BMW-Magna: Relationship in jeopardy?

News | September 21st, 2009 by 2
bmw-x3-2-10-4

According to AutomotiveNews and The Global and Mail, the long-standing and close business relationship between BMW and the Canadian car parts giant, Magna International, could …

According to AutomotiveNews and The Global and Mail, the long-standing and close business relationship between BMW and the Canadian car parts giant, Magna International, could face some difficulties. Recently, Magna International announced their intention to acquire a controlling stake in German carmaker Opel, a move that raised concerns among BMW executives.

Magna, which is headquartered in Canada, it is currently a “‘significant supplier”‘ to BMW’s Spartanburg facility and also its subsidiary Magna Steyr was responsible for the assembling of the first generation BMW X3 at its plant in Austria.

Quoting The Globe and Mail, “The average BMW 3-series car that rolls off the line carries $5,000 worth of Magna parts. The X3 contains $2,500 worth of Magna content.”

BMW Magna: Relationship in jeopardy?In a statement released to Frankfurter Allgemeine Zeitung, BMW’s head of production Frank-Peter Arndt said it generally was a problem when a supplier became a competitor.

“Magna would be well advised to clearly separate the two businesses. If we saw a conflict of interest we would react”.

At the Frankfurt Auto Show, BMW chief financial officer Friedrich Eichiner said:

“Magna has always been a strong supplier to us,” Mr. Eichiner said.

“However, with Magna acquiring control of Opel, this creates a new situation which we will have to assess. We will not put into question any running contracts with Magna. But where we see conflicts of interest, when it involves innovative technologies, such as new [drive train] technologies, this of course could create a conflict of interest in the future.”

BMW is Magna’s second biggest customer after General Motors. BMW generated 19 per cent of Magna’s $23.7-billion in sales last year.

There are also unconfirmed reports that a future MINI model will be built at the Magna Steyr Graz(Austria) plant.

[Source: The Globe and Mail | AutomotiveNews (sub. required) ]

  • Giom

    I don’t know much about the supply chain, but should this supplier be cut off, are there other alternatives for BMW to look at?

    But with only $2500 worth of parts on the X3, and $5000 on the 3-series, it really doesn’t seem like a too big a deal…?

  • Lance

    It depends on what they are supplying BMW….. the parts could involve some insider info on BMW products, which would then create conflict of interest. BMW would now have to evaluate the situation very carefully. You don’t want to be spending sums of money on R&D of a cerain innovative part or product and the supplier just dishes it out to its sub compay, Opel in a similar form.

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