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June 19, 2017

Magna to contract build BMW PHEV

Magna International will assemble BMW's new 5-series plug-in hybrid at its Austrian Magna Steyr factory as part of a strategy to produce electric cars on a contract basis for global automakers, the company said.

Magna International will assemble BMW's new 5-series plug-in hybrid at its Austrian Magna Steyr factory as part of a strategy to produce electric cars on a contract basis for global automakers, the company said.

Reuters reported the 530 plug-in hybrid would be manufactured from this summer at Magna's plant in Graz, Austria, which plans to produce Jaguar's I-Pace SUV beginning in early 2018.

Magna Steyr has previously built other niche models for BMW and the Mini Countryman/Paceman. The latter were recently moved to a Dutch contract assembler following a redesign. It has also made Mercedes models for Daimler and a mix of Chrysler and Jeep vehicles.

Reuters noted Aurora, Ontario-based Magna, North America's largest automotive supplier and the third globally, is alone among top auto suppliers to perform contract manufacturing for carmakers. Its Austrian plant can produce about 200,000 cars per year. It is currently building a new paint shop in Slovenia due to increased demand.

A Magna spokeswoman would not comment to Reuters on a statement by the Slovenian government in March the auto supplier would potentially invest up to EUR1.24bn in the country, including a car plant with capacity of 100,000 to 200,000 vehicles per year.

Having contract manufacturing in its portfolio creates a niche for the company as automakers slowly bring more electrified vehicles to market over the next decade. For automakers, outsourcing the assembly can be an advantage on low-volume models to minimise capital expenditures and avoid tying up their own production lines, the news agency said.

Swamy Kotagiri, Magna's chief technology officer, said he sees contract manufacturing of electric vehicles as a "near-term opportunity" for the company, given that by 2025, 40% to 50% of all vehicles produced will include some electrification elements.

"We are setting up knowing the penetration will be higher."

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