Automotive News Canada - April 2019 - 27

* APRIL 2019

Changing industry aligns with Magna's
expertise in contract manufacturing
CONTINUED FROM PA GE 3

low-volume, high value-vehicles - including
niche luxury models and electric cars - more
efficiently than the typical automaker-owned,
high-volume assembly plant, industry experts
said.
With the auto market becoming increasingly fragmented and new technologies
threatening to disrupt traditional business
models, North American automakers are
more willing to consider outsourcing some
The Magna Steyr plant in Graz, Austria, is
final assembly, said Robinet.
the biggest facility within Magna, worldwide,
"The market is splintering very, very
and has produced more than 3.5 million
quickly right now. Even the same nameplate
vehicles in 28 models. F I L E P H O T O
will have five or six different trim levels, five
or six different body styles. Every time that
"Magna is a Canadian-based company but
occurs, it slows down the assembly process,"
it's also a public company that has to answer
Robinet said. "Most manufacturers love to
to shareholders."
build their own vehicles. But if the alternative
Magna CEO Don Walker set the ball in
is to slow down the assembly process, if you
motion during a question-and-answer perihave to add more materials and more people,
od following an Automotive News World
sometimes it makes more sense to just conCongress speech in Detroit in January.
tract it out."
Asked whether Magna would consider the
Raj Nair, COO of privately held globOshawa plant, Walker said, "It's a chicken
al parts supplier Multimatic Inc., based in
and egg. If we had four or five customers that
Markham, Ont., said he already sees the effect said, 'I'll give you 20 to 30 to 40,000 vehicles,'
on his customers' orders for parts. "We used
and we could add that up to 120,000 to 150,000
to have days where a car program would be
vehicles, then we could have a plant. We'd
200,000 to 300,000 units. And you had
make a greenfield, buy a brownthe Big Three [Ford, GM and Fiat
field, it really depends on what our
Chrysler] and the Asians [Honda
customers want."
and Toyota] as your main manufacHis comments prompted specuturers," said Nair. "Now you have
lation Magna might take over the
more manufacturers coming in. And
plant, which employs about 2,600
you have more segments. You don't
hourly workers. GM has said it
have one SUV or one sedan. You see
plans to end vehicle production
a lot more programs that are 50,000
there in December.
to 100,000 units and sometimes even
Michael Robinet, DOWNPLAYING OSHAWA RESCUE
less. The [auto manufacturers] are
executive
less set up for that."
On Magna's fourth-quarter condirector,
Multimatic also builds the limitference call Feb. 22, Walker downautomotive
ed-production Ford GT.
played a North American expangroup, at
For new players, such as tech
sion.
IHS
Markit,
companies or China-based car mak"There's been a lot of speculasays contract
ers that want to test the waters in
tion
on that. But there's no plans to
assemblers
North America, contract assembly
expand at the current time."
can
produce
is a way to limit their exposure to
The Oshawa plant offers some
low-volume,
building an expensive plant, said
big pluses: GM invested nearly $2
high-value
Joe McCabe, CEO of AutoForecast
billion a decade ago converting it
vehicles more
Solutions in Chester Springs, Pa.
to flexible manufacturing, and in
efficiently than
"You have someone else man2016 it committed to invest a further
the typical auto
age the responsibility from womb
$500 million to complete the assemassembly plant,
to tomb. It allows them faster entry
bly of the previous-generation GMC
but Magna has
into the market."
Sierra and Chevrolet trucks, which
mastered this
In June 2018, Magna announced a production
are still being sold.
joint venture with Beijing Electric
But it also has some big drawmodel.
Vehicle Co., to produce complete
PHOTO: IHS MARKIT
backs: It's on the wrong side of the
vehicles in China and provide engicongested Toronto area, and is far
neering for an electric vehicle. And Magna's
larger than a contract assembly manufacturer
strong track record in Europe producing luxwould need.
ury cars for Mercedes-Benz and BMW makes
Still, Walker's remarks signal improvit the leading candidate to export that busiing relations between the auto industry and
ness model to North America.
the Ontario government, home to five glob"Magna is already in this business.
al automakers, said Flavio Volpe, president
They're the masters in Austria," Robinet said, of the Automotive Parts Manufacturers'
noting automakers in Europe have traditionAssociation.
ally been open to the idea of contracting out
"I think some of the stuff you heard in the
some final assembly.
past, including from Magna, was a frustration
Magna has identified the move toward
with the way things were going from a regumass customization and the possibility for
latory perspective," Volpe said. "The repeal of
more outsourcing, said Shashank Modi,
Bill 148 was an important first step in demonresearch engineer, materials and manufacstrably showing the industry this government
turing technology group at the Center for
means it when it says it's open for business."
Automotive Research in Ann Arbor, Mich.
The bill, scrapped last fall by the newly
"And you see the number of proposed elecelected Progressive Conservative government,
tric launch vehicles by Ford and GM. I think
ended the Liberals' planned minimum-wage
that's what is making them think this market
increase to $15 an hour from $14.
will grow."
During the previous Liberal regime,
Walker was an outspoken critic of what he
TREND TOWARD CONTRACT MANUFACTURING
regarded as socialist, anti-competitive poliBut whether Magna would build a new
cies, citing high taxes, high power rates and
assembly plant or take over an existing one
labour costs.
remains to be seen. And while it hasn't ruled
The province, meanwhile, has said it is
out Oshawa, the sprawling facility east of the
talking to anyone else who might have a lonGreater Toronto Area is not a slam dunk.
ger-term vision for the Oshawa, including
"We're less than 50 per cent now on the
Magna.
Magna Oshawa issue," McCabe said, adding
Ontario also announced a $40-million plan
Ontario would face stiff competition from U.S. aimed at assisting auto-industry suppliers,
jurisdictions with lower cost structures and
boosting high-tech skills training and attractricher government incentives.
ing investment. - ANC

