Magna CEO Don Walker says his company is in good position to build cars for tech companies.AARON HARRIS/Reuters
Magna International Inc. would be an ideal partner to manufacture vehicles for Apple Inc., Google Inc., or other new entrants that might decide to jump into the automotive business, Magna chief executive officer Don Walker says.
"We are, in my opinion, the best contract manufacturer in the world," Mr. Walker said Thursday. "[With] our ability to do small-volume niche vehicle production and help with the engineering and the launch and the procurement … we'd be a logical person for anybody if they have small volume or [are] a new entrant coming out."
Google already has self-driving vehicles on the road and Apple is widely believed to be developing a vehicle that would hit the streets by the end of the decade. The entrance of such companies with huge cash piles and strong brands has the potential to reshape the auto industry.
Among the reports about Apple developing a car were rumours that it has visited Magna operations in Austria that assemble vehicles on contract for several existing auto makers. Mr. Walker has refused to comment on whether there are discussions with Apple or other potential new customers.
"I'm sure there will be some new entrants," he said in an interview after Magna's annual meeting in Toronto, although he noted that entering the auto industry would be a huge task for a new player.
The advantage Magna has to sell to potential news entrants is its Magna-Steyr vehicle assembly operation in Graz, Austria, whose customers include the Mercedes-Benz division of Daimler AG and the Mini brand owned by BMW.
Magna could be the Foxconn Technology Group of the auto industry, Morgan Stanley analysts said in a report on Magna issued earlier this week. Foxconn is the China-based company that assembles iPads, iPhones and other devices for Apple.
"If Silicon Valley does start to assemble cars with Apple and Google logos on the hood, we believe it is highly unlikely that they will install greenfield assembly capacity for cars by themselves and are more likely to heavily leverage suppliers to engineer the non-critical components in the car and do final assembly for them," the analysts wrote. "Magna-Steyr is pretty much the only company they can call to do it for them."
But beyond that assembly capability, Magna's diversity, from body components, to seats, to all-wheel-drive systems makes it a "one-stop shop" for companies that want to build vehicles, the report said.
While Mr. Walker said he believes autonomous cars are 15 to 20 years away from legislative approval, Magna is increasing the amount of money and time it devotes to research and development into high-tech features and components that contribute to bringing such vehicles closer to reality.
"We've had a much more significant focus on it," he said.
Swamy Kotagiri, Magna's chief technical officer, told the annual meeting that vehicles are changing "to a very complex mechanism of software [and] hardware."
The auto parts giant is trying to develop innovative products to take advantage of that shift. Among the actions it has taken were a student innovation challenge at the Consumer Electronics Show in Las Vegas earlier this year and a survey among its 133,000 global employees that asks them: "What would you like your car to do?"
Magna also reported first-quarter financial results on Thursday that were affected by the drop in the values of the Canadian dollar and the euro against the currency in which it reports, the U.S. dollar.
Sales fell to $8.33-billion (U.S.) from $8.96-billion a year earlier.
Profit rose, however, to $465-million, or $1.12 a share, from $393-million, or 88 cents.