, both positive and negative, to determine
the amount of any required valuation allowance. During 2022, the Company recognized a tax benefit of $24 million due to the reversal of
valuation allowances related to deferred tax assets for loss carryforwards and other deferred balances in Brazil, on the basis of
management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains a number of revisions
to the Internal Revenue Code, including a 15% corporate alternative minimum income tax and a 1% excise tax on corporate stock
repurchases in tax years beginning after December 31, 2022. While these tax law changes have no immediate effect and are not expected
to have a material adverse effect on our results of operations going forward, we will continue to evaluate its impact as further information
becomes available.
The foreign tax rate variance reflects the fact that approximately two-thirds of the Company’s non-U.S. pre-tax income is generated by
business operations located in tax jurisdictions where the tax rate is between 20-30%. The tax rate from quarter to quarter and from year
to year is also impacted by the mix of earnings and tax rates in various jurisdictions compared to the same periods or prior years.
The Company has reserves for income taxes that may become payable in future periods as a result of tax audits. These reserves
represent the Company’s best estimate of the potential liability for tax exposures. Inherent uncertainties exist in estimates of tax exposures
due to changes in tax law, both legislated and concluded through the various jurisdictions’ court systems. The Company files income tax
returns in the United States federal jurisdiction, and various states and non-U.S. jurisdictions.
At any given time, the Company is undergoing tax audits in several tax jurisdictions, covering multiple years. The Company is no longer
subject to income tax examination by the U.S. Federal tax authorities for years prior to 2015. With few exceptions, the Company is no
longer subject to income tax examination by U.S. state or local tax authorities or by non-U.S. tax authorities for years before 2011. The
Company is undergoing tax audits in several non-U.S. jurisdictions and several U.S. state jurisdictions, covering multiple years. As of
December 31, 2022, as a result of those tax examinations, the Company is not aware of any proposed income tax adjustments that would
have a material impact on the Company’s financial statements, however, other audits could result in additional increases or decreases to
the unrecognized tax benefits in some future period or periods.
The Company recognizes interest and potential penalties accrued related to unrecognized tax benefits in tax expense. As of December
31, 2021, the Company had recorded $49 million for unrecognized tax benefits related to prior years, including $11 million of accrued
interest and penalties. During 2022, the Company recorded a net decrease of $4 million to income tax reserves for unrecognized tax
benefits related to tax positions taken in prior years. Also during 2022, the Company recorded a net increase of $7 million to income tax
reserves for unrecognized tax benefits based on tax positions taken in the current year.
The Company had $11 million accrued for the payment of interest and penalties as of December 31, 2022. Of the total unrecognized tax
benefits of $46 million recorded at December 31, 2022, $5 million is classified as current income tax payable, and $41 million is classified
as non-current tax payable included in Other Non-Current Liabilities on the Consolidated Balance Sheets. Substantially all of these
reserves would impact the effective tax rate if released into income. The following table summarizes the activity related to the Company’s
unrecognized tax benefits (dollars in millions):
72
UNRECOGNIZED TAX BENEFITS
Unrecognized tax benefits at beginning of year
2022
2021
2020
$
65
$
63
$
59
Increases as a result of tax positions taken during a prior
period
Increases as a result of tax positions taken during the current
period
Decreases as a result of tax positions taken during a prior period
Decreases relating to settlements with taxing authorities
Decreases resulting from the lapse of the applicable statute
of limitations
Translation Difference
Total unrecognized tax benefits at end of year
$
0
7
0
(4)
0
(1)
67
$
3
5
0
(4)
(1)
(1)
65
$
1
4
0
0
(1)
(0)
63
The tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities were as
follows (dollars in millions).
DEFERRED TAXES
Assets
Provisions
Costs capitalized for tax
Property, plant and equipment
Retirement Plans
Tax receivables, principally NOL’s
Deferred tax assets before allowances
Valuation allowances
Total
Liabilities
Acquired intangibles
Statutory tax allowances
Distribution taxes
Other
Total
Net deferred tax asset
2022
December 31,
2021
2020
$
$
99
43
12
42
123
319
(46)
273
0
0
(3)
(2)
(5)
268
$
$
136
29
0
46
109
320
(59)
261
0
(6)
(6)
(3)
(15)
246
$
$
141
21
5
59
110
336
(68)
268
(2)
(0)
(15)
(4)
(21)
247
The following table summarizes the activity related to the Company’s valuation allowances (dollars in millions):
VALUATION ALLOWANCES AGAINST DEFERRED TAX ASSETS
Allowances at beginning of year
Benefits reserved current year
Benefits recognized current year
Translation difference
Allowances at end of year
2022
December 31,
2021
2020
$
$
59
14
(27)
0
46
$
$
68
5
(9)
(5)
59
$
$
61
14
(1)
(6)
68
73
6. Receivables
(Dollars in millions)
Receivables
Allowance for credit loss at beginning of year
Reversal of (addition to) allowance
Write-off against allowance
Translation difference
Allowance for credit loss at end of year
Total receivables, net of allowance
7. Inventories
(Dollars in millions)
Raw material
Work in progress
Finished products
Inventories
Inventory reserve at beginning of year
Reversal of (addition to) reserve
Translation difference
Inventory reserve at end of year
Total inventories, net of reserve
8. Other Non-Current Assets
(Dollars in millions)
Equity method investments
Deferred tax assets
Income tax receivables
Insurance receivables
Other non-current assets
Total other non-current assets
2022
December 31,
2021
2020
1,916
(8)
(4)
2
1
(9)
1,907
$
$
1,707
(12)
(0)
4
1
(8)
1,699
2022
December 31,
2021
445
350
265
1,060
(91)
(5)
4
(91)
969
$
$
395
283
190
868
(93)
(3)
5
(91)
777
$
$
$
$
1,831
(9)
(4)
1
(1)
(12)
1,820
2020
379
292
220
891
(83)
(3)
(6)
(93)
798
December 31,
2022
2021
12 $
289
22
124
56
502 $
11
271
20
127
51
481
$
$
$
$
$
$
As of December 31, 2022 and 2021, the Company had one equity method investment. The Company owns 49% of Autoliv-Hirotako
Safety Sdn, Bhd (parent and subsidiaries) in Malaysia which it currently does not control, but in which it exercises significant influence
over operations and financial position.
74
9. Property, Plant and Equipment
(Dollars in millions)
Land and land improvements
Buildings
Machinery and equipment
Construction in progress
Property, plant and equipment
Less accumulated depreciation
Net of depreciation
December 31,
2022
2021
Estimated life
$
$
125
957
4,155
523
5,760
(3,800)
1,960
$
$
147
957
4,193
354
5,651
(3,796)
1,855
n/a to 15
20-40
3-12
n/a
DEPRECIATION INCLUDED IN
Cost of sales
Selling, general and administrative expenses
Research, development and engineering expenses, net
Total
$
$
2022
2021
2020
329
11
20
360
$
$
348
13
23
384
$
$
327
13
21
361
No significant fixed asset impairments related to the Company’s operations were recognized during 2022, 2021 or 2020.
The net book value of machinery and equipment and buildings and land under finance lease contracts recorded at December 31, 2022
and December 31, 2021 were immaterial. The amortization expense related to finance leases is included with depreciation expenses
disclosed in the table above.
10. Goodwill and Intangible Assets
GOODWILL (Dollars in millions)
Carrying amount at beginning of year
Translation differences
Carrying amount at end of year
2022
2021
$ 1,387 $
(11)
$ 1,375 $
1,398
(11)
1,387
Approximately $1.2 billion of the Company’s goodwill is associated with the 1997 merger of Autoliv AB and the Automotive Safety Products
Division of Morton International, Inc. No goodwill impairment charges were recognized during 2022, 2021 or 2020.
AMORTIZABLE INTANGIBLES (Dollars in millions)
Gross carrying amount
Accumulated amortization
Carrying value
2022
2021
$
$
387 $
(380)
7 $
398
(390)
8
At December 31, 2022, intangible assets subject to amortization mainly relate to acquired technology. No significant impairments of
intangible assets were recognized during 2022, 2021 or 2020.
Amortization expense related to intangible assets was $3 million, $10 million and $10 million in 2022, 2021 and 2020, respectively.
Estimated future amortization expense is: 2023: $2 million; 2024: $2 million; 2025: $2 million; 2026: $— million and 2027: $— million.
75
11. Restructuring
Restructuring provisions are made on a case-by-case basis and primarily include severance costs incurred in connection with headcount
reductions and plant consolidations. Restructuring costs other than employee related costs are immaterial for all periods presented and
are included in the table below. The Company expects to finance restructuring programs over the next several years through cash
generated from its ongoing operations or through cash available under its existing credit facilities. The Company does not expect that the
execution of these programs will have an adverse impact on its liquidity position. The changes in the employee-related reserves have
been charged against Other income (expense), net in the Consolidated Statements of Income. The restructuring reserve balance is
included within Accrued expenses in the Consolidated Balance Sheet.
