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Auto parts maganate Frank Stronach, who founded Magna International Inc. is being given a $1 billion dollar golden parachute for him to exit the giant corporation he founded in 1957.
Stronach is something of a folk hero in Canada, where Magna is based. A penniless immigrant from Austria, Stronach founded the company and grew it from a small auto parts maker into a massive conglomerate that assembles vehicles like the BMW X3 and the Mercedes-Benz G-Class. The deal must be approved in Canadian courts before it can go through.
[Source: Toronto Star]
Compact European cars a good fit for Canadian market
Magna International will not be selling Opel cars in the United States or China, says company CEO Frank Stronach. The head of the Canadian auto parts supplier said that this was part of the deal he worked out with GM when purchasing its European Opel brand.
Interestingly, however, there is no indication that the agreement included the Canadian market.
Stronach has commented that he’d like to manufacture cars in Canada. “We want to build Opel cars in Canada… Canada should have its own Canadian company … a truly Canadian automobile industry.”
While the Canadian market is small, with the latest figures showing about 1.5 million units expected for 2009, it’s not unforeseeable that Magna could look into building Opel cars in Canada. It also makes particular sense as smaller European-style cars (like the Corsa GSi pictured above) are much more popular in Canada than in the United States.
SMART began selling its fortwo in Canada several years before it even landed in the U.S. and currently Mercedes-Benz sells its compact B-Class in Canada. Honda has also had tremendous success selling a rebadged Civic Sedan as an entry-level luxury car called the CSX (formerly EL) under its Acura brand.
As for the Chinese market, Stronach did say that the deal may be flexible if GM (which still holds a 35 percent share in Opel) could see it as a profitable venture.
Stronach says he expects Opel to break even in just three years and furn a profit in its fourth. He also downplayed any interest in Saturn or Saab, indicating that one major acquisition might just be enough for now.
Additionally, Magna is seeking a $140 million grant from the Canadian government to assist in producing an electric car in Canada. Estimates put an electric car assembly plant at $280 million.
“If we get a loan we know we could speed it up. We could make sure it’s going to be in Canada,” Stronach told Automotive News.
[Source: Automotive News]
Successful Saturn Bid Could See Opel-Based Saturns Built in Canada
By solidifying a deal to take control of GM’s European operations, Canada’s Magna International Inc. is eager to start producing Opel cars in Canada.
“We want to build Opel cars in Canada,” said company founder and CEO Frank Stronach. “Canada should have its own Canadian company … a truly Canadian automobile industry.”
The third largest auto parts supplier in the world, Magna certainly has the resources and the know-how – it just doesn’t have the facilities to build cars in Canada. That, however, might all change as Chrysler may close operations and General Motors Canada recently shut down its truck plant in Oshawa, Ontario.
The lower value of the Canadian currently would likely help matters and should be enough to easily offset the cost of shipping vehicles to Europe – although it’s not clear that Canadian-built cars would be for the European market, as moving production outside of Germany would certainly be a devastating public relations move.
What Stronach may have in mind is for Opel-based cars to be built in Canada for distribution in Canada and the U.S. As Magna is also currently bidding to take control of Saturn from GM, it’s entirely possible that production of those models, all but one of which are based on Opel vehicles, could happen in Magna’s backyard.
There is also a strong possibility that Magna will expand into the Russian car market.
Magna’s partners in the Opel deal include Sberbank of Russia and both Stronach and Magna have strong ties to Russia. Stronach actually did work as an auto industry adviser for Prime Minister Vladimir Putin and Russian Magna investor Oleg Deripaska (the owner of Russian truck maker GAZ) has had long standing aspirations to sell consumer cars.
Building Opel models in Russia is a strong possibility, however, it is unlikely those models would be exported to Europe.
General Motors is expected to announce final candidates for the sale of Saturn in the next few weeks.
[Source: The Globe and Mail]