Magna Considers Plant Purchase

It was only a few years ago that Magna International Inc. acquired the Steyr-Daimler-Puch vehicle assembly plant and subsequently sold its share of the neighboring Eurostar minivan assembly plant in Graz, Austria, to DaimlerChrysler AG.

At the time, DC said it was “strategically important” that the auto maker “take full control of Eurostar now.”

So it comes as a bit of a surprise that Magna plans to re-acquire the Eurostar plant from the German-American auto maker. Eurostar was half-owned by Magna until DC bought it out in 1999.

And it's noteworthy that the deal derails Magna's intention to merge its Magna Steyr unit with its Tesma International Inc. to become a global force in the powertrain/drivetrain market. The proposed Tesma merger, ironically, was touted as a means for Magna to reduce its reliance on business with DC, its biggest customer.

Magna officials have been tightlipped as to how the Eurostar deal surfaced. Perhaps DC was looking for some quick cash and made an offer that its top supplier couldn't refuse.

Perhaps Magna made the overture because it wanted more space to build BMW AG's upcoming X3 sport-activity vehicle.

Perhaps DC wanted to cut bait on the Eurostar plant, which just tooled up to produce PT Cruiser in 2001, only to find that Europeans weren't wild for PT. The Chrysler Group has said it will move assembly of European versions of PT to Toluca, Mexico, the lead plant producing PT.

Whatever the impetus, the Eurostar deal makes Magna an even more integral member of the DC family, and it will allow Magna to combine the Steyr and Eurostar plants. Magna will continue producing Chrysler minivans in Graz, but that production moves next-door to the Steyr facility in mid-2002.

The minivan joins Jeep Grand Cherokee, Mercedes-Benz M-Class, G-Class and E-Class 4-Matic, in addition to the upcoming Saab convertible (see WAW — Dec. '01, p.21) at the Steyr plant.

The minivan appears to take up the capacity at Steyr that would have been used for X3.