(Dollars in millions)
Reserve at beginning of the period
Provision - charge
Provision - reversal
Cash payments
Translation difference
Reserve at end of the period
2022
2021
2020
$
$
88
17
(4)
(64)
(5)
31
$
$
126
39
(31)
(37)
(8)
88
$
$
56
109
(10)
(38)
9
126
As of December 31, 2022, approximately $10 million out of the $31 million in total reserve balance can be attributed to footprint
optimization activities in Europe, initiated in the third quarter of 2020 and expected to be concluded in 2023. The restructuring charges in
2022 of $17 million, mainly related to footprint optimization activities in Asia and Europe. Cash payments of $64 million in 2022 are mainly
related to the structural efficiency program initiated in 2020, footprint optimization activities in Europe initiated in 2020 and in Asia initiated
in 2022.
The restructuring charges in 2021 of $39 million, mainly related to footprint optimization activities primarily in Asia. Reversals mainly
related to the structural efficiency program initiated in the second quarter of 2020. Cash payments in 2021 related to the structural
efficiency program initiated in the second quarter of 2020 and other footprint activities.
The restructuring charges in 2020 of $109 million, mainly related to the structural efficiency program initiated in the second quarter of
2020 in the Americas and Europe, and footprint optimization activities in Europe initiated in the third quarter of 2020. Cash payments in
2020 mainly related to the structural efficiency program initiated in 2019.
12. Product Related Liabilities
Autoliv is exposed to product liability and warranty claims in the event that the Company’s products fail to perform as represented and
such failure results, or is alleged to result, in bodily injury, and/or property damage or other loss. The Company has reserves for product
risks. Such reserves are related to product performance issues including recall, product liability and warranty issues. For further
information, see Note 17.
The Company records liabilities for product related risks when probable claims are identified and when it is possible to reasonably estimate
costs. Changes in reserve for warranty claims are estimated based on prior experience, likely changes in performance of newer products,
and the mix and volume of the products sold. The changes in reserve are recorded on an accrual basis.
Pursuant to the Spin-off Agreements, Autoliv is also required to indemnify Veoneer, Inc. (which was acquired by SSW Partners on April
1, 2022) for recalls related to certain qualified Electronics products. At December 31, 2022, the reserves for indemnification liabilities were
approximately $4 million and were included within accrued expenses on the Consolidated Balance Sheet.
In 2022, the change in the reserve for product related liabilities mainly related to warranty related issues. Of the cash payments in 2022
the main part was also related to warranty related issues. In 2021, the cash payments mainly related to recall related issues, whereof the
main part was related to the “Toyota Recall” recall issue. In 2020, the change in reserve mainly related to recall related issues, whereof
the "Toyota Recall" represented the major recall issue. The reserve for product related liabilities is included in accrued expenses on the
Consolidated Balance Sheet.
A majority of the Company’s recall related issues as of December 31, 2022 are covered by insurance. Insurance receivables are included
within other current and non-current assets on the Consolidated Balance Sheet. As of December 31, 2022, the Company had total
insurance receivables related to recall issues of $124 million ($138 million as of December 31, 2021).
The table below summarizes the change in the balance sheet position of the product related liabilities (dollars in millions).
(Dollars in millions)
Reserve at beginning of the year
Change in reserve
Cash payments
Translation difference
Reserve at end of the year
2022
2021
2020
$
$
144
20
(17)
(2)
145
$
$
341
49
(245)
(1)
144
$
$
72
304
(36)
1
341
76
13. Debt and Credit Agreements
SHORT-TERM DEBT
As of December 31, 2022 and 2021, total short-term debt was $711 million and $346 million, respectively. As of December 31, 2022,
short-term debt consisted mainly of a €500 million ($533 million) 5-year notes in the Eurobond market issued in June 2018. The notes
carry a coupon of 0.75% and are due June 2023.
The Company’s subsidiaries have credit agreements, principally in the form of overdraft facilities with several local banks. Total available
short-term facilities as of December 31, 2022, excluding commercial paper facilities as described below, amounted to $349 million, of
which approximately $27 million was utilized. The weighted average interest rate on total short-term debt outstanding at December 31,
2022 and 2021, excluding the short-term portion of long-term debt, was 5% and 2%, respectively.
LONG-TERM DEBT
As of December 31, 2022 and 2021, total long-term debt was $1,054 million and $1,662 million, respectively.
In June 2020, the Company utilized its SEK 3,000 million facility with Swedish Export Credit Corporation which was signed in May 2020.
The SEK 3,000 million ($287 million) loan matures in 2025 and carries a floating interest rate of 3M STIBOR +1.85%.
In 2014, the Company issued long-term debt securities in a U.S. Private Placement. As of December 31, 2022 the total long-term debt
outstanding from the 2014 issuance of $767 million consist of: $297 million aggregate principal amount of 10-year senior notes with an
interest rate of 4.09%; $285 million aggregate principal amount of 12-year senior notes with an interest rate of 4.24%; and $185 million
aggregate principal amount of 15-year senior notes with an interest rate of 4.44%.
CREDIT FACILITIES
In May 2022, the Company refinanced its existing revolving credit facility (RCF) of $1,100 million. The facility, syndicated among 11
banks, matures in May 2027 and has two extension options, each for an additional year. The Company pays a commitment fee on the
undrawn amount of 0.15%, representing 35% of the applicable margin, which is 0.425% (given the Company’s rating of “BBB” from S&P
Global Ratings). Borrowings under the facility are unsecured. As of December 31, 2022, the facility was not utilized.
The Company has a €3,000 million ($3,199 million) Euro Medium Term Note Program in place for being able to issue notes to be traded
on the Global Exchange Market of Euronext Dublin. At December 31, 2022, there were no notes outstanding that had been issued under
this program.
The Company has two commercial paper programs: one SEK 7 billion ($671 million) Swedish program and a $1 billion U.S. program. At
December 31, 2022 the total amount outstanding was SEK 100 million ($10 million) and $142 million under these two programs.
The Company is not subject to any financial covenants, i.e., performance related restrictions, in any of its significant long-term borrowings
or commitments.
CREDIT RISK
In the Company’s financial operations, credit risk arises in connection with cash deposits with banks and when entering into forward
exchange agreements, swap contracts or other financial instruments. In order to reduce this risk, deposits and financial instruments are
only entered with a limited number of banks up to a calculated risk amount of $200 million per bank for banks rated A- or above and up
to $50 million for banks rated BBB+. The policy of the Company is to work with banks that have a strong credit rating and that participate
in the Company’s financing. In addition to this, deposits of up to an aggregate amount of $2 billion can be placed in U.S. and Swedish
government paper and in certain AAA rated money market funds. As of December 31, 2022, the Company had placed $237 million in
money market funds compared to $579 million as of December 31, 2021.
The table below shows debt maturity as cash flow. For a description of hedging instruments used as part of debt management, see the
Financial Instruments section of Note 2 and Note 4.
DEBT PROFILE
PRINCIPAL AMOUNT BY EXPECTED MATURITY
(dollars in millions)
Bonds
Loans
Commercial papers
Other short-term debt
Total principal amount
$ — $— $
—
—
—
$ —
$
Thereafter
185
—
—
—
185
Total
long-
term
$
767
287
—
—
$ 1,054
Total
$ 1,300
287
152
27
$ 1,765
2023
2024
2025
2026
2027
$
$
533
—
152
27
711
$
$
297
—
—
—
297
$ — $
287
—
—
287
$
$
285
—
—
285
77
14. Shareholders’ Equity
The number of shares outstanding as of December 31, 2022 was 86,187,746.
DIVIDENDS
Cash dividend paid per share
Cash dividend declared per share
2022
2021
2020
$
$
2.58
2.58
$
$
1.88
1.88
$
$
0.62
—
OTHER COMPREHENSIVE LOSS / ENDING BALANCE1) (Dollars in millions)
Cumulative translation adjustments
Net pension liability
Total (ending balance)
2022
2021
2020
$
$
(492) $
(30)
(522) $
(355) $
(52)
(408) $
(269)
(78)
(347)
Deferred taxes on the pension liability
1) The components of Other Comprehensive Loss are net of any related income tax effects.
$
9
$
15
$
23
SHARE REPURCHASE PROGRAM
On December 31, 2021, the stock repurchase program authorized by the Board of Directors in 2014 expired with approximately 3 million
shares remaining. In November 2021, the Board of Directors approved a new stock repurchase program that authorizes the Company to
repurchase up to $1.5 billion or up to 17 million shares (whichever comes first) between January 2022 and the end of 2024.
During 2022, the Company repurchased and immediately retired 1,440,572 shares for approximately $115 million.
15. Supplemental Cash Flow Information
Payments for interest and income taxes were as follows:
(Dollars in millions)
Interest
Income taxes
2022
2021
2020
$
$
64
215
$
60
207
73
104
78
16. Stock Incentive Plan
The Company maintains the Autoliv, Inc. 1997 Stock Incentive Plan, as amended (the “Stock Incentive Plan”), pursuant to which it has
granted to eligible employees and non-employee directors stock options (SOs), restricted stock units (RSUs) and performance shares
(PSUs).
The fair value of the RSUs and PSUs is calculated as the grant date fair value of the shares expected to be issued. The RSUs and PSUs
granted in 2022, 2021 and 2020 entitle the grantee to receive dividend equivalents in the form of additional RSUs and PSUs subject to
the same vesting conditions as the underlying RSUs and PSUs. For the grants made during 2022, 2021 and 2020, the fair value of a
RSU and a PSU was calculated by using the closing stock price on the grant date and, with respect to a PSU, assumed target
performance. The grant date fair value for the RSUs and PSUs granted during 2022 was approximately $5 million and approximately $8
million, respectively.
Pursuant to the Company’s non-employee director compensation policy effective May 1, 2022, the Company’s non-employee directors
receive an annual RSU grant having a grant date value equal to $147,500 and the Chairman of the Board of Directors also receives an
additional annual RSU grant having a grant date value equal to $85,000. All RSUs granted to non-employee directors vest in one
installment on the earlier of the next AGM or the first anniversary of the grant date, in each case subject to the grantee’s continued service
as a non-employee director on the vesting date with limited exceptions. The RSUs granted to the Company’s non-employee directors
entitle the grantee to receive dividend equivalents in the form of additional RSUs subject to the same vesting conditions as the underlying
RSUs. The grant date fair value for the RSUs granted in 2022 to the Company’s non-employee directors was approximately $2 million.
The source of the shares issued upon vesting of awards is generally from treasury shares. The Stock Incentive Plan provides for the
issuance of up to 9,585,055 common shares for awards. At December 31, 2022, 6,926,837 of these shares have been issued for awards
and 2,658,218 shares remain available for future grants.
In 2015 and earlier, stock awards were granted in the form of SOs and RSUs. All SOs were granted for 10-year terms, had an exercise
price equal to the fair market value per share of common stock at the date of grant, and became exercisable after one year of continued
employment following the grant date. The average grant date fair values of SOs were calculated using the Black-Scholes valuation model.
The Company used historical exercise data for determining the expected life assumption. Expected volatility was based on historical and
implied volatility.
The Company recorded approximately $4 million, $10 million and $12 million stock-based compensation expense related to RSUs and
PSUs for 2022, 2021 and 2020, respectively. The total compensation cost related to non-vested awards not yet recognized is $13 million
for RSUs and PSs and the weighted average period over which this cost is expected to be recognized is approximately 1.7 years. There
are no remaining unrecognized compensation costs associated with SOs.
Information on the number of RSUs, PSUs and SOs related to the Stock Incentive Plan during the period of 2020 to 2022 is as follows.
RSUs
Weighted average fair value at grant date
2022
2021
2020
$
87.56 $
94.01 $
69.58
Outstanding at beginning of year
Granted
Shares issued
Cancelled/Forfeited/Expired
Outstanding at end of year
218,268
85,985
(84,848)
(18,641)
200,764
244,901
81,866
(99,399)
(9,100)
218,268
255,195
115,500
(105,750)
(20,044)
244,901
The aggregate intrinsic value for RSUs outstanding at December 31, 2022 was approximately $15 million.
PSUs
Weighted average fair value at grant date
2022
2021
2020
$
88.05
$
93.90
$
69.86
Outstanding at beginning of year
Change in performance conditions
Granted
Shares issued
Cancelled/Forfeited/Expired
Outstanding at end of year
179,311
(69,924)
82,914
(64,397)
(26,076)
101,828
158,128
(44,385)
74,427
—
(8,859)
179,311
76,321
23,998
75,940
—
(18,131)
158,128
The PSUs granted include assumptions regarding the ultimate number of shares that will be issued based on the probability of
achievement of the performance conditions. Changes in those assumptions result in changes in the estimated shares to be issued which
is reflected in the “Change in performance conditions” line above.
79
SOs
Outstanding at December 31, 2019
Exercised
Spin conversion 1)
Outstanding at December 31, 2020
Exercised
Cancelled/Forfeited/Expired
Outstanding at December 31, 2021
Exercised
Cancelled/Forfeited/Expired
Outstanding at December 31, 2022
OPTIONS EXERCISABLE
At December 31, 2020
At December 31, 2021
At December 31, 2022
Number
of options
Weighted
average
exercise
price
115,875 $
(14,238)
(11,462)
90,175
(40,112)
(188)
49,875
(8,614)
(10,150)
31,111
90,175 $
49,875
31,111
66.70
55.55
69.25
68.13
67.49
51.74
68.71
59.28
70.40
70.77
68.13
68.71
70.77
1) Reflects the cancellation of SOs outstanding as of the effective date of the Veoneer spin-off, and the conversion to new awards in accordance with the
conversion factor (1.41). The weighted average exercise price reflects the exercise price of the shares cancelled due to the Veoneer spin-off.
The following summarizes information about SOs outstanding and exercisable at December 31, 2022:
EXERCISE PRICE
$49.07
$67.29
$80.40
Number
outstanding &
exercisable
Remaining
contract life
(in years)
Weighted
average
exercise
price
5,203
10,424
15,484
31,111
$
0.14
1.14
2.13
1.46
49.07
67.29
80.40
70.77
The total aggregate intrinsic value, which is the difference between the exercise price and $76.58 (closing price per share at December
31, 2022), for all “in the money” SOs, both outstanding and exercisable as of December 31, 2022, was immaterial.
80
17. Contingent Liabilities
LEGAL PROCEEDINGS
Various claims, lawsuits and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters
that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is subject
to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, and with the exception of
losses resulting from the antitrust proceedings described below, it is the opinion of management that the various legal proceedings and
investigations to which the Company currently is a party will not have a material adverse impact on the consolidated financial position of
Autoliv, but the Company cannot provide assurance that Autoliv will not experience material litigation, product liability or other losses in
the future.
ANTITRUST MATTERS
Authorities in several jurisdictions have conducted broad, and in some cases, long-running investigations of suspected anti-competitive
behavior among parts suppliers in the global automotive vehicle industry. These investigations included, but are not limited to, the products
that the Company sells. In addition to concluded matters, authorities of other countries with significant light vehicle manufacturing or sales
may initiate similar investigations.
PRODUCT WARRANTY, RECALLS AND INTELLECTUAL PROPERTY
Autoliv is exposed to various claims for damages and compensation if its products fail to perform as expected. Such claims can be made,
and result in costs and other losses to the Company, even where the product is eventually found to have functioned properly. Where a
product (actually or allegedly) fails to perform as expected or is defective, the Company may face warranty and recall claims. Where such
(actual or alleged) failure or defect results, or is alleged to result, in bodily injury and/or property damage, the Company may also face
product liability and other claims. There can be no assurance that the Company will not experience material warranty, recall or product
(or other) liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The
Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding
product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle
design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for
contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall
practices. Recall decisions regarding the Company’s products may require a significant amount of judgment by us, our customers and
safety regulators and are influenced by a variety of factors. Once a recall has been made, the cost of a recall is also subject to a significant
amount of judgment and discussions between the Company and its customers. A warranty, recall or product-liability claim brought against
the Company in excess of its insurance may have a material adverse effect on the Company’s business. Vehicle manufacturers are also
increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such
products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the
repair or replacement costs of products when the product supplied did not perform as represented by us or expected by the customer in
either a warranty or a recall situation. Accordingly, the future costs of warranty or recall claims by the customers may be material. However,
the Company believes its established reserves are adequate. Autoliv’s warranty reserves are based upon the Company’s best estimates
of amounts necessary to settle future and existing claims. The Company regularly evaluates the adequacy of these reserves, and adjusts
them when appropriate. However, the final amounts actually due related to these matters could differ materially from the Company’s
recorded estimates.
In addition, as vehicle manufacturers increasingly use global platforms and procedures, quality performance evaluations are also
conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having
a small financial impact) may cause a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new
orders, which may have a material impact on the Company’s results of operations.
The Company maintains a program of insurance, which may include commercial insurance, self-insurance, or a combination of both
approaches, for potential recall and product liability claims in amounts and on terms that it believes are reasonable and prudent based
on our prior claims experience. The Company’s insurance policies generally include coverage of the costs of a recall, although costs
related to replacement parts are generally not covered. In addition, a number of the agreements entered into by the Company, including
the Spin-off Agreements, require Autoliv to indemnify the other parties for certain claims. Autoliv cannot assure that the level of coverage
will be sufficient to cover every possible claim that can arise in our businesses or with respect to other obligations, now or in the future,
or that such coverage always will be available should we, now or in the future, wish to extend, increase or otherwise adjust our insurance.
As noted in Note 12 above, as of December 31, 2022, the Company has accrued $145 million for total product related liabilities. The
majority of the total product liability accrual as of December 31, 2022, relates to recalls, which are generally covered by insurance.
Insurance receivables for such recall related liabilities total $124 million as of December 31, 2022.
81
Product Liability:
On September 18, 2014, Jamie Andrews filed a wrongful death products liability suit against several Autoliv entities stemming from a fatal
car accident in 2013 where the plaintiff’s husband was fatally injured. The lawsuit alleges that Autoliv should be liable for a defectively-
designed driver seatbelt. The case was removed to the United States District Court for the Northern District of Georgia. The suit originally
included Bosch and Mazda entities as well, but these entities were dismissed pursuant to confidential settlement agreements with the
plaintiff, and all of the Autoliv entities except Autoliv Japan Ltd. were also dismissed. On January 10, 2017, the District Court entered an
order granting summary judgment in favor of Autoliv, concluding that Autoliv was not actively involved in the design of Mr. Andrews’s
seatbelt and, therefore, should not be liable for plaintiff’s claims as a matter of law. However, on appeal, the Eleventh Circuit Court of
Appeals reversed the decision, holding that, under Georgia’s products liability statute, Autoliv could be liable for a design defect associated
with the seatbelt, regardless of its level of involvement in the seatbelt’s ultimate design, because Autoliv manufactured it. On October 4,
2021, the case proceeded to a bench trial before the United States District Court for the Northern District of Georgia. On December 31,
2021, the District Court entered a Final Order and Judgment concluding that Mr. Andrews’s seatbelt was defectively designed and Autoliv
was strictly liable for the design. In doing so, the District Court concluded that Mr. Andrews had incurred $27,019,343 in compensatory
damages, but only ordered Autoliv to pay 50 percent of that amount, $13,509,671 after finding that 50 percent of the fault for Mr. Andrews’s
damages should be apportioned to Mazda. The Court declined to apportion any fault for Mr. Andrews’s damages to Mr. Andrews or
Bosch. The District Court also entered an award of punitive damages against Autoliv in the amount of $100,000,000. Subsequently, on
September 30, 2022, the District Court awarded pre-judgement interest on the compensatory damages award of approximately
$4,734,350.
The Company believes the District Court’s verdict was in error, including the grossly high punitive damages award, and appealed the
verdict.
The Company has determined that a loss with respect to this litigation is probable and has in the fourth quarter of 2021 accrued $14
million pursuant to ASC 450. The Company accrued an additional $5 million for the pre-judgement interest in the third quarter of 2022.
The accrual is reflected in the total product liability accrual. This amount reflects the low end of the range of a probable loss of $18 million
to $118 million. The accrual reflects the Company’s best estimate of the probable loss based on currently available information and does
not include any amount for the punitive damages. It is reasonably possible that the Company may have to pay the entire damages
awarded by the District Court. The Company believes that its insurance should cover all of the types of damages awarded by the District
Court, and has therefore recognized a receivable, included within Other non-current assets on the Consolidated Balance Sheet at
December 31, 2021, for the expected insurance proceeds. However, the extent of the Company's insurance coverage for punitive
damages in this matter is uncertain and may be less than all of such punitive damages ultimately awarded. In the event all or a portion of
the punitive damages award survives the Company's appeal, the Company will continue to engage with our insurance carriers and
aggressively pursue all potential recoveries. The ultimate loss to the Company of the litigation matter could be materially different from
the amount the Company has accrued. The Company cannot predict or estimate the duration or ultimate outcome of this matter.
82
Specific Recalls:
In the fourth quarter of 2020, the Company was made aware of a potential recall by one of its customers (the “Unannounced Recall”).
The Company continues to evaluate this matter with its customer. The Company determined pursuant to ASC 450 that a loss with respect
to the Unannounced Recall is probable and accrued an amount that is reflected in the total product liability accrual in the fourth quarter
of 2020 and increased the accrual in the fourth quarter of 2021. The amount by which the product liability accrual exceeds the product
liability insurance receivable with respect to the Unannounced Recall is $27 million and includes self-insurance retention costs and
deductibles. The ultimate loss to the Company of the Unannounced Recall could be materially different from the amount the Company
has accrued.
Volvo Car USA, LLC (together with its affiliates, “Volvo”) has recalled approximately 762,000 vehicles relating to the malfunction of
inflators produced by ZF (the “ZF Inflator Recall”). The recalled ZF inflators were included in airbag modules supplied by the Company
only to Volvo. The recall commenced in November 2020 and later expanded in September 2021. Because the Company’s airbags were
involved with the ZF Inflator Recall, the Company has determined pursuant to ASC 450 that a loss is reasonably possible with respect to
the ZF Inflator Recall. The Company continues to evaluate this matter with Volvo and ZF and no accrual has been made. Although the
Company currently estimates a range of $0 to $43 million with respect to this potential loss, the Company anticipates that any losses net
of insurance claims and claims against ZF will be immaterial.
Intellectual property:
In its products, the Company utilizes technologies which may be subject to intellectual property rights of third parties. While the Company
does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the
Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the Company has sold products
which infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result
thereof. Such claims could be material.
The table in Note 12 above summarizes the change in the balance sheet position of the product related liabilities for the fiscal year ended
December 31, 2022.
83
18. Retirement Plans
DEFINED CONTRIBUTION PLANS
Many of the Company’s employees are covered by government sponsored pension and welfare programs. Under the terms of these
programs, the Company makes periodic payments to various government agencies. In addition, in some countries the Company sponsors
or participates in certain non-governmental defined contribution plans. Contributions to defined contribution plans for the years ended
December 31, 2022, 2021 and 2020 were $29 million, $18 million and $15 million, respectively.
MULTIEMPLOYER PLANS
The Company participates in a multiemployer plan in Sweden. This ITP-2 plan is funded through Alecta and covers employees born
before 1979, for whom it provides a final pay pension benefit based on all service with participating employers. The Company must pay
for wage increases in excess of inflation on service earned with previous employers. The plan also provides disability and family benefits
and is more than 100% funded. The Company´s contributions to this multiemployer plan for the years ended December 31, 2022, 2021
and 2020 were $6 million, $5 million and $4 million, respectively.
DEFINED BENEFIT PLANS
The Company has a number of defined benefit pension plans, both contributory and non-contributory, in the U.S., France, Germany,
India, Japan, Mexico, Philippines, Poland, Sweden, South Korea, Thailand, Turkey and the United Kingdom. There are funded as well as
unfunded plan arrangements which provide retirement benefits to both U.S. and non-U.S. participants.
The main plan is the U.S. plan for which the benefits are based on an average of the employee’s earnings in the years preceding
retirement and on credited service. In a prior year, the Company closed participation in the Autoliv ASP, Inc. Pension Plan to exclude
those employees hired after December 31, 2003. Within the U.S. there is also a non-qualified restoration plan that provides benefits to
employees whose benefits in the primary U.S. plan are restricted by limitations on the compensation that can be considered in calculating
their benefits. During December 2017 the Company amended the U.S. defined benefit pension plan, communicating a benefits freeze
that will begin on December 31, 2021. Settlement accounting has been recognized each quarter in 2022 for the U.S. plans because the
lump-sum payments made to plan participants during 2022 exceeded the sum of service cost and interest cost.
For the Company’s non-U.S. defined benefit plans the most significant individual plan is in the U.K. The Company has closed participation
in the U.K. defined benefit plan to exclude all employees hired after April 30, 2003 with few members currently accruing benefits.
CHANGES IN BENEFIT OBLIGATIONS AND PLAN ASSETS FOR THE YEARS ENDED DECEMBER 31
(Dollars in millions)
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss due to:
Change in discount rate
Experience
Other assumption changes
Benefits paid
Plan settlements/curtailments
Plan amendments
Other
Translation difference
Benefit obligation at end of year
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Plan settlements
Translation difference
Fair value of plan assets at end of year
Pension liability recognized in the balance sheet
U.S.
Non-U.S.
