GRAZ, Austria – Expect more news about increased production at Magna Steyr Fahrzeugtechnik AG & Co. KG, a company source says.

Despite the Jan. 23 production launch of the redesigned Mercedes-Benz AG E-Class and the pending launches of a new Saab Automobile convertible and BMW AG’s X3 cross/utility vehicle, Magna Steyr’s assembly operations here has unused annual capacity of 30,000 to 50,000 units (see related story: Magna Steyr Rolls Out Redesigned E-Class).

Magna Steyr has unused capacity at its Graz assembly complex.

And a new production contract for additional vehicles could be announced before third quarter begins, says a Magna Steyr source.

Meanwhile, continued expansion is still on the Tier 1 supplier’s radar. Eastern Europe, Asia/Pacific, China and North America are all under consideration. Final decisions will be based on the vehicle programs and the locations of their markets.

"It is a question of time before we do come to North America, we are just evaluating which customer we will be doing that with. At some point time in the future it is our hope to do so for one of our customers," says Belinda Stronach, president and CEO of Magna International Inc.

"The E-Class program is an example of Magna’s unique position in the automotive supplier industry. Through Magna Steyr, which can design, engineer, test and assemble complete vehicles, we have capabilities that no other independent supplier is able to offer to its customers."

The production of the old E-Class was a success story for Magna Steyr. The original contract called for the production of 45,600 units of the 4wd version. Due to the unexpected popularity of the 4Matic, a total of 72,172 4Matic were made. In addition, the Austrian plant produced 25,471 rear-wheel-driven E-Class cars to support the German plant. About half of the 4Matic production was exported to the U.S.

In contrast to the launch of its predecessor, new E-Class production at Magna Steyr starts with rear-wheel-drive cars. Welded bodies are sourced from DaimlerChrysler AG’s plant in Sindelfingen, Germany. Current production is 48 units per day, it will hit 112 units daily in March 2003. The assembly of the 4Matic version will be added by July 2003. Magna Steyr plans to build more than 23,000 E-Classes this year.

According to Hans-Heinrich Weingarten, plant manager of DaimlerChrysler’s partner plant in Sindelfingen, the plan calls for production of at least 70 to 80 4Matic cars a day.The new E-Class assembly operation forms the core of the "SEC Project," which covers:

  • development and assembly of the 4Matic E-Class,

  • the assembly of some standard rear-wheel-drive models,

  • further development of the 4Matic all-wheel drive system for C- and S-Class,

  • manufacturing of core components of the all-wheel drive system,

  • and overall responsibility for the purchasing and logistics of about 280 4wd specific components for the S- and C-Class vehicles that are manufactured in Germany.

Magna Steyr’s powertrain plant in nearby Lannach and Ilz, manufacture transfer cases and front axle transmissions for the Graz-assembled E-Class 4Matic, as well as the C- and S-Class.

The SEC Project means a total sales volume of some E3.7 billion (over $3.9 billion) over the life of all three vehicle programs. It is the largest development and assembly contract in the Graz plant’s history. It secures 950 jobs in Graz and 100 jobs in Lannach and Ilz.

The first Mercedes-Benz vehicle – a G-Class – was built in Graz in 1979. Since then more than 338,000 Mercedes vehicles have been produced here.

Magna Steyr manufactured 92,269 cars last year, compared to 6,831 in 1994. It produced 30,376 Jeep Grand Cherokee, 25,813 E-Class and 9,072 G-Class vehicles. Nearly 13,000 Mercedes M-Class were assembled before Austrian production of that model was stopped in July, 2002.

Production of the Chrysler Voyager was shifted from the neighboring Eurostar plant to Magna Steyr’s "old" plant, where 14,729 Voyagers were made between September and December 2002.

"We expect a production increase of about 20% in 2003," says Herbert Demel, President and CEO of Magna Steyr. The next jump will come in 2004. "We are targeting the production of 200,000 for next year," says Siegfried Wolf, vice executive chairman of Magna International. "We became the world’s biggest car maker without an own brand," adds Wolf.

Much of that increase comes from the addition of the production of the X3, which is to start in late autumn 2003. Production of the new Saab convertible is expected to begin this summer, after bowing at the Geneva auto show.

Pilot production started in December 2002.