Summary
Magna may have risked alienating certain customers, especially in regards to component technology development, if they had succeeded with the Opel partial purchase.
Magna is developing good partnerships in the growth segments of electronic, software, sensor, battery, and power management, so a growing interest in shopping for those suppliers that can be added to Magna's electronics or eletrical component product portfolio makes very good sense.
Analysis
Now that Magna is no longer in the hunt for Opel, this should allow the company to focus on companies that can truly improve their position and product portfolio.
The growth of content per vehicle of components that fall within the categories of electronics, electrical, chipset, sensor, and software will be significant in the coming years. This should be a very attractive component sector to most any large, well positioned, financially stable Tier One supplier. This includes content that is needed to support active safety, telematics, infotainment, conversion of mechanical hydraulics to electrical mechanical, and the conversion of the powertrain to hybrid or full electric content. In addition, as the internal combustion engine itself is made more effiicient in both gasoline and diesel form, for improved fuel economy and reduced emissions, there are many components that should benefit from higher volumes including variable valve, turbocharging, piezo injectors, and direct injection as a small sample.
Magna will most likely seek those companies that improve their competitive position as a systems integrator, support vertical integration of existing product lines, provide a technical and market competence in a new area of content growth, or provide access to emerging market OEM's, both domestic and foreign manufacturers.
One example could be the use of A123 lithium battery cells in Magna battery packs. These packs will find their way into Volvo commercial vehicle applications. Another example is Magna's joint venture with Semikron to develop and produce power electronics for hybrid and electric vehicle applications. These are just two examples of what could be many potential partnerships, joint ventures, and acquisition targets for Magna.
Expect to see Magna execute deals that make sense along these sectors and for these reasons.
