Magna has warned that the market is too murky and uncertain to give an outlook for 2009 and warned that January’s North American car sales numbers are a portent of worse to come.
Magna’s co-chief executive Siegfried Wolf, who heads the company together with Donald Walker, told Reuters in a phone interview that January’s car sales numbers indicated worse was to come.
“Our success depends on the success of our clients and if you look at the messages that came across in the first month you know that we haven’t hit the bottom by a long way,” Wolf said.
“We don’t know what we should be planning for, because our clients don’t know either how many vehicles they will sell,” he said when asked if he could give an outlook. “It wouldn’t be responsible to give one.”
“In past years, it had become very easy to buy a new car and people actually bought more than they needed,” he said. “Now, people are afraid to lose their jobs, they don’t know for how much longer they’ll have an income.”
The good news for Magna was that the economic crisis, while decimating the car industry, had also put an end to financial investors inflating asset prices, making bolt-on acquisitions now a realistic option again for strategic buyers, Wolf said.
“In the past few years it was extremely difficult for car parts makers like us to make acquisitions, because unlike hedge funds we were … interested in realistic asset valuations,” Wolf said. “Now acquisitions have become possible again because you are not buying pipe dreams anymore.”
Magna has today announced that it is to acquire the European operations of bankrupt US-based rival Cadence Innovation.
Go deeper with GlobalData
Cadence Europe, which reported sales of about US$369m in 2007, supplies automotive interior and exterior plastic components and systems, including instrument panels and bumpers, to several European and Asian carmakers, Reuters reported.
All four European production sites are in the new EU member states: three in the Czech Republic and a fourth in Hungary, the report said.
See also: GERMANY: Magna buys Cadence Europe operations
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