Magna: It's our job to help customers balance between low cost and high quality

Peter Seidl, Vice President Marketing & Sales of Magna Powertrain USA.

Gasgoo.com: What are the most advanced technologies in terms of powertrain Magna have currently? Do you have any plans to apply or introduce the related technology to China?

Peter Seidl: Yes, we have many advanced technologies. The Magna Powertrain's product portfolio is consisting of different product groups. We have products of driveline&chassis control systems, products of fluid Pressure & Controls group, stampings products, diecasting products including Aluminum & Magnesium , Engineering Services & System integration and we have a group of After Sales Components.

To start with the Driveline &Chassis Control Systems, we are a world leader in driveline systems. For instance, we provide many of the transfer cases and All Wheel Drive Systems for BMW, for Mercedes, VW , for Land Rover, Ford, GM and Chrysler. The most advanced systems here are electronically controlled, through which the driver does not feel anything when the four wheel drive engages, everything goes smooth and with highest efficiency and fuel economy.

Our All Wheel Drive System ( for FWD type vehicles ), which is different from four wheel drive system ( for RWD based vehicles ) , is for example equipped on the VW Tiguan that is coming to China. For those products we provide the PTU & RDM (Power Take Off & Rear Drive Module units), and our advanced technology here is the use of laser welding and a very compact design. The process can help to reduce the weight and make the components very compact. For the all wheel drive system we also provide two ways of couplings, one is our Proactive Coupling and another is our Deha 2 Full Active Coupling. The advantage is that they are automatically engaging so that you don't feel anything besides perfect traction of all four wheels.

Another advanced systems include Active Rear Wheel Steering on the new BMW 7 series used for driving performance and better handling of cars.

We also have a variety of applications for EV’s & Hybrid Cars. We work closely together with other groups within Magna for instance Magna Electronic and Magna STEYR. We are making the Electric Drive Modules currently for Electric Vehicles & Hybrid applications, Magna Electronics provides all the electric & electronic components & Magna STEYR provides the complete vehicle engineering.

In our Fluid Pressure Products, we have electric water pump, electric oil pump which all need now for hybrids to get a better fuel efficiency.

In our Stamping Group, they indeed do not look highly sophisticated but the point is the process of how they are made. We make some of the parts in cold forming, for instance clutch housing for Automatic - , Powershift - & CVT transmissions. And we do single - & two piece flex plate, which means we make a flex plate for a car out of one piece, usually it’s out of two pieces.

Gasgoo.com: From your previous introduction, is there any product or technology you plan to introduce to China?

Peter Seidl: We plan to introduce and produce mass balancing system with or without an integrated oilpump for Diesel - Gasoline engines , stampings and some cold forming devices, PTUs, rear drive modules and transfer cases in our plant in Changzhou. We are already producing in China different kind of oil pumps, aluminum die castings and single piece flex plates at our Changzhou plant. In addition we provide a full range of Engineering services for both , Commercial – as well as Passenger Vehicles through our ESSI and ECS ( Engineering Center STEYR ) Group .

Because we see China, especially in the field of modern technology as well as all wheel drive, four wheel drive system, is growing rapidly. Even though the market in all wheel drive, four wheel drive system is still small, then if your look over the next few years, the market is going to go up nicely.

Gasgoo.com: How to expand the application of some technologies or products (like Magna's superb 4WD/AWD) used in the high-end vehicle models to a broader range of mass models?

Peter Seidl: Just now I gave a few examples because these are all well known brands. But we are also doing R&D for Fiat Panda including rear drive driving coupling. We are also developing products for the best cost countries. We are going to introduce a system which has got very good value for money and will be applied in vehicles that are cost efficient. This system is going to be developed in our engineering centers in China and India.

Gasgoo.com: Many global auto-parts companies have said that China's local customers are relatively sensitive to the price and very demanding about the technology and product. How will you balance that so as to meet their demands?

Peter Seidl: I think the main point is local engineering, local manufacturing and local purchasing. Because we are not making all of the parts ourselves, what we make inhouse is actually a rather small part, so we have to purchase the parts in the local market, and we have to have smart engineering solution in order to meet the customers demand.

We understand the demands very well because we have been in this market for quite a lot of years. We are a learning group. Being with customers everyday one learns a lot of things.

