Several carmakers, including top Autoliv customer Daimler, and suppliers have rolled out warnings in recent weeks as an expected recovery in demand has not panned out.

Autoliv, the world's largest seatbelts and airbags maker, said it would cut about 1,000 jobs in areas like sales and R&D and sharpen its purchasing process, adding it had already slashed 1,200 production jobs during the second quarter.

CEO Mikael Bratt said car production was at its worst since the financial crisis, with demand weakest in China, where the earlier-than-planned introduction of new emission rules had heightened uncertainty, and Western Europe.

"We see customers here, some who have withdrawn or changed their footprint, and we need to follow that," he told Reuters, linking it partly to No. 4 customer Ford's plans to scale back its European presence.

"We have been able to drive the efficiency in a good way in the second quarter and we have continued to scrutinise all our costs in the system here and we are stepping up the work here to counterbalance the development in the marketplace."

TARIFF IMPACT

Bratt said Autoliv would perform some productivity actions sooner than it had planned, with the company's profitability being hit by higher costs for key raw materials like steel and an indirect impact from suppliers facing tariffs.

Autoliv told analysts it had already found ways to mitigate almost all of the expected $30 million hit in the United States from the latest batch of tariffs and that its sharpening of sourcing would cover 75% of its total purchasing costs.

Its Stockholm-listed shares held on to gains made before the results report was issued at 1000 GMT. The stock was up 3.0% at 1206 GMT, against a positive broader market.

"There was a lot of fear built in ahead of the results, with the persistent theme from all companies being that car production has weakened more than expected," Handelsbanken Capital Markets analyst Hampus Engellau said.

"Autoliv show that they are on the ball and implementing measures, while they are apparently planning for a worse scenario when it comes to global car production."

The company, which competes with Joyson Safety Systems and ZF TRW, forecast for 2019 organic sales growth of 1% to 3% from around 5% forecast earlier, and an adjusted operating margin of 9.0% to 9.5% from about 10.5% previously.

This, Autoliv said, was based on its expectations that global light vehicle production would decline 4-6%, a worse decline that forecast by leading agency IHS Markit.

It reported a fall in second-quarter operating profit to $170 million from $229 million a year ago. Analysts on an average had expected $199 million according to Refinitiv data.

(Reporting by Esha Vaish in Stockholm; editing by Johannes Hellstrom and Elaine Hardcastle)

By Esha Vaish and Johannes Hellstrom