Competition Comes from Below: Part II

Competition Comes from Below: Part II

Magna International (tkr: MGA), got its start as a machine tool shop. Today, Magna is automotive supplier to major Auto OEMs, Tier I suppliers, Heavy Equipment manufacturers and Rideshare companies such as Lyft.

Humble Beginnings

Magna counts BMW, Ford, Honda, Hyundai, Tata, Tesla, Toyota, a number of the China-based Auto OEMs as well as a number of Tier 1 Auto suppliers amongst its diversified customer roster. A far cry from its humble beginnings as a one-man machine tool shop in Toronto during the 1950s. Magna was founded in 1957 by Frank Stronach as Multimatic. The company merged with Magna Electronics in 1968 and became Magna International in 1973. MGA’s 2019 outlook calls for $41.3 Billion of Revenue (mid-point) at a 7.5% EBIT margin.

The Pursuit of Intellectual Property (“IP”)

Today’s automobile is advanced technology on wheels. Magna’s IP includes advanced driver assist technologies (a technological step below the LiDAR systems that power fully-autonomous vehicles), fuel tank systems, alternative energy storage systems and a variety of automobile components.

It’s Nice to Have Options

For the moment Magna is playing nice with its OEM customers. However, the firm is capable of building or acquiring its own proprietary vehicle (Magna flirted with acquiring Aston Martin in 2007). So long as Magna continues to invest in its IP portfolio – the firm will remain a relevant player in the global Automotive industry. Magna will retain the option to operate exclusively as a supplier or to forge ahead into full automobile production.

In our perfect world, Magna would have acquired Ansys some years ago to capture greater design and simulation capability. That ship has sailed and SAP is now the logical Ansys acquirer.

Learn about Magna International here: