VW to Magna: “Us or Opel”

It has been commented widely (and it doesn’t take a tall IQ to do so) that Magna might get problems with its parts customers (a.k.a. OEMs) when Magna starts competing with them through Opel. Didn’t take long: “Volkswagen AG said Wednesday Canadian auto parts supplier Magna International Inc. will face conflicts of interest following the planned takeover of General Motors Corp.’s (GM) Adam Opel GmbH unit,” Dow Jones Newswire reports from Germany. The threats are carefully worded:

According to VeeDub’s spokesperson Michael Brendel, “Volkswagen will monitor this development very closely.” Translation: Volkswagen Purchasing is talking to other bidders.

Volkswagen is a direct rival of Opel. Volkswagen is also a major customer of Magna. Magna also supplies components to Porsche, Volkswagen’s largest shareholder. Conflict of interest? Looks like it.

Large parts suppliers enjoy a tight relationship with auto makers. They often are embedded in the development process of a new car. If you want to know in detail what a auto maker plans for five years down the road, become one of their components suppliers. You will work with them, and they will work with you. Unless you also own a direct competitor like Opel. If you do that, your mugshot will be posted at Wache Sandkamp, the main entrance to Volkswagen’s HQ in Wolfsburg.

Volkswagen has another beef: “Tax money has been used to a large extent for Opel’s rescue.” Volkswagen would have rather seen Opel dead. Being propped up with tax money, AND run by one of their suppliers is a bit much for them to swallow. Other makers most likely see it the same way as Volkswagen.

Magna will have to decide: Auto maker or parts maker. I’d choose the latter.