5 Years After the Crash, Magna International is Up 5-fold From Its Lows

This auto-parts giant is firing on all cylinders.

| More on:
The Motley Fool

By:  Christine Conway

The automotive industry suffered terribly in 2008 and 2009, with both sales and production down due to the financial crisis.  That was bad news for Magna International (TSX: MG), (NYSE: MGA) as its business is built around the manufacturing and assembly of vehicles.

It’s never a good sign when your customers start to fail

In 2008, business at General Motors, Ford, and Chrysler was not good.  All 3 are Magna customers, therefore, the Canadian giant was feeling the impact of the significant drop in vehicle production that occurred.

It got worse in 2009 as North American sales in the first half of the year dropped another 50%.  Not only that but European sales dropped 33% compared to the first half of 2008.  The following chart shows the year end production numbers for 2008 and shows the change from then to 2012.


N.   Am Light Vehicle Production

European   Light Vehicle Production


12.6   million units

14.6   million units


15.5   million units

12.7   million units

While the North American market has picked up, at the end of 2012 the continued uncertainty in Europe was still hurting production numbers there.

These vehicle production results had a big impact on Magna’s net income.  Magna went from earning more than $600 million in 2007, to barely breaking even in 2008.  As indicated in the table below, as North American production has rebounded, so too has Magna’s bottom line.


Net   Income


$663   million


$71   million


$1,430   million

Source: company reports


Magna, is very much an international company. It has developed a wide reach with manufacturing and assembly lines as well as locations for product development in North America, South America, Africa, Europe & Asia.  A lot of the expansion has come through strategic acquisition.

Thanks to this broad-based strategy, as the table below helps to illustrate, there’re more to the Magna bounce than just improving vehicle sales.  The company is evolving, and growing its global footprint.




Manufacturing Operations



Product development, engineering, sales   centres



Number of countries



Number of employees



Outlook for the remainder of  2013

In the company’s second quarter report, Magna indicated a light vehicle production outlook for 2013 of 16.1 million units in North America and 18.6 million units in Europe.  These would be the strongest number since the crash. Magna has proved that by continuing to invest in its footprint and with continual growth and expansion they can persevere through a financial recession that would have caused many smaller firms to close their doors.

Magna is well run and financially sound – just the kind of business Canadian investors deserve to own.  While these types of companies are relatively scarce in Canada, the U.S. market is home to some of the best in the world.  We have created a special FREE report that identifies 3 U.S. businesses that are worthy of every Canadian’s hard earned investment dollars.  Simply click here to receive “3 U.S. Stocks Every Canadian Should Own” – FREE!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Christine Conway doesn’t own share of any companies mentioned.  David Gardner owns shares of Ford.  The Motley Fool owns shares of Ford.     

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

Dividend Stocks

Passive Income: Buy Dividends to Rule Your Retirement

You can establish a passive-income stream by investing in high-dividend ETFs like BMO Equal Weight Banks ETF (TSX:ZEB).

Read more »

consider the options
Dividend Stocks

Magna Stock: Is a 3% Dividend Yield Enough to Make Investors Stay?

Magna (TSX:MG)(NYSE:MGA) stock has grown 8% in the last week but is down over the last year. So is a…

Read more »

TSX Today
Tech Stocks

TSX Today: What to Watch for in Stocks on Wednesday, May 18

Canada's latest inflation numbers and investors’ reaction to the Federal Reserve chair Jerome Powell’s latest comments about the economy could…

Read more »

edit Sale sign, value, discount

Don’t Miss the Opportunity to Buy These 5 Canadian Growth Stocks Ultra Cheap

There are several bargains to consider in today's environment, but these five Canadian growth stocks are some of the very…

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Retirees: How to Stay Calm in Market Downturns

Are you losing sleep because of market volatility? Here are three tips that should give you peace of mind.

Read more »

Growth from coins

Buy the Dip: Growth Stocks Are Finally Cheap!

Cheap stocks like Constellation Software (TSX:CSU) should be on your radar.

Read more »

Index funds
Dividend Stocks

Buy the Pullback: 2 Top TSX Dividend Stocks for RRSP Investors

The drop in the TSX Index is giving RRSP investors a chance to buy top dividend stocks at cheap prices.

Read more »


Canadians: Now Is a Great Time to Snag These TSX Stocks for Your TFSA!

TFSA investors should look to snatch up undervalued TSX stocks like Manulife Financial (TSX:MFC)(NYSE:MFC) in the middle of spring.

Read more »