FRANKFURT -- Magna International Inc. is finding that some automaker customers are angry about the prospect of the Canadian supplier becoming a competitor.
Along with Russian state lender Sberbank, Magna has won tentative approval to buy a 55 percent share of General Motors Co. subsidiaries Opel and U.K. sister brand Vauxhall. That means Magna will control an automaker that battles against its parts customers.
Automakers fear, for example, that Magna could learn competitive secrets from them about technology and future products that could be useful for Opel.
Magna executives have said that they will erect a firewall between the two parts of the business, keeping Opel and the components business separate.
Other automakers have tried to manage the problem. For example, GM and Ford Motor Co. sold parts to other automakers before they spun off Delphi Corp. and Visteon Corp. And supplier Faurecia SA is controlled by PSA/Peugeot-Citroen SA.
VW, BMW voice concern
The most blunt comment about the Magna-Opel situation came from Volkswagen AG Chairman Ferdinand Piech, whose VW-brand vehicles compete directly with those of Opel.
"As a company, we don't like it when our supplier becomes our rival," Piech told the Dow Jones News Service.
Detlef Wittig, VW's head of sales and marketing, said last week that Europe's largest automaker will withdraw business from Magna if it takes over Opel.
"If they really do go through with it, then we will withdraw business from Magna in which our development know-how is included," Wittig said.
"We cannot leave our know-how in the hands of a supplier that then uses this in his own automobile company," Wittig told reporters on the sidelines of an event in Hamburg.
BMW AG's head of production, Frank-Peter Arndt, said it generally is a problem when a supplier becomes a competitor.
"Magna would be well-advised to clearly separate the two businesses. If we saw a conflict of interest, we would react," Arndt told the German newspaper Frankfurter Allgemeine Zeitung in an interview.
BMW is Magna's second-biggest customer after GM.
One high-ranking German executive, who declined to be named, said his automaker will continue sourcing to Magna for the duration of existing products but is reconsidering all future products.
Ford OK with takeover
Ford Motor Co. executives, on the other hand, have been conciliatory. John Fleming, CEO of Ford of Europe, said Ford is giving Magna the benefit of the doubt.
"They've assured us that they have the ability to keep our intellectual property separate, and we believe them," Fleming said at the auto show here.
Two sources close to Magna said the deal with Opel was done despite general opposition from Magna's board and the opposition of some high-ranking Magna executives. Said one high-ranking executive: "Ego, and ego alone, drove the [Opel] decision."
Wilbur Ross, owner of supplier International Automotive Components Group, agreed that Magna's becoming an automaker is tricky.
"The proof is there that it doesn't always work well," he said. "With Visteon and Delphi, they were still too identified with the parent automakers [Ford and GM] that once managed them."