World’s Biggest Contract Vehicle Assembler May Not Enter America After All

Magna International may have considered putting up a North American assembly plant two years ago, but recent developments have pushed the Mercedes-Benz G-Class maker to rethink the strategy. The confirmation came from Magna CEO Swamy Kotagiri during a media roundtable this month, highlighting that the plan’s probability is “very low right now.” The move to produce cars in North America would be favorable in complying with the Inflation Reduction Act when manufacturing EVs.

Kotagiri cited uncertainty in uncertainty and excess capacity in the market as the main reasons for the change of strategy. The changes in EV sales, along with the recent Fisker bankruptcy, were also a point of discussion, with Magna looking to have long-term, multiple product cycles with clients. The current not-so-favorable demand for EVs makes this impossible for potential Magna clients.

On To A More Cautious Approach

Magna is one of the world’s largest contract auto manufacturers, with BMW, Toyota, Jaguar, and Mercedes-Benz among its expansive client repertoire. Fisker was also one of its biggest clients with the Ocean EV, but the American startup company’s recent filing for bankruptcy is expected to incur a $400 million revenue loss for Magna, along with the cutdown of 500 jobs in April.

That said, Magna is said to be moving forward with a more cautious approach when it comes to vehicle assembly as it was providing more than just assembly for the EV startup. Kotagiri said the company will be taking a different viewpoint when asked whether it will provide the same service again to other customers.

Clients Pulling Out Of Magna

While Fisker’s bankruptcy has greatly affected Magna’s outlook toward manufacturing in North America, there are other factors involved. The Ineos Fusilier EV won’t be produced at its Graz plant anymore, while the production of the BMW Z4, Toyota GR Supra, and Jaguar E-Pace and I-Pace is not expected to be renewed anymore. Even the botched Apple Car project, which was rumored to be handled by Magna, should add to the uncertainy in expanding its manufacturing in North America.

Source:
Automotive News