A red-hot trend in the car industry is for new entrants such as Fisker to hand over the complicated and capital-intensive work of engineering and building vehicles to a contract manufacturer.
There’s at least one big contract manufacturer ready to take advantage of these seismic industry changes: Canada’s Magna International Inc. “If Apple is serious about building a car … Magna Steyr should build it,” says Evercore ISI analyst Chris McNally. Typically those companies choose to outsource the work, rather than retool or build a new production line, because the sales volumes are relatively small. In 2019 Magna assembled almost 160,000 vehicles – more than many carmakers produce — and generated US$6.7 billion of revenue from these activities. Together with joint venture partner Beijing Automotive Group Co. it recently added another facility in China, which is capable of producing 180,000 vehicles yearly.