One other very important point is quality, especially for OEMs who are going to export their products abroad, where the quality requirements are very high. Therefore when we are suggestion a solution, you can find this is the top choice. Sometimes even if you may think it’s a little bit costly, you must consider the whole chain. When someone says this is a little bit different from something in the past, he does not take into account the aspect of quality. You will learn very fast if you go abroad to Europe or America, that if you are not having the top quality, it will cost you a lot of money afterwards and you will never sell your products again.

We see clearly that it’s our job to explain to our customers clearly what this means for the future. Why certain components might cost a little bit more but at the end of the day, taking the life cycle of the product into consideration, it might be cheaper than many cheap, low quality components.

There's an old saying in our part of the globe that "people who buys cheap buys the end of the day expensive."

Gasgoo.com: The Chinese government encourages the purchase of low-emission vehicles and requires that sub-1.5L models of passenger cars should reach 40% market share (with sub-1.0L models to have 15%). What services will Magna provide in the efforts to make engines lighter and smaller?

Peter Seidl: Actually we make our products for all sizes of cars. There's no real specific focus on a specific engine segment. Especially when you have smaller cars, you will need certain advanced components, you will need advanced components like mass balancer for engine, very capable oil pumps some specific all wheel drive system. We certainly have strength in the sector because Magna is the only automotive supplier worldwide which is not only producing component, but which can develop complete cars. It is actually building cars and doing complete engineering for our customers. This all comes from our history as we used to be a car manufacturer ourselves. You can see the best example here in China is the STEYR Heavy Commercial Trucks, the No 1 seller in the country for more than 20 years. It contains our Design - & Engineering.

Gasgoo.com: Hybrid and electric vehicles are becoming a popular trend in China. Does Magna have any strategy to readjust its products to follow this trend?

Peter Seidl: We are Engineering Components for hybrid and electric vehicles as well as the whole car and we are currently in the process of defining our strategy for China. As soon as we define everything, we will make official announcement.

Gasgoo.com: What do you think has caused the current crisis in the auto industry? How much competitiveness does the North American auto industry still hold? Do you think it will recover and how will it impact the whole industry?

Peter Seidl: In think you have seen from the TV what has happened to GM and Chrysler. They are now both in a restructure process. Chrysler has emerged from bankruptcy, so with GM. Chrysler is now the alliance of Fiat, and there will be a lot of change taking place in this company. In terms of products, Fiat has got a lot of fuel efficient cars, therefore there will be a positive outcome at the end of the day for Chrysler. With GM it's may be in a different situation because GM has a complete different structure, but again GM is focusing now on fuel-saving cars, particularly they have got some joint ventures in China making small cars already. There's a good opportunity for it.
The current financial crisis indeed has impact on automakers as well as suppliers. But Magna for instance is a financial strong company, of course we have our challenges, but due to effect of voluntary reductions, financially we remain very strong. And we also see a lot of opportunities for us with suppliers which are going into bankruptcy or have financial difficulties. We are able to take over some of this business in order to help the OEMs not to lose their supply chain. As we are a very flexible company we are able to provide help & assistance in such cases very fast.

Gasgoo.com: Just now we have talked about the impact of the financial crisis have on auto parts suppliers. Do you think it will trigger a wave of mergers and acquisitions among auto-parts companies?

Peter Seidl: Yes, there will be. But I cannot tell you in concrete who will buy whom. If you want hear that all I can say that we have been acquiring companies and we will acquire companies if it makes business sense for us. This is all I can say because I can not speak for other companies what they will do and what they will buy. The point is if you look at Magna's growth over the last twenty years, it was mainly driven by mergers and acquisitions, just like Magna Steyr. Therefore whenever it makes sense, we are ready for action.

Gasgoo.com: As you know while the auto industry in other courtiers are severely hit by the financial crisis, the Chinese market is still growing very rapidly and sometimes is the only growing markets for some automakers. Do you think many global companies will increase R&D expenditures and boost their engineering capacities in China?

Peter Seidl: I think the trend is already here. I have been coming to China for almost 20 years and I also lived in Shanghai for 2 years. It was a slow start but over the last one or two years, quite a lot of companies have increased their engineering capacities here. Because there is a lot of engineering demand in this country due to the fact that in the past you were basically just getting technology from somebody and building it here but now you are in the process to build state-of-the-art products. Therefore you may not have all the know-how in the country and you will have to get whatever foreign companies to help you.