00:00Personally, I have been a fan of your company for many, many years just because you make the G-Class
00:05in Graz, one of my all-time favorite vehicles, but you do so much more.
00:10I think you have like 80 production facilities in 30 different countries. What's driving this growth?
00:17Hi, Matt. Thanks for having me, and I appreciate you talking about the G-Wagon, and we are thankful to
00:23our customer, Mercedes, in this case.
00:25Yes, we are actually in 27 different countries, and we have over 350 divisions across doing various systems and components
00:35for all global OEMs across the world.
00:39And on top of it, the one differentiator is we also assemble cars for some of the OEMs.
00:45At the same time, the global vehicle production is basically flat. So how are you pulling off that feat?
00:51Yeah, this really is the proof point of our resilience in execution.
00:57We have had three years running of margin expansion, which really goes to about all the initiatives we have in
01:06our operational excellence,
01:08a model that is just not dependent on the volume uptick.
01:12There is a lot of discipline in how we allocate capital.
01:15We are really focused on looking at product portfolios so it is aligned with the market share, what is relevant
01:21going forward, and so on.
01:23That's really the key variables that have helped us hit the year 2025 finish really strong, and we are really
01:32set up for 2026 in the same fashion.
01:35I was looking through all the different parts that you make and am curious.
01:43You know, other competitors like Bosch, everybody knows their ABS and their IMUs, or BorgWarner, everybody knows their turbos or
01:50their Haldex, you know, ZF, everybody knows about their HP transmissions.
01:56How come you don't have branded components, because you make famously capable and successful all-wheel drive components, for example,
02:06and other stuff like seats and doors.
02:07And, you know, the OEMs then take them and name them what they like, Intelligent AWD.
02:14Why don't you brand some of your successful products to make a bigger name for yourself?
02:21Yeah, yeah, I think we are a B2B business, Matt, as you know, and it's all about collaborating with the
02:29OEMs.
02:30Like, even if you have not branded, you know about the G-Wagon, who makes it, you know about our
02:35all-wheel drive, four-wheel drive, you know about our seats.
02:37At the end of the day, that's really the important part of it.
02:42Like you said, we have the largest share in all-wheel drive, four-wheel drive systems.
02:47Now we are working through the transition for hybrids and electric drive systems, and within the next two, three years,
02:54we'll be the largest supplier outside the OEMs making those systems.
02:59In most of the product lines that we have, whether it is our structural systems, we call it the Cosmo,
03:05we have exteriors in plastics and composites, we have seats, we have mirrors, we have inside mirrors, we have electronics.
03:13And most of these product lines, we are in, you know, top one, two, or three positions.
03:20And at the end of the day, if you are able to continue to execute this gain market share and
03:24provide the value to the shareholders, you know, branding is important, but I would say, you know, it will come.
03:32Swami, when it comes to cost, there's a, after Stellantis' earnings, there's a story that they're considering using Chinese EV
03:40technology.
03:40It's an industry that you know intimately well, obviously.
03:44Why is there still this grab, this movement towards China?
03:48How important is their EV market, despite the fact that there are international tariffs on that make it quite expensive
03:54for some car makers to try to incorporate technology from China?
03:59Yeah, that's a great question.
04:01I think we have always focused on having modular systems, you know, and having a footprint that can cater to
04:09the local needs.
04:10As an example, in China, we have over 35 divisions supplying to various OEMs there.
04:16We have about five and a half billion dollars in sales in China for producing for China.
04:22So we have a seat at the table.
04:24We understand what the requirements are for the OEMs there.
04:28When you start looking at homologation and the requirements in Europe and North America, obviously the system requirements are a
04:36bit different.
04:37We can leverage what we're learning from there and bring to different OEMs in Europe, in North America.
04:45So I think really it's about having the flexibility while you're designing the architecture.
04:50I don't think it's one solution fits all.
04:53In a headline perspective, they're talking about getting stuff, taking the synergies of developing a core, being able to address
05:01multiple platforms, staying disciplined in the market that you can address, which is like 80-20 rule, right?
05:09That's what is ultimately going to get you the economies of scale and hopefully leads to the affordability of the
05:16vehicles to the consumer at the end.
05:18So I always think of Magna Steyer and Graz and you're obviously in Michigan, but Magna International is a Canadian
05:26company and the Canadian government has made very clear that it wants an auto parts supplier to do a JV
05:32with a Chinese company in Canada.
05:35And you're, you know, one of the only Canadian companies with the know-how to build a complete car.
05:41Would you be interested in that?
05:42Because you also know China well.
05:45You have your own JVs in China.
05:47Would you do a JV with a Canadian, with a Chinese company in Canada?
05:52Yeah, I think, Matt, it's the most important thing for us is that we are in the ecosystem in China
05:58supplying for Chinese OEMs and Western OEMs there,
06:01which means we know how they work, what's going on, how to work with them.
06:07We have typically not indexed, as you can imagine, with a particular OEM.
06:12We try to address the broader total addressable market as a system supplier and a solution provider.
06:19If there is an opportunity that gets us using our capacity and our capability to help the ecosystem there, absolutely
06:28yes.
06:28But the key is, as you can imagine, cannot be indexed to one OEM or one particular brand.
06:34But we have the breadth, we have the width, we have the portfolio, we have the footprint.
06:40So I think whatever happens there, it will be a tailwind for Magna.
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