2022
2021
2022
2021
$
$
$
$
$
381
—
12
(111)
15
—
(4)
(66)
—
—
—
227
343
(75)
3
(4)
(66)
—
201
26
$
$
$
$
$
426
8
10
(17)
3
3
(4)
(48)
—
—
—
381
355
25
15
(4)
(48)
—
343
38
$
$
$
$
$
260
9
6
(65)
4
18
(20)
(3)
2
—
(19)
192
101
(27)
19
(20)
—
(10)
63
128
$
$
$
$
$
279
12
5
(22)
9
4
(8)
(2)
—
(0)
(16)
260
103
1
11
(8)
(2)
(2)
101
159
The U.S. plan provides that benefits may be paid in the form of a lump sum if so elected by the participant. In order to more accurately
reflect a market-derived pension obligation, Autoliv adjusts the assumed lump sum interest rate to reflect market conditions as of each
December 31. This methodology is consistent with the approach required under the Pension Protection Act of 2006, which provides the
rules for determining minimum funding requirements in the U.S.
84
COMPONENTS OF NET PERIODIC BENEFIT COST ASSOCIATED WITH THE DEFINED BENEFIT RETIREMENT PLANS FOR THE
YEARS ENDED DECEMBER 31
(Dollars in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Settlement loss
Net periodic benefit cost
(Dollars in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service costs
Amortization of actuarial loss
Settlement/curtailment (gain) loss
Net periodic benefit cost
2022
U.S.
2021
2020
— $
12
(14)
0
6
4 $
8 $
10
(18)
2
5
7 $
2022
Non-U.S.
2021
2020
9
6
(2)
1
1
(8)
7
$
$
12
5
(2)
0
1
0
17
$
$
8
12
(16)
3
7
13
12
6
(2)
0
2
0
19
$
$
$
$
The service cost and amortization of prior service cost components are reported among other employee compensation costs in the
Consolidated Statements of Income. The remaining components, interest cost, expected returns on plan assets and amortization of
actuarial loss, are reported as Other non-operating items, net in the Consolidated Statements of Income.
Amortization of the net actuarial loss from accumulated other comprehensive income is made over the estimated average remaining
lifetime of the plan participants (28 to 32 years) for the U.S. plans, and the estimated average remaining service lives or lifetimes of the
plan participants for the non-U.S. plans, the periods varying over a wide range between the different countries depending on the age of
the population concerned.
COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS BEFORE TAX AS OF DECEMBER 31
(Dollars in millions)
Net actuarial loss
Prior service cost
Total accumulated other comprehensive loss
recognized in the balance sheet
U.S.
Non-U.S.
2022
2021
2022
2021
$
$
$
22
—
22
$
$
35
—
35
$
$
18
4
22
$
30
3
33
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BEFORE TAX FOR THE YEARS ENDED DECEMBER 31
(Dollars in millions)
Total retirement benefit recognized in accumulated
other comprehensive loss at beginning of year
Net actuarial loss (gain)
Amortization or curtailment recognition of prior service credit
(cost)
Amortization or settlement recognition of net gain (loss)
Translation difference
Total retirement benefit recognized in accumulated
other comprehensive loss at end of year
U.S.
Non-U.S.
2022
2021
2022
2021
$
35
(7)
—
(6)
—
$
$
62
(19)
$
33
(15)
—
(7)
—
1
5
(2)
$
22
$
35
$
22
$
45
(8)
(0)
(2)
(2)
33
The accumulated benefit obligation for the U.S. non-contributory defined benefit pension plans was $227 million and $381 million at
December 31, 2022 and 2021, respectively. The accumulated benefit obligation for the non-U.S. defined benefit pension plans was $154
million and $223 million at December 31, 2022 and 2021, respectively.
Pension plans for which the accumulated benefit obligation (ABO) is notably in excess of the plan assets reside in the following countries:
U.S., Mexico, France, Germany, Japan, South Korea, Sweden, Thailand and Turkey.
85
PENSION PLANS FOR WHICH ABO EXCEEDS THE FAIR VALUE OF PLAN ASSETS AS OF DECEMBER 31
(Dollars in millions)
Projected Benefit Obligation (PBO)
Accumulated Benefit Obligation (ABO)
Fair value of plan assets
U.S.
Non-U.S.
2022
2021
2022
2021
$
227 $
227
201
$
381
381
343
134 $
102
2
164
132
4
The Company, in consultation with its actuarial advisors, determines certain key assumptions to be used in calculating the projected
benefit obligation and annual net periodic benefit cost.
ASSUMPTIONS USED TO DETERMINE THE BENEFIT OBLIGATIONS AS OF DECEMBER 31
(% Weighted average / % Range)
Discount rate
Rate of increases in compensation level
U.S.
2022
2021
5.41
n/a
2.77
n/a
Non-U.S.1)
2022
0.75-5.40
2.00-5.00
2021
0.25-3.20
1.80-4.00
ASSUMPTIONS USED TO DETERMINE THE NET PERIODIC BENEFIT COST FOR THE YEARS ENDED DECEMBER 31
(% Weighted average)
Discount rate
Rate of increases in compensation level
Expected long-term rate of return on assets
(% Range)
Discount rate
Rate of increases in compensation level
Expected long-term rate of return on assets
2022
2.77
n/a
5.05
2022
0.25-3.20
1.80-4.00
1.70-2.20
U.S.
2021
2.37
2.65
5.05
Non-U.S.1)
2021
0.25-2.70
1.80-4.00
1.40-2.25
2020
3.25
2.65
5.05
2020
0.25-2.70
2.00-5.00
1.50-2.25
1) The Non-U.S. weighted average plan ranges in the tables above represent significant plans only.
The discount rate for the U.S. plans has been set based on the rates of return on high-quality fixed-income investments currently available
at the measurement date and expected to be available during the period the benefits will be paid. The expected timing of cash flows from
the plan has also been considered in selecting the discount rate. In particular, the yields on bonds rated AA or better on the measurement
date have been used to set the discount rate. The discount rate for the U.K. plan has been set based on the weighted average yields on
long-term high-grade corporate bonds and is determined by reference to financial markets on the measurement date.
The expected rate of increase in compensation levels and long-term rate of return on plan assets are determined based on a number of
factors and must take into account long-term expectations and reflect the financial environment in the respective local market. The
expected return on assets for the U.S. and U.K. plans are based on the fair value of the assets as of December 31.
The level of equity exposure is currently targeted at approximately 40% for the primary U.S. plan. The investment objective is to provide
an attractive risk-adjusted return that will ensure the payment of benefits while protecting against the risk of substantial investment losses.
Correlations among the asset classes are used to identify an asset mix that Autoliv believes will provide the most attractive returns. Long-
term return forecasts for each asset class using historical data and other qualitative considerations to adjust for projected economic
forecasts are used to set the expected rate of return for the entire portfolio. The Company has assumed a long-term rate of return on the
U.S. plan assets of 5.05% for calculating the 2022 expense and 5.05% for calculating the 2023 expense.
The Company has assumed a long-term rate of return on the non-U.S. plan assets in a range of 1.70-2.20% for 2022. The closed U.K.
plan, which has a targeted and actual allocation of almost 100% debt instruments, accounts for approximately 74% of the total non-U.S.
plan assets.
Autoliv made contributions to the U.S. plan during 2022 and 2021 amounting to $3 million and $15 million, respectively. Contributions to
the U.K. plan during 2022 and 2021 amounted to $2 million and $2 million, respectively. The Company expects to contribute $1 million to
its U.S. pension plan in 2023 and is currently projecting a yearly funding at the same level in the years thereafter. For the UK pension
plan, which is the most significant non-U.S. pension plan, the Company expects to contribute $2 million in 2023 and in the years thereafter.
86
FAIR VALUE OF TOTAL PLAN ASSETS FOR THE YEARS ENDED DECEMBER 31
ASSETS CATEGORY (% Weighted average)
Equity securities %
Debt instruments %
Other assets %
Total %
U.S.
Target
allocation
40
60
—
100
U.S.
Non-U.S.
2022
2021
2022
2021
23
76
1
100
42
57
1
100
0
60
40
100
0
76
24
100
The following table summarizes the fair value of the Company’s U.S. and non-U.S. defined benefit pension plan assets:
(Dollars in millions)
Assets
Non-U.S. Bonds
Corporate
Insurance Contracts
Other Investments
Assets at fair value Level 2
Investments measured at net asset value
(NAV):
Common collective trusts
Total
Fair value measurement at December 31,
2022
2021
$
$
$
38
14
11
63
201
264
$
77
16
8
101
343
444
The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not
been classified in the fair value hierarchy. Plan assets not measured using the NAV are classified as Level 2 in the table above. Plan
assets measured using the NAV mainly relate to the U.S. defined benefit pension plans and are separately disclosed as Common
collective trusts below the Level 2 assets in the table above.
The estimated future benefit payments for the pension benefits reflect expected future service, as appropriate. The amount of benefit
payments in a given year may vary from the projected amount, especially for the U.S. plan since historically this plan pays the majority of
benefits as a lump sum, where the lump sum amounts vary with market interest rates.
PENSION BENEFITS EXPECTED PAYMENTS (dollars in millions)
2023
2024
2025
2026
2027
Years 2028-2032
$
U.S.
