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September 18, 2009

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Home » Business » Auto

Magna looks for China opportunities

MAGNA International Inc, which has agreed with its Russian partner to buy a majority stake in General Motor's Opel unit, said it would look at strategic investment opportunities in China and Russia, a senior company executive said yesterday in Shanghai.

Magna, the world's third-largest auto parts maker, has shown an interest in buying struggling auto makers since the global financial crisis prompted car makers to spin off unprofitable units.

The Opel deal has triggered market speculation that Magna would use it as a stepping stone to take on auto giants amid restructuring in the sector.

James J. Tobin, Magna's Asia president and executive vice president of business development, said the Canada-based parts maker was not interested in making vehicles.

He said Magna had made the Opel bid due to concern that its Europe business would dry up if Opel went bankrupt.

GM is Magna's biggest client, contributing 21 percent to its global business.

"Magna and the new Opel will be separate companies, and we don't want to compete with our clients," Tobin said. "Magna will continue to produce auto parts for the automotive industry."

In the new Opel, Magna and its Russian partner, the state-owned lender Sberbank, would each retain a 27.5 percent stake with Detroit-based GM taking 35 percent and workers the remaining 10 percent.

Tobin said Magna would take three of 20 seats on the new Opel's board of directors.

Tobin said China and Russia would be its top priority for further expansion.

"We don't anticipate the North American and EU market to return to the 2007 level until somewhere around 2013," he said. "But China will continue to grow significantly this year as well as the next five years."

China's auto sales rose 18 percent in the first half of this year from the same period in 2008 thanks to government stimulus measures.


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