THE FUTURE CAR ?

'magna corporation' - one of the largest canadian corporations and a supplier to most of the world's car manufacturers - is showing a
'car of the future' together with the ford motor company.
'magna' , which was founded by an austrian immigrant tool and die maker in his workshop some forty years ago(frank stronach) , has become one of the major component suppliers to car manufacturers worldwide .
it will be interesting to watch this development. hbg
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Breaking News from The Globe and Mail

Magna's car of the future
GREG KEENAN

Sunday, February 19, 2006

Amid all the shiny metal on display at the Canadian International Auto Show, it's a concept car deep in the Ford display that provides one of the most intriguing hints about how Magna International Inc. sees the future of the auto industry unfolding.

But it's the not the soy-based bumpers, corn-based convertible roof or even the hydrogen-powered engine of the Ford Motor Co. model U concept that Magna president Mark Hogan singles out. It's the plastic body panels. They're moulded in colour, not painted.

If that technology can be perfected, it can lead to an assembly plant without a paint shop. The savings amount to a few hundred million dollars. Hang the plastic panels on a metal space frame and eliminate the need for a body shop. There's another $500-million or so saved.

Suddenly, producing a tiny volume of cars makes economic sense.

"It could be 5,000 units," Mr. Hogan says.

"I personally don't think it's that far away. We're working on it."

Magna already assembles vehicles on contract for some auto makers in Europe and is keenly interested in transferring that ability to North America and other markets.

It's clear from a two-hour tour of the sprawling show that occupies two buildings of Toronto's convention centre and the field in the city's baseball stadium that Mr. Hogan and his team are trying to make sure they stay on top of developing trends in the North American vehicle market.

He notes, for example, the move toward crossover utility vehicles and the rapid expansion of the subcompact car segment amid high gas prices.

Steve Rodgers, Magna's vice-president of marketing and business development for the Asia-Pacific region, points out that Magna noticed a bit of a shift in the market out of sport utility vehicles and back toward minivans.

That drove the company to invest in research and development for fold-into-the-floor seats for minivans for DaimlerChrysler AG, a vehicle for Magna because of the value of Magna parts it carries ?-between $1,600 (U.S.) and $2,000.

And the expected growth of convertibles with roofs that retract into the body of the car sparked Magna's purchase in December of a roof system manufacturing company from Porsche AG.

So at the show, Mr. Hogan takes a long look at the Chevrolet Camaro concept on display at the GM stand and asks if DaimlerChrysler unveiled the Akino subcompact car it has shown off in Europe. That car is at the Toronto show.

He also checks to see which vehicles are front and centre in each auto maker's display.

"You can kind of smell what's going to be a winner and what isn't," Mr. Hogan says.

Another issue that emerges from a walk around the show is the key challenge Magna faces over the next few years and the critical task for both Mr. Hogan and Mr. Rodgers: winning more business with Asia-based auto makers gaining market share in North America and Europe, Magna's two largest markets.

At the Toyota Canada Inc. display, for example, Mr. Hogan acknowledges that the company would like to win more business with the world's second-largest auto maker and it sees Toyota's new assembly plant in Woodstock, Ont., as a key opportunity.

Magna has 55 parts plants from its various divisions within about a two-hour drive of Woodstock.

Mr. Rodgers points to some breakthroughs Magna has made with Japan-based auto makers?-transfer cases for four-wheel-drive systems with Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. in Japan, instrument panels for the Honda Civic in Europe and interior components on Nissan cars, also in Europe.

"It's not easy to earn your way in," Mr. Hogan says.

Contracts are not awarded simply on the basis of price or even a combination of price and quality.

"They want to know how you respond when a problem comes up," Mr. Rodgers says. "When a problem comes up, how responsive are you?"

One difficulty Magna faces is that unlike the Detroit-based companies, the Japan-based auto makers still assemble most of their own instrument panels and exterior bumper covers, known as fascias, as well as stamping their own sheet metal for exterior body panels.

The North American-based companies have contracted out much of this work.

Mr. Rodgers says the average Detroit-based vehicle has about $13,000 worth of parts on which suppliers can bid.

Magna can compete for about half of that total and they are key Magna strengths, such as fascias. The company's Decoma International Inc. division, for example, has the largest share of the fascia market.

But because Honda and Toyota still do much of that work themselves, Magna is able to bid on only $3,000 to $3,700 worth of parts on their vehicles.

European companies are similar to the North American auto makers, with BMW AG, Volkswagen AG and others relying on outside suppliers for more of their key components than Japan-based companies.

Striking deals with parts suppliers within the Honda and Toyota families of companies may be a way of expanding Magna's presence with them, Mr. Hogan says.

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