Magna Steyr Lands X3 Assembly

Ending months of speculation, BMW AG announces that the Steyr-Daimler-Puch Fahrzeugtechnik AG & Co. plant in Graz, Austria, will assemble the X3 “sports activity vehicle,” the smaller sibling of the successful 2-year-old X5.

Magna International Inc., the Canadian supplier that acquired Steyr-Daimler-Puch in 1998, will build a new assembly line in an existing facility in Graz as part of the $450 million project. Production of the X3 is slated to begin in 2004, with capacity of up to 300 vehicles per day.

At full capacity, Magna Steyr would annually produce 78,000 X3s for export to world markets, especially the U.S. It should be the highest-volume vehicle for Magna Steyr, which in all of calendar 2000 produced 88,000 units total of Jeep Grand Cherokee and Mercedes-Benz M-, E- and G-Class vehicles. Output for 2001 is expected to reach 100,000 units, the company has said.

Conveniently, BMW's largest engine factory is located in Graz. It produces 4- and 6-cyl. gas and diesel engines. But BMW hasn't said if the X3 powertrain will come from Graz.

Magna Steyr's existing paint shop and shell construction facilities will be modified for the X3 project, which will require some 2,500 production employees. Earlier in the year, BMW awarded Magna Steyr a contract to engineer the X3, although BMW says it will sign off on all of the vehicle's components. BMW Group will remain solely responsible for design, engine construction, purchasing and customer service.

Based on BMW's projections, X3 sales should far exceed those of the larger X5. In MY '01, BMW sold 39,741 X5s in the U.S., exceeding deliveries of the venerable 5-series. BMW will continue to assemble the X5 at its plant in Spartanburg, SC.

Meanwhile, Magna International says Magna Steyr and its Tesma International Inc. division will merge Jan. 1 to form Magna Steyr Inc.