AUTO INDUSTRY REPORTER
Magna International Inc. wants to assemble complete electric vehicles for auto makers and ride the wave of innovation in electric and hybrid vehicles that is starting to transform the auto industry.
"The way we want to do complete vehicles is in conjunction [with]or for our customers," co-chief executive officer Don Walker said yesterday.
"If we can work with two, three, four car makers to pool our resources, pool our R&D, help develop vehicles on their platforms, if we wanted to do a unique platform with them, that's what our focus is," Mr. Walker said during a conference call on Magna's year-end and fourth-quarter financial results.
Entering into such relationships would further cement the Canadian auto parts giant's status as one of the world's leading auto parts makers and position it to be a major player when alternative-power vehicles start gaining market traction later this decade.
"We expect to generate sales and [be]profitable and we plan on spending money on R&D and buying development expertise for all the components for electric or hybrid vehicles," Mr. Walker said.
Magna has already played a key role in this area with Ford Motor Co. by developing a battery-powered Focus that Ford is testing now and plans to begin selling next year.
It also developed an electric vehicle called the Mila, which it showcased last year at the Geneva International Auto Show.
Mr. Walker noted that production volumes for electric vehicles are expected to be small for the next five years.
But industry analysts and sources expect the market to heat up later in the decade when new, more stringent fuel economy rules come into effect in the U.S. and Canadian markets. In addition, auto makers will have had a few years of experience by then in developing so-called extended-range electric vehicles, which rely mainly on battery propulsion, but include a small gasoline engine so drivers aren't left stranded if a battery runs out of juice.
Automotive consulting firm J.D. Power and Associates forecasts that North American production of battery-powered vehicles will be 10,000 in 2012, but jump to 37,000 by 2015. Sales are expected to more than double to 55,000 vehicles in 2015 from 22,000 in 2012.
The financial results showed that Magna narrowed its loss in the fourth quarter from year-earlier levels, but slid to a loss of $493-million (U.S.) for all of 2009, compared with a profit of $71-million a year earlier.
The parts maker also scaled back its sales outlook for 2010 from a forecast issued last month.
Sales now are expected to be in the range of $19-billion to $20-billion, compared with the previous expectation of $19.5-billion to $20.5-billion.
The outlook for North American vehicle production has increased to 10.5 million vehicles from 10.4 million, but a drop in the value of the euro against the U.S. dollar means the value of Magna parts in the average vehicle produced in Europe will translate into lower amounts than previously forecast.
Magna also announced that it has acquired Karmann Japan Co. Ltd., a maker of convertible tops and a subsidiary of Wilhelm Karmann GmbH of Germany. It is also close to a final deal to purchase Karmann's convertible top businesses in Poland and Germany.
MAGNA INT'L (MG.A)
Close: $60.62, up 21¢
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Magna International
Q4 / 2009 / 2008
Profit / ($139 million) / ($148 million)
EPS / ($1.25) / ($1.33)
Revenue / $5.4 billion / $4.8 billlion
All figures in U.S. dollars
Source : Company reports