Non-U.S.
14 $
16
17
19
19
94
10
11
11
11
12
74
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company currently provides postretirement health care and life insurance benefits to a limited group of U.S. retirees.
In general, the terms of the plans provide that U.S. employees who retire after attaining age 55, with 15 years of service (5 years before
December 31, 2006), are reimbursed for qualified medical expenses up to a maximum annual amount. Spouses for certain retirees are
also eligible for reimbursement under the plan. Life insurance coverage is available for those who elect coverage under the retiree health
plan. During 2014, the plan was amended to move from a self-insured model where employees were charged an estimated premium
based on anticipated plan expenses for continued coverage, to a plan where retirees are provided a fixed contribution to a Health
Retirement Account (HRA). Retirees can use the HRA funds to purchase insurance through a private exchange. Employees hired on or
after January 1, 2004 are not eligible to participate in the plan.
As of December 31, 2022 and 2021, the benefit obligation for postretirement benefit plans other than pensions were $15 million and $21
million, respectively. The liability for postretirement benefits other than pensions is classified as other non-current liabilities in the balance
sheet. The components of the net periodic benefit costs associated with these plans were immaterial for the years 2022, 2021 and 2020.
The average discount rate used to determine the U.S. postretirement benefit obligation was 5.39% in 2022 and 2.91% in 2021. The
average discount rate used in determining the postretirement benefit cost was 2.91% in 2022, 2.60% in 2021 and 3.50% in 2020.
The accumulated other comprehensive income before tax associated with the postretirement benefit plans other than pensions
recognized in the balance sheet as of December 31, 2022 and 2021 were $7 million and $3 million, respectively. The components of the
accumulated other comprehensive income were immaterial for the years 2022 and 2021.
The estimated future benefit payments for the postretirement benefits, which reflect expected future service as appropriate, are expected
to be immaterial for all the future years 2023-2032.
87
19. Related Party Transactions
Veoneer, Inc., was a related party until April 1, 2022. During the three months period ended March 31, 2022, when Veoneer was a related
party, the Company's related party purchases from Veoneer amounted to $17 million. The related party purchases for the full year 2021
amounted to $69 million.
Amounts due to and due from related parties as of December 31, 2021 are summarized in the below table:
(Dollars in millions)
Related party receivables
Related party payables1)
Related party accrued expenses1)
1) Included in Related party liabilities in the Consolidated Balance Sheet.
20. Segment Information
As of December 31,
2021
$
1
15
9
The Company has one operating segment which includes Autoliv’s airbag and seatbelt products and components. The operating results
of the operating segment are regularly reviewed by the Company’s chief operating decision maker to assess the performance of the
operating segment and make decisions about resources to be allocated to the operating segment.
The Company’s customers consist of all major European, U.S. and Asian automobile manufacturers. Sales to individual customers
representing 10% or more of net sales were:
In 2022: Renault 11% (including Nissan and Mitsubishi), Stellantis 11% and VW 10%.
In 2021: Renault 13% (including Nissan and Mitsubishi), Stellantis 11% and VW 10%.
In 2020: Renault 13% (including Nissan and Mitsubishi) and VW 11% and Honda 10%.
NET SALES BY REGION (Dollars in millions)
China
Japan
Rest of Asia
Americas
Europe
Total
2022
2021
2020
$
$
1,883 $
686
952
2,967
2,355
8,842 $
1,766 $
733
908
2,535
2,289
8,230 $
1,541
733
769
2,337
2,067
7,447
The Company has attributed net sales to the geographic area based on the location of the entity selling the final product.
External sales in the U.S. amounted to $2,029 million, $1,724 million and $1,647 million in 2022, 2021 and 2020, respectively. Of the
external sales, exports from the U.S. to other regions amounted to approximately $298 million, $280 million and $348 million in 2022,
2021 and 2020, respectively.
NET SALES BY PRODUCT (Dollars in millions)
Airbag, Steering Wheels and Other1)
Seatbelt Products1)
Total net sales
1) Including Corporate and other sales.
LONG-LIVED ASSETS (Dollars in millions)
China
Japan
Rest of Asia
Americas
Europe
Total
2022
2021
2020
5,807 $
3,035
8,842 $
5,380 $
2,850
8,230 $
4,824
2,623
7,447
2022
2021
581 $
134
283
1,962
1,043
4,003 $
521
178
293
1,838
1,032
3,862
$
$
$
$
Long-lived assets in the U.S. amounted to $1,626 million and $1,604 million for 2022 and 2021, respectively. For 2022 and 2021, $1,226
million and $1,227 million, respectively, of the long-lived assets in the U.S. refers to intangible assets, principally from acquisition goodwill.
88
21. Earnings Per Share
The computation of basic and diluted EPS under the two-class method were as follows (dollars and shares in millions):
Numerator: 1)
Net income attributable to common shareholders
Denominator: 1)
Basic weighted average common stock
Added: Weighted average stock options/share awards
Diluted weighted average common stock
Basic EPS
Diluted EPS
2022
2021
2020
$
$
$
423 $
435 $
87.1
0.2
87.2
87.5
0.2
87.7
4.86 $
4.85 $
4.97 $
4.96 $
187
87.3
0.2
87.5
2.14
2.14
1) The Company’s unvested RSUs and PSs, of which some included the right to receive non-forfeitable dividend equivalents, are considered participating
securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any
undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the
denominator. However, these participating securities have been immaterial for all the years presented.
Anti-dilutive shares outstanding for the years ended December 31, 2022, 2021 and 2020 were immaterial.
22. Subsequent Events
There were no reportable events subsequent to December 31, 2022.
89
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There have been no changes to and no disagreements with our independent auditors regarding accounting or financial disclosure matters
in our two most recent fiscal years.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation has been carried out by the Company’s management, under the supervision and with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer
and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are
effective.
Internal Control over Financial Reporting
(a) Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or
under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of
directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those
policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Autoliv’s internal control over financial reporting as of December 31, 2022. In making this
assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control – Integrated Framework (2013 framework).
Based on our assessment, we believe that, as of December 31, 2022, the Company’s internal control over financial reporting is effective.
(b) Attestation Report of the Registered Public Accounting Firm
Ernst & Young AB has issued an attestation report on the Company’s internal control over financial reporting, which is included herein as
the Report of Independent Registered Public Accounting Firm under Item 8. Financial Statements and Supplementary Data for the year
ended December 31, 2022.
(c) Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15-(f)
and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
None.
90
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10. regarding executive officers, directors and nominees for election as directors of Autoliv, Autoliv’s
Audit Committee, Autoliv’s code of ethics, and compliance with Section 16(A) of the Securities Exchange Act is incorporated herein by
reference from the information under the captions “Executive Officers of the Company” and “Proposal 1: Election of Directors”,
“Committees of the Board” and “Audit and Risk Committee Report”, “Corporate Governance Guidelines and Codes of Conduct”, and
“Delinquent Section 16(a) Reports”, respectively, in the Company’s 2023 Proxy Statement. Information on Board meeting attendance is
provided under the caption “Board Meetings” in the 2023 Proxy Statement and incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11. regarding executive compensation for the year ended December 31, 2022 is included under the
caption “Compensation Discussion and Analysis” in the 2023 Proxy Statement and is incorporated herein by reference. The information
required by the same item regarding Leadership Development and Compensation Committee is included in the sections “Leadership
Development and Compensation Committee Interlocks and Insider Participation” and “Leadership Development and Compensation
Committee Report” in the 2023 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by Item 12. regarding beneficial ownership of Autoliv’s common stock is included under the caption “Security
Ownership of Certain Beneficial Owners and Management” in the 2023 Proxy Statement and is incorporated herein by reference.
Shares Previously Authorized for Issuance Under the 1997 Stock Incentive Plan
The following table provides information as of December 31, 2022, about the common stock that may be issued under the Autoliv, Inc.
Stock Incentive Plan. The Company does not have any equity compensation plans that have not been approved by its stockholders.
(a) Number of
Securities to
be issued upon
exercise of
outstanding options,
warrants and rights
(b) Weighted-
average exercise
price of outstanding
options, warrants
and rights(2)
(c) Number of
securities remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column
(a))(3)
333,703
$
—
333,703
$
70.77
—
70.77
2,658,218
—
2,658,218
Plan Category
Equity compensation plans
approved by security
holders (1)
Equity compensation plans
not approved by security
holders
Total
(1)
(2)
(3)
Autoliv, Inc. Stock Incentive Plan, as amended and restated on May 6, 2009, as amended by Amendment No. 1 dated December 17, 2010 and
Amendment No. 2 dated May 8, 2012.
Excludes restricted stock units and performance shares which convert to shares of common stock for no consideration.
