Magna to lose $2B BMW contract

Magna to lose $2B BMW contract

Aurora, Ontario -- Canadian auto parts maker Magna International Inc., which lost its bid for Chrysler, lost a $2 billion BMW production contract, the company said Wednesday.

BMW will shift assembly of its X3 sport utility vehicle to its plant in Spartanburg, S.C., from Magna's Magna Steyr plant in Graz, Austria, in 2010, after it stops making the vehicle's current generation, Magna said.

BMW, of Munich, Germany, is increasing the Spartanburg plant's capacity to 200,000 vehicles a year from 140,000 to protect itself against the weak U.S. dollar, The Globe and Mail reported.

The United States is also the largest market for the X3, a compact, luxury SUV being redesigned for the 2010 model year.

Losing X3 production could cost Magna more than $2 billion in revenue, based on last year's 113,000 vehicle sales, the newspaper said. Magna reported assembly revenue of $4.4 billion last year.

"While end of production for the program is at the discretion of BMW, Magna Steyr currently expects BMW X3 production to end in 2010," Magna said in a statement.

It added Magna was "a significant supplier to BMW's Spartanburg facility."

Magna has been the X3's sole production source since its 2003 introduction.

Copyright 2007 by United Press International.

Source: [url=http://www.themoneytimes.com/articles/20070517/magna_to_lose_2b_bmw_contract-id-103775.html]The Money Times[/url]