Revenge of the nerds:
Sedan sales strike back
A 1.4-per-cent overall
year-to-date sales
decline was not
unexpected, but the
sedan surge bucked
the usual trends
By JEREMY SINEK

TORONTO CORRESPONDENT

MARCH WENT PRETTY
much as predicted, even if
that meant lower sales for the
month.
The year-over-year 1.4-percent change was negative, not
positive, but it was in line with
expectations of a second year
of modestly lower sales after
2017's all-time record.
The month's total of 184,251
cars and trucks, based on the
same number of selling days as
March 2018, brought first-quarter sales to 418,818, which is 2.6
per cent lower than the same
period last year.
Ford Canada reasserted
itself as the top-selling automaker in March, and that
wasn't only on the back of
eight-per-cent higher F-series
sales. Ford's overall 7.7-percent growth included sharply
higher sales of the EcoSport,
Flex, Fusion, Transit and
Transit Connect, and a significant increase of the Taurus,
which ceased production
March 1.
As a result, in percentage
terms, Ford actually grew its
car sales more than trucks.

DETROIT-THREE DOWNER
It was the same story from
Fiat Chrysler Automobiles
Canada, which recorded
strong gains for the Dodge
Charger and Chrysler 300
sedans. Bucking convention,
full-size sedans achieved the
highest first-quarter growth
of any vehicle segment, other
than electrics, as analyzed by
Automotive News.
However, 20-per-cent lower

MOVERS & SHAKERS
Compared with the
same month a year ago
Chrysler 300: +382%
Ram Promaster City: +346%
Ford Fusion: +170%
Ford Flex: +162%
Infiniti QX50: +157%
Mitsubishi Eclipse Cross: +156%
Mitsubishi Mirage: +99
Jaguar XE: -79%
Mercedes SL: -76%
Nissan Armada: -75%
VW Passat: -73%
Nissan Leaf: -70%
Smart ForTwo: -69%

FULL OF SURPRISES
Ford Taurus: +1,318%
Chrysler 300: +382%
VW Jetta: +200%
Hyundai Kona: +197%
Lincoln Continental: -89%
Lexus LS: -89%
Volvo S90: -88%

Sales gains for the EcoSport
(pictured), Flex, Transit and
Transit Connect vans, and the
Fusion and Taurus sedans,
helped push Ford's March
sales up by 7.7 per cent from
a year ago. P H O T O : F O R D

Jeep sales and a 19-per-cent
slump for the Ram pickup left
overall FCA sales down 11
per cent in March. Combine
that with GM Canada's 18-percent drop, and Detroit Three
sales overall were down eight
per cent, while the rest of the
industry edged up 3.7 per cent.
GM no longer breaks down
sales by model, but overall, its
trucks (down 14 per cent) fared
less badly than cars (down 36
per cent). So despite Ford's and
FCA's car sales spurts, for the
market as a whole, light trucks
(up 0.4 per cent) outperformed
cars (down 5.6 per cent).
The light-truck share of the
market came in at 72.4 per cent
in March; it is 73.1 per cent for
the year to date.

KONA'S TRIPLE THREAT
Even more than February,
the truck gains included striking increases by Hyundai's
new Kona. It tripled its sales
in March to 2,717 units and
outsold established crossover
nameplates such as the Mazda
CX-5 and Nissan Qashqai.
March was also a blockbuster
month for Mitsubishi, which
increased its utility sales 59
per cent.
At the top of the crossover
charts, the Honda CR-V surged
24 per cent to blow past rival
Toyota's RAV4 in year-to-date
sales. Yet even so, the CR-V
couldn't overtake its own compact-sedan sibling, as sales of
the Honda Civic grew eight per
cent.
Between them, the brand's
big sellers helped boost Honda
Canada's total sales 12 per
cent and put it close to Toyota
Canada, which declined three
per cent despite a third consecutive month of record Lexus
sales.
After a wobbly February,
luxury brands reported mixed
results in March. The Japanbased luxury brands all grew
their sales, as did BMW, Volvo
and Porsche. But MercedesBenz, Audi and Jaguar Land
Rover declined. In Audi's case,
it didn't help that it was all out
of Q3 crossovers as it awaits
the all-new 2019 model. For
Volvo, it was the best March in
12 years.
A bevy of new or reborn
nameplates made their sales
debuts in March: BMW Z4
(six sales) and X7 (180), Honda
Passport (265), Kia Telluride
(111) and Volkswagen Arteon
(13). - ANC

Automotive News Canada - April 2019

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