All such shares are available for issuance pursuant to grants of full-value stock awards.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding the Company’s policy and procedures concerning related party transactions is included under the caption “Related
Person Transactions” in the 2023 Proxy Statement and is incorporated herein by reference. Information regarding director independence
can be found under the caption “Board Independence” in the 2023 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by Item 9(e) of Schedule 14A regarding principal accounting fees and the information required by Item 14
regarding the pre-approval process of accounting services provided to Autoliv is included under the caption “Proposal 3. Ratification of
Appointment of Independent Registered Public Accounting Firm Appointment” in the 2023 Proxy Statement and is incorporated herein
by reference.
91
Item 15. Exhibit and Financial Statement Schedules
PART IV
(a)
(1)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Documents Filed as Part of this Report
Financial Statements
Consolidated Statements of Income – Years ended December 31, 2022, 2021 and 2020;
Consolidated Statements of Comprehensive Income – Years ended December 31, 2022, 2021 and 2020;
Consolidated Balance Sheets – as of December 31, 2022 and 2021;
Consolidated Statements of Cash Flows – Years ended December 31, 2022, 2021 and 2020;
Consolidated Statements of Total Equity – as of December 31, 2022, 2021 and 2020;
Notes to Consolidated Financial Statements; and
(vii)
Reports of Independent Registered Public Accounting Firm (PCAOB Auditor ID No. 1433).
(2)
Financial Statement Schedules
All of the schedules specified under Regulation S-X to be provided by Autoliv have been omitted either because they are not applicable,
they are not required, or the information required is included in the financial statements or notes thereto.
(3)
Exhibits
Exhibit
No.
Description
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Distribution Agreement, dated June 28, 2018, between Veoneer, Inc. and Autoliv, Inc., incorporated herein by reference to
Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-12933, filing date July 2, 2018).
Autoliv’s Restated Certificate of Incorporation, as amended, incorporated herein by reference to Exhibit 3.1 to the Quarterly
Report on Form 10-Q (File No. 001-12933, filing date April 22, 2015).
Autoliv’s Third Restated By-Laws, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (File
No. 001-12933, filing date December 18, 2015).
Indenture, dated March 30, 2009, between Autoliv, Inc. and U.S. Bank National Association, as trustee, incorporated herein
by reference to Exhibit 4.1 to Autoliv’s Registration Statement on Form 8-A (File No. 001-12933, filing date March 30, 2009).
Second Supplemental Indenture (including Form of Global Note), dated March 15, 2012, between Autoliv, Inc. and U.S. Bank
National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No.
001-12933, filing date March 15, 2012).
Form of Note Purchase and Guaranty Agreement dated April 23, 2014, among Autoliv ASP, Inc., Autoliv, Inc. and the
purchasers named therein, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No.
001-12933, filing date April 25, 2014).
Amendment and Waiver 2014 Note Purchase and Guaranty Agreement, dated May 24, 2018 among Autoliv, Inc., Autoliv
ASP, Inc. and the noteholders named therein, incorporated herein by reference to Exhibit 4.4 to the Quarterly Report on Form
10-Q (File No. 001-12933, filing date July 27, 2018).
General Terms and Conditions for Swedish Depository Receipts in Autoliv, Inc., representing common shares in Autoliv, Inc.,
effective as of May 30, 2018 with Skandinaviska Enskilda Banken AB (publ) serving as a custodian, incorporated herein by
reference to Exhibit 4.5 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
Agency Agreement dated June 26, 2018 among Autoliv, Inc., Autoliv ASP Inc. and HSBC Bank PLC, incorporated herein by
reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
Description of Registrant´s Securities, incorporated by reference to Exhibit 4.13 to the Annual Report on Form 10-K (File No.
001-12933, filing date February 19, 2021).
Base Listing Particulars Agreement, dated February 22, 2022, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers named
therein, incorporated herein by reference to Exhibit 4.12 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing
date April 22, 2022).
Amended and Restated Programme Agreement, dated February 22, 2022, among Autoliv, Inc., Autoliv ASP, Inc. and the
dealers named therein, incorporated herein by reference to Exhibit 4.13 to the Quarterly Report on Form 10-Q (File No. 001-
12933, filing date April 22, 2022).
92
4.10
4.11
10.1+
10.2+
10.3+
10.4
10.5
10.6+
10.7
10.8+
10.9+
10.10+
10.11
10.12+
10.13+
10.14+
10.15
10.16+
10.17+
10.18+
10.19+
Amended and Restated Agency Agreement, dated February 22, 2022, among Autoliv, Inc., Autoliv ASP, Inc. and the dealers
named therein, incorporated herein by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q (File No. 001-12933,
filing date April 22, 2022).
Description of Registrant´s Securities, incorporated by reference to Exhibit 4.13 to the Annual Report on Form 10-K (File No.
001-12933, filing date February 19, 2021)
Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated on May 6, 2009, incorporated herein by reference to
Appendix A of the Definitive Proxy Statement of Autoliv, Inc. on Schedule 14A (filing date March 23, 2009).
Amendment No. 1 to the Autoliv, Inc. 1997 Stock Incentive Plan as amended and restated on May 6, 2009, dated December
17, 2010, incorporated herein by reference to Exhibit 10.24 to the Annual Report on Form 10-K (File No. 001-12933, filing
date February 23, 2011).
Amendment No. 2 to the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated on May 6, 2009, dated May 8,
2012, incorporated herein by reference to Exhibit 10.29 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing
date July 20, 2012).
Form of Note Purchase and Guaranty Agreement, dated April 23, 2014, among Autoliv ASP, Inc., Autoliv, Inc. and the
purchasers named therein, incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q (File No.
001-12933, filing date April 25, 2014).
General Terms and Conditions for Swedish Depository Receipts in Autoliv, Inc. representing common shares in Autoliv,
Inc., effective as of May 30, 2018, with Skandinaviska Enskilda Banken AB (publ) serving as custodian, incorporated herein
by reference to Exhibit 4.5 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
Amendment No. 3 to the Autoliv, Inc. 1997 Stock Incentive Plan, as amended and restated, dated April 24, 2017, incorporated
herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date April 28, 2017).
Tax Matters Agreement, dated June 28, 2018, between Veoneer, Inc. and Autoliv, Inc., incorporated herein by reference to
Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-12933, filing date July 2, 2018).
Employment Agreement, effective as of June 29, 2018, by and between Autoliv, Inc. and Mikael Bratt, incorporated herein
by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
Employment Agreement, dated March 21, 2018 and effective as of June 29, 2018, by and between Autoliv, Inc. and Jordi
Lombarte incorporated herein by reference to Exhibit 10.12 to the Quarterly Report on Form 10-Q (File No. 001-12933,
filing date July 27, 2018).
Employment Agreement, effective as of June 29, 2018, by and between Autoliv, Inc. and Anthony J. Nellis, incorporated
herein by reference to Exhibit 10.14 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 27, 2018).
Cooperation Agreement, dated March 1, 2019, between Autoliv, Inc. and Cevian Capital II GP Limited, incorporated herein
by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-12933, filing date March 1, 2019).
Employment Agreement, dated April 23, 2019, between Autoliv, Inc. and Frithjof Oldorff, incorporated herein by reference
to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 25, 2019).
Employment Agreement, dated March 18, 2019, between Autoliv, Inc. and Christian Swahn, incorporated herein by
reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 25, 2019).
Employment Agreement, dated February 15, 2019, between Autoliv, Inc. and Magnus Jarlegren, incorporated herein by
reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 25, 2019).
Form of Indemnification Agreement between Autoliv, Inc. and its directors and certain of its executive officers, incorporated
herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 25,
2019).
Employment Agreement, dated November 26, 2019 and effective as of March 1, 2020, between Autoliv, Inc. and Fredrik
Westin, incorporated herein by reference to Exhibit 10.56 to the Annual Report on Form 10-K (File No. 001-12933, filing
date February 21, 2020).
Employment Agreement, dated January 23, 2020, between Autoliv, Inc. and Svante Mogefors, incorporated herein by
reference to Exhibit 10.58 to the Annual Report on Form 10-K (File No. 001-12933, filing date February 21, 2020).
Form of Employee restricted stock units grant agreement (2020) to be used the Autoliv, Inc 1997 Stock Incentive Plan, as
amended and restated, incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No.
001-12933, filing date April 24, 2020).
Form of Employee performance share units grant agreement (2020) to be used under the Autoliv, Inc 1997 Stock Incentive
Plan, as amended and restated, incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q
(File No. 001-12933, filing date April 24, 2020).
