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Porsche threatens to pull Boxster production from Magna

Fri, 25 Sep 2009

Porsche is considering canceling an existing contract with Magna to build the next-generation Boxster and Cayman in Austria starting in 2013 and may instead move production to Karmann in Germany.

The move would be aimed at protecting Porsche's closely guarded engineering and production cost secrets for its upcoming entry-level roadster and coupe. Porsche insiders say plans established under former boss Wendelin Weideking to build the Boxster and the Cayman at Magna's Graz factory in Austria are now being heavily reviewed following the Canadian/Austrian company's bid to take control of financially embattled Opel from General Motors.

Porsche's review of future Boxster and Cayman production comes on the heels of threats from Martin Winterkorn, chairman of parent company Volkswagen, at the recent Frankfurt motor show. Winterkorn suggested that the German car-making giant, which is in the process of purchasing Porsche, may be forced to seek a new engineering partner if Magna's plans to purchase a majority stake in Opel are successful.

Since its introduction in 1996, Porsche has regularly relied on Valmet in Finland for production of the Boxster, depending on demand. In recent times, however, the Boxster has been brought back in-house, with production now taking place at Porsche's Zuffenhausen factory on the outskirts of Stuttgart, along with the mechanically identical Cayman.

Porsche's decision to move production from Valmet to Magna was originally made on cost and logistic grounds. Insiders now suggest the future Boxster and Cayman could end up coming from Karmann, which recently entered bankruptcy protection following the loss of key contracts, including the Mercedes-Benz CLK cabriolet. Based in Osnabruck, Germany, Karmann traditionally has had close links with Volkswagen and is considered one of the favorites to build a production version of the BlueSport roadster concept revealed at the Detroit auto show in January.

The loss of engineering work from Porsche and Volkswagen would be a major financial blow to Magna, which is reeling from a major downturn in contracts related to the world economic crisis. No firm figure has been placed on what the Porsche and Volkswagen contracts are worth, but insiders estimate they are "in the hundreds of million" per year.

Still, Porsche and VW are not the only carmakers considering their relationship with Magna. BMW officials say an internal study is under way to determine whether plans to build the Mini Crossover at Magna could be advantageous to Opel.

By Greg Kable