Magna: It's our job to help customers balance between low cost and high quality

• Source: Gasgoo
• [08:23 August 07 2009]
• Comments

We see clearly that it’s our job to explain to our customers clearly what this means for the future. Why certain components might cost a little bit more but at the end of the day, taking the life cycle of the product into consideration, it might be cheaper than many cheap, low quality components.

There's an old saying in our part of the globe that "people who buys cheap buys the end of the day expensive."

Gasgoo.com: The Chinese government encourages the purchase of low-emission vehicles and requires that sub-1.5L models of passenger cars should reach 40 percent market share (with sub-1.0L models to have 15 percent). What services will Magna provide in the efforts to make engines lighter and smaller?

Peter Seidl: Actually we make our products for all sizes of cars. There's no real specific focus on a specific engine segment. Especially when you have smaller cars, you will need certain advanced components, you will need advanced components like mass balancer for engine, very capable oil pumps some specific all wheel drive system. We certainly have strength in the sector because Magna is the only automotive supplier worldwide which is not only producing component, but which can develop complete cars. It is actually building cars and doing complete engineering for our customers. This all comes from our history as we used to be a car manufacturer ourselves. You can see the best example here in China is the STEYR Heavy Commercial Trucks, the No 1 seller in the country for more than 20 years. It contains our Design - & Engineering.

Gasgoo.com: Hybrid and electric vehicles are becoming a popular trend in China. Does Magna have any strategy to readjust its products to follow this trend?

Peter Seidl: We are Engineering Components for hybrid and electric vehicles as well as the whole car and we are currently in the process of defining our strategy for China. As soon as we define everything, we will make official announcement.

Gasgoo.com: What do you think has caused the current crisis in the auto industry? How much competitiveness does the North American auto industry still hold? Do you think it will recover and how will it impact the whole industry?

Peter Seidl: In think you have seen from the TV what has happened to GM and Chrysler. They are now both in a restructure process. Chrysler has emerged from bankruptcy, so with GM. Chrysler is now the alliance of Fiat, and there will be a lot of change taking place in this company. In terms of products, Fiat has got a lot of fuel efficient cars, therefore there will be a positive outcome at the end of the day for Chrysler. With GM it's may be in a different situation because GM has a complete different structure, but again GM is focusing now on fuel-saving cars, particularly they have got some joint ventures in China making small cars already. There's a good opportunity for it.
The current financial crisis indeed has impact on automakers as well as suppliers. But Magna for instance is a financial strong company, of course we have our challenges, but due to effect of voluntary reductions, financially we remain very strong. And we also see a lot of opportunities for us with suppliers which are going into bankruptcy or have financial difficulties. We are able to take over some of this business in order to help the OEMs not to lose their supply chain. As we are a very flexible company we are able to provide help & assistance in such cases very fast.

Gasgoo.com: Just now we have talked about the impact of the financial crisis have on auto parts suppliers. Do you think it will trigger a wave of mergers and acquisitions among auto-parts companies?

Peter Seidl: Yes, there will be. But I cannot tell you in concrete who will buy whom. If you want hear that all I can say that we have been acquiring companies and we will acquire companies if it makes business sense for us. This is all I can say because I can not speak for other companies what they will do and what they will buy. The point is if you look at Magna's growth over the last twenty years, it was mainly driven by mergers and acquisitions, just like Magna Steyr. Therefore whenever it makes sense, we are ready for action.