93
10.20
10.21+
10.22+
10.23+
10.24+
10.25+*
10.26+
10.27+
10.28+
10.29+
10.30+
10.31+
10.32+
10.33+
10.34
10.35+
10.36+
10.37+*
10.38+*
Facility Agreement, dated May 28, 2020, by and among Autoliv AB, as borrower, Autoliv, Inc. and Autoliv ASP, as
guarantors, and AB Svensk Exportkredit, as lender, incorporated herein by reference to Exhibit 10.1 to the Quarterly Report
on Form 10-Q (File No. 001-12933, filing date July 17, 2020).
Form of Non-Employee Directors 2020 restricted stock units grant agreement under the Autoliv, Inc 1997 Stock Incentive
Plan, as amended and restated, incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
(File No. 001-12933, filing date July 17, 2020).
Employment Agreement, dated May 20, 2020 and effective as of July 1, 2020, between Autoliv, Inc. and Per Ericson,
incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July
17, 2020).
Employment Agreement, dated June 8, 2020 and effective as of June 15, 2020, by between Autoliv, Inc. and Kevin Fox,
incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July
17, 2020).
Employment Agreement, effective as of August 17, 2020, by and between Autoliv AB and Mikael Hagström incorporated
herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 23,
2020).
Amendment No. 1, effective as of July 1, 2020, to Employment Agreement, effective March 21, 2018, by and between
Autoliv Inc. and Jordi Lombarte.
Amendment No. 2, effective as of March 9, 2021, to Employment Agreement, effective March 21, 2018, by and between
Autoliv Inc. and Jordi Lombarte incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File
No. 001-12933, filing date April 23, 2021).
Employment Agreement, dated October 1, 2020 and effective as of November 1, 2020, by and between Autoliv Inc. and
Colin Naughton incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-12933,
filing date April 23, 2021).
Form of Employee restricted stock units grant agreement (2021) to be used under the Autoliv, Inc 1997 Stock Incentive
Plan, as amended and restated, incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q
(File No. 001-12933, filing date April 23, 2021).
Form of Employee performance share units grant agreement (2021) to be used the Autoliv, Inc 1997 Stock Incentive Plan,
as amended and restated, incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No.
001-12933, filing date April 23, 2021).
Amendment No. 1, effective as of April 1, 2021, to Employment Agreement, effective March 18, 2019, by and between
Autoliv Inc. and Christian Swahn incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q
(File No. 001-12933, filing date April 23, 2021).
Employment Agreement, dated December 14, 2021 and effective as of January 19, 2021, by and between Autoliv Inc. and
Sng Yih incorporated herein by reference to Exhibit 10.46 to the Annual Report on Form 10-K (File No. 001-12933, filing
date February 22, 2022).
Form of Employee restricted stock units grant agreement (2022) to be used under the Autoliv, Inc 1997 Stock Incentive
Plan, as amended and restated, incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q
(File No. 001-12933, filing date April 22, 2022).
Form of Employee performance share units grant agreement (2022) to be used promised under the Autoliv, Inc 1997 Stock
Incentive Plan, as amended and restated, incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form
10-Q (File No. 001-12933, filing date April 22, 2022).
Facilities Agreement, dated May 23, 2022, among Autoliv, Inc., Autoliv ASP, Inc., Citibank, N.A., London Branch, Mizuho
Bank, Ltd., Skandinaviska Enskilda Banken AB (publ), and the other parties and lenders named therein, incorporated
herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date July 22, 2022).
Form of Non-Employee Directors restricted stock units grant agreement (2022) to be used under the Autoliv, Inc. 1997
Stock Incentive Plan, as amended and restated incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q (File No. 001-12933, filing date July 22, 2022).
Autoliv, Inc. Non-employee Director Compensation Policy, effective November 1, 2022 incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-12933, filing date October 21, 2022).
Employment Agreement, dated December 1, 2022 and effective as of January 15, 2023, by and between Autoliv, Inc. and
Jonas Jademyr.
Amendment, dated and effective December 5, 2022, to Employment Agreement, effective as of January 23, 2020, by and
between Autoliv, Inc. and Svante Mogefors.
21*
Autoliv’s List of Subsidiaries.
94
23*
31.1*
31.2*
32.1*
32.2*
Consent of Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of
1934, as amended.
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934,
as amended.
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.
101.INS*
Inline XBRL Instance Document – The instance document does not appear in the Interactive Date File because its XBRL
tags are embedded within the inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File (embedded within the inline XBRL document).
* Filed herewith.
+ Management contract or compensatory plan.
† Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
95
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, as of February 16, 2023.
AUTOLIV, INC.
(Registrant)
By /s/ Fredrik Westin
Fredrik Westin
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated, as of February 16, 2023.
Title
Name
Chairman of the Board of Directors
/s/ Jan Carlson
Jan Carlson
Chief Executive Officer and President (Principal Executive Officer)
and Director
/s/ Mikael Bratt
Mikael Bratt
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
/s/ Fredrik Westin
Fredrik Westin
Director
Director
Director
Director
Director
Director
Director
Director
Director
/s/ Laurie Brlas
Laurie Brlas
/s/ Hasse Johansson
Hasse Johansson
/s/ Leif Johansson
Leif Johansson
/s/ Franz-Josef Kortüm
Franz-Josef Kortüm
/s/ Frédéric Lissalde
Frédéric Lissalde
/s/ Xiaozhi Liu
Xiaozhi Liu
/s/ Gustav Lundgren
Gustav Lundgren
/s/ Martin Lundstedt
Martin Lundstedt
/s/ Thaddeus Senko
Thaddeus Senko
96
Glossary and Definitions
In this report, the following company or industry specific terms and abbreviations are used:
BCC
Best Cost Country.
CASH CONVERSION
Free cash flow in relation to net income.
CAPITAL EMPLOYED
Total equity and net debt (net cash).
CAPITAL EXPENDITURES
Investments in property, plant and equipment.
CAPITAL TURN-OVER RATE
Annual sales in relation to average capital employed.
CPV
Content Per Vehicle, i.e. value of the safety products in a vehicle.
DEVELOPED MARKETS
Includes North America, Western Europe, Japan and South Korea
EARNINGS PER SHARE
Net income attributable to controlling interest relative to weighted average number of shares (net of treasury shares) assuming dilution
and basic, respectively.
EBIT
Earnings before interest and taxes.
EBITDA
Earnings before interest, taxes, depreciation, and amortization
FREE CASH FLOW
Cash flows from operating activities less capital expenditures, net.
GROSS MARGIN
Gross profit relative to sales.
GROWTH MARKETS
Includes all markets except North America, Western Europe, Japan and South Korea.
HEADCOUNT
Employees plus temporary personnel.
97
INVENTORY OUTSTANDING IN RELATION TO SALES
Outstanding inventory relative to annualized fourth quarter sales.
LEVERAGE RATIO
Debt per the Policy (Net debt adjusted for pension liabilities) in relation to EBITDA per the Policy (Adjusted EBITDA) (Earnings Before
Interest, Taxes, Depreciation and Amortization, other non-operating items, net, income from equity method investments and capacity
alignments), see Item 7 for a calculation of this non-U.S. GAAP measure.
LMPU
Labor minutes per produced unit.
LVP
Light vehicle production of light motor vehicles with a gross weight of up to 3.5 metric tons.
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NET DEBT
Short and long-term debt including debt-related derivatives less cash and cash equivalents, see Non-U.S. GAAP Performance Measures
in Item 7 for a reconciliation of this non-U.S. GAAP measure.
NET DEBT TO CAPITALIZATION
Net debt in relation to total equity (including non-controlling interest) and net debt.
NUMBER OF EMPLOYEES
Employees with a continuous employment agreement, recalculated to full time equivalent heads.
OEM
Original Equipment Manufacturer referring to customers assembling new vehicles.
OPERATING MARGIN
Operating income relative to sales.
OPERATING WORKING CAPITAL
Current assets excluding cash and cash equivalents less current liabilities excluding short-term debt. Any current derivatives reported in
current assets and current liabilities related to net debt are excluded from operating working capital. See Non-U.S. GAAP Performance
Measures in Item 7 for reconciliation of this non-U.S. GAAP measure.
OUR MARKET
Our products include seatbelts, airbags and steering wheels.
PAYABLES OUTSTANDING IN RELATION TO SALES
Outstanding payables relative to annualized fourth quarter sales.
PRETAX MARGIN
Income before taxes relative to sales.
RECEIVABLES OUTSTANDING IN RELATION TO SALES
Outstanding receivables relative to annualized fourth quarter sales.
98
RETURN ON CAPITAL EMPLOYED
Operating income and equity in earnings of affiliates, relative to average capital employed.
RETURN ON TOTAL EQUITY
Net income relative to average total equity.
ROA
Rest of Asia includes all Asian countries except China and Japan.
TOTAL EQUITY RATIO
Total equity relative to total assets.
TRADE WORKING CAPITAL
Outstanding receivables and outstanding inventory less outstanding payables.
99