France's Parrot banks on smartphones in cars

* First quarter representative of full year performance

* Second quarter went "reasonably well"

* Cutting costs to maintain profits

By Michel Rose and Florent Le Quintrec

PARIS, July 9 (Reuters) - French telecom equipment group Parrot (PARRO.PA) hopes to become the industry standard for on-board electronics in cars as it bets on struggling automakers seeking to cut costs as they weather the economic crisis.

The company, which designs and markets hands-free wireless mobile phone kits for vehicles, is betting on smartphones such as Apple's (AAPL.O) iPhone replacing car radios.

"Car makers have enormous pressures on price, we are a solution to that. (Telecoms) is not their business, the industry needs a standard. We tell them, if you work with us, it will cost you less," Chief Executive Henri Seydoux told Reuters in an interview.

"The radio tape has disappeared, the CD will disappear, in favour of what we do, a system integrated in the car that allows you to make phone calls, listen to music, connect to the internet."

Parrot, which was founded by Seydoux in 1994 and was listed on the stock market in 2006, will launch a new car kit this summer that allows car owners to plug in their smartphone and use it as the car's music player.

"We think the smartphone industry is much more efficient than embedded systems, so our future is to offer the cellular phone's technology and business model to car manufacturers," Seydoux added.

Parrot sells about a fifth of its vehicle kits directly to auto manufacturers such as Peugeot (PEUP.PA), Ford (F.N) and Toyota (7221.T) that integrate them into their cars and the rest to retailers for customers to install themselves.

Parrot also makes home-stereo equipment and launched wireless speakers by French designer Philippe Starck, though this accounts for only a marginal part of the group's sales.

Parrot swung to a small operating profit of 0.1 million euros in the first quarter. Chief Financial Officer Gilles Labossiere told Reuters in the interview he expected this earnings trend to continue for the full year.

"The first quarter seems so far representative of this year, in terms of trade and, therefore, in terms of operating income," Labossiere said.

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