just-auto.com

GERMANY: Magna after Porsche cancellation compo

By just-auto.com editorial team | 26 November 2009

Magna International reportedly wants at least EUR400m (US$600m) in compensation from Porsche for cancelling an assembly contract, a newspaper reported on Thursday.

Austrian newspaper WirtschaftsBlatt quoted an "involved person" as saying that the compensation was for development work already done by Magna, which was due to assemble Porsche's Boxster and Cayman models from 2012 in its Austrian factory.

Porsche, which is in the process of merging with Volkswagen, aims to cancel the deal under which Magna would build the Boxster, a source familiar with the situation told Reuters on Tuesday.

Porsche last year awarded Magna an eight-year contract to build the Cayman and Boxster models from 2012. The models are currently built at Valmet in Finland.

However, Volkswagen has since acquired some facilities of bankrupt Karmann and it is expected the automaker will build the Porsche models there.