Magna unit wins contract to make bigger Mini: report

Globe and Mail Update

A Magna International Inc. assembly plant in Graz, Austria has won the contract to build the new Mini-based multi-activity vehicle, a BMW AG spokesman told Bloomberg News Tuesday.

Magna Steyr, which currently makes the BMW X3 sport utility vehicle, will build about 40,000 of the vehicles annually beginning in 2009, reports said Tuesday.

The contract partially fills a production gap at the plant, which builds vehicles on contract for auto makers. The new Mini will help make up for the loss of about 60,000 vehicles because Chrysler LLC is shifting assembly of its minivan and full-sized sedans out of the Magna facility and back to its own plants in North America.

But the bigger hole will come when X3 production is shifted to a BMW operation in South Carolina in 2009, leaving Magna volume of about 100,000 vehicles annually to make up.

“It's a good step in the right direction,” for Magna as it attempts to win new assembly contracts to replace the X3 and other vehicles it's losing, said CIBC World Markets Inc. analyst Michael Willemse. “They're going to have to hurry up if they want to fully offset it.”

Magna shares were changing hands at $82.25 in mid-afternoon trading, down $1.24