DETROIT -- Fresh on the heels of his company’s $1.9 billion acquisition of transmission supplier Getrag last week, Magna International CEO Don Walker said he sees no slowdown in the pace of consolidation among auto suppliers.
Walker said the relentless onrush of new technology, the pace of government regulation and the globalization of the industry are helping to drive the trend.
“You need to be well financed. You need to be global. You need to have a lot of product and process innovation,” Walker said in an interview before his speech at the Automotive News World Congress today. “You need to be very good at program management and you need to be able to launch it all.”
Magna specializes in a variety of automotive systems including seating, exteriors, closures, vision systems, body and chassis, powertrain, electronics and contract manufacturing. The company, which reported sales of $36.6 billion in 2014, has 139,000 employees at its 95 product development, engineering and sales centers in 29 countries.
“Our ability to take a 360-degree holistic view of a vehicle puts us in an advantageous position to address both the challenges and opportunities of the industry now and to come,” Walker told World Congress attendees.
Consumer electronics, cloud computing and driver assistance systems “are all converging in today’s car,” Walker said. “We are putting more than 100 million lines of code into a car -- more than in the Space Shuttle. The future of the automobile will not only be built by people in manufacturing and assembly plants, it will also be built by those with 1’s and 0’s in their veins,” he said.
To compete in this environment, Walker doesn’t believe in tying Magna to one fixed strategy for acquiring new technology. Rather, he believes Magna must remain as open as possible to new ideas, whether they come from universities, tech startups or from within Magna itself.
That means the company won’t just be acquiring larger, more established firms like Getrag. He cited the company’s partnership with Argus Cyber Security Ltd. based in Tel Aviv, Israel, announced in September. Argus has developed a technology called Intrusion Prevention System that protects a vehicle’s on-board systems from being hacked.
“We have made a conscious decision not to have our own Magna venture capital fund,” he said. “We’re not convinced that’s a skill set we necessarily have. We want to be open to work with anybody.”
When Magna makes acquisitions, they’re more likely to be product- or system- oriented, he said.
“We’re not going to invest in an app that’s going to become a $1 billion valuation,” he said. “We have a great history of developing ideas from within our company. But we also know a lot of things can happen outside our four walls.”