TORONTO — Canadian auto parts giant Magna International Inc. is well-positioned to manufacture vehicles for new industry players and may even consider expanding its plant in Austria to accommodate them, the company’s CEO said Thursday as rumours continue to swirl about a tie-up with Apple Inc.
Magna chief executive Don Walker wouldn’t address reports that the company is in advanced talks with Apple about building an electric car for the tech giant, saying “we never comment on people we’ve been talking to.”
However, new industry entrants are a “mega trend” that Magna is watching, Walker said in a presentation at the company’s annual shareholder meeting in Toronto.
Magna International Inc front-runner to win long-rumoured Apple Car business: reportAuto parts firm Magna International signs deal for German company Telemotive AG
“I think people always overestimate how quickly a new player that doesn’t make a vehicle can actually come to market with a vehicle, but I’m sure there will be some new entrants at some point in time,” he told reporters after the meeting.
“And because we have the capability of full vehicle manufacturing and engineering … if somebody new comes into the market, they would certainly be talking to us.”
German publication Handelsblatt reported last month that both BMW AG and Daimler AG have ended talks with Apple and Magna is now considered to be the front-runner for the contract.
Besides supplying parts to major automakers around the world, Magna also produces vehicles for customers at its Magna Steyr plant in Austria.
Walker said the plant is currently “pretty well full” but he didn’t rule out the possibility of expansion.
“We’re growing very rapidly, we’ve got a lot of good orders there,” he said.
“Personally I think there might be opportunities to expand that business as people come up with more variance off common global platforms and new entrants might also be looking at whether they want to actually do everything (themselves).”
On Thursday, Magna reported first-quarter profit from continuing operations of US$492 million, up eight per cent from a year earlier. Earnings per share were US$1.22, up from US$1.10, while revenue rose 15 per cent to US$8.9 billion.
The company also updated its forecast for 2016, saying it now expects full-year sales of US$35.5 billion to US$37.2 billion, US$900 million higher than its previous estimate.
A large part of this sales growth will come from China, which remains an important market for Magna despite the recent stock market turmoil and concerns about a slowing economy, said Jim Tobin, chief marketing officer and president of the company’s Asian operations.
Walker said Magna is focused on five “mega trends” for the future: fuel economy, electrification, automated vehicles, the arrival of new industry players and the growth of car sharing.
However, he said fully self-driving cars — in which no driver is needed behind the wheel — are a long way off.
“I think many people outside the industry are way overestimating how fast the penetration of fully autonomous vehicles is going to come,” Walker said, adding that he believes it will be “years and years” before cars can drive themselves.
Walker said significant adoption of electric vehicles is also something that won’t happen for many years.
“If you said how long before 30 per cent of the vehicles in the world are electric vehicles, I think well beyond 2030,” he said.