Opel Buy May Hurt Magna

As the official announcement concerning Opel draws ever closer, Austrian-Canadian manufacturer Magna begins to feel the pressure of their endeavor. As if the troubles it faces with GM and RHJ aren't enough, Magna may lose some of its customers (read carmakers), as some of them are already shopping elsewhere for possible suppliers.

"The contracts being shopped around cover parts that auto makers feel separate their vehicles from others," one supplier told Dow Jones. "They just don't have clear evidence yet that their ideas won't find their way into Opel cars."

Most of the concerns raised by the automakers concern proprietary electronic components and interior designs, as they are the primary attributes of a car noticed by customers. The contacted suppliers say automakers are interested in finding out pricing and production capabilities.

So far, the single car manufacturer who has expressed its willingness to give up the cooperation with Magna is Volkswagen. VW CEO Martin Winterkorn warned his company will reconsider doing business with Magna for a list of several complex components if the Canadian firm will take over Opel.

"I think there may be some change but I doubt you will see large contracts shifted away," Mike Wall, an auto analyst with CSM Worldwide told the source.

"This is new territory. An auto-parts supplier becoming an automaker. Magna needs to demonstrate that they can build separate firewalls to protect everyone. If they fail to communicate that strongly, however, there could be some problems."

Until now, Magna's European unit in Steyr, Austria, has been responsible for the assembly of BMW X3, Mercedes-Benz G-Klasse, Chrysler 300C, Jeep Commander and Grand Cherokee, as well as for supplying components to several carmakers.