Submitted by Cedric Hughes on Thu, 06/11/2009 - 11:47
At the time of writing, Magna International Inc., the Canadian based automotive supplier is poised to acquire 20% of the ownership of General Motors’ German-based Opel. This deal, which includes a financial partnership between Magna and the Russian state run lender Sberbank, an industrial partnership between Opel and the Russian carmaker GAZ, loan guarantees from Germany’s federal government and the four state governments with Opel plants, and a trust scheme to protect Opel from “getting caught in any turbulence” from a GM bankruptcy is big: in complexity (obviously), in geopolitical alliances, in dollars, and, as with all things now in the global auto industry, in risk.
Business writers speculate that Magna’s risk also includes the conundrum of how its customer base will respond to its new identity as a rival “original equipment manufacturer or OEM,” a business term for the brand name manufacturers such as General Motors, Ford and Toyota whose products are assemblages of components designed and manufactured by others.
Many of Magna’s customers already appreciate its car making (not just parts making) capabilities. From its start in the 1950s in Aurora, Ontario as a one-man tool and die shop, Magna has become the self-described “most diversified automotive supplier in the world” designing, developing and manufacturing automotive systems, assemblies, modules and components, and engineering and assembling complete vehicles, primarily for sale to OEMs in three geographic segments: North America, Europe, and the rest of the world, which in Magna terms is primarily Asia, South America and Africa.
According to the Magna website, as of March 2009, it has 240 manufacturing operations and 86 product development, engineering and sales centres in 25 countries on five continents. Through one of its subsidiaries, Magna Steyr, it engineers, develops and assembles up to 200,000 complete automobiles a year for other companies on a contractual basis making it the largest contract manufacturer for automobiles worldwide. For example, Magna Steyr developed Mercedes-Benz's "4MATIC" all wheel drive system and assembles all E-Class 4Matic, and it did substantial development on the BMW X3 and manufactures all X3s.
The ‘About Us’ section of the Magna website, www.magna.com includes a list of its customers—“virtually every automotive manufacturer for every major brand”—and a vehicle contents section in which you can roll your cursor over numerous vehicle models from many OEMs for the components and systems supplied by Magna.
Magna’s global reach, having been spotlighted by this acquisition, raises a number of questions. The efforts Road Rules has written about to measure and compare in terms of safety one make and model with another may be less about a brand’s unique quality than about the optimum combination from a safety perspective of standard or uniform parts. Perhaps branding is only about market share and extracting profit from a perceived prestige item essentially identical to a downscale item. But if not so, shouldn’t the optimum combination become the universal baseline for safety? Shouldn’t each car regardless of cost have to be as safe as any car of that size can be?
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Shouldn’t each car regardless of cost have to be as safe as any car of that size can be?
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