Auto parts giant Magna International Inc. has cut its sales outlook amid weak demand and production plans for electric vehicles.
Swamy Kotagiri, Magna’s chief executive officer, said EV delays, cancellations and volume reductions at several of Magna’s customers will reduce the Aurora, Ont.-based parts maker’s sales by about US$4-billion in 2026. Magna is responding to the slowdown by slashing investments and capital expenditures to preserve free cash flow, Mr. Kotagiri told analysts on a quarterly earnings conference call on Friday morning.
“We are taking actions at more than 40 divisions to restructure, consolidate or wind down operations,” Mr. Kotagiri said.
He cited a list of customers that have scrubbed or pushed back EV production amid softer demand. These include Ford Motor Co.’s recent decision to scrap the EV transformation at its plant in Oakville, Ont., and delay production in Tennessee; General Motors Co.’s delay of full-size pickup and sport utility vehicle output in Michigan; and Tesla Inc.’s pause in construction of a factory in Mexico. Also, three customers cancelled SUVs that were to be made at Magna Steyr in Austria: the electric Ineos Fusilier and the Fisker Ocean EV. Magna Steyr faced another blow after Mercedes-Benz ended production of its G-Class SUV.
The reduction in Magna’s 2026 sales forecast affects many of its product lines, he said, including seats, mirrors and driving-assist technology. The revision pegs the sales outlook between US$44-billion and US$46.5-billion, more than US$4-billion less than the outlook issued in February.
In a statement accompanying its earnings release, Magna said it does not normally revise its forecasts, but did so “given the magnitude of the changes that are taking place in the automotive industry and the potential impacts on our business.”
Tamy Chen, a Bank of Montreal stock analyst, said the revision was expected, given the slowing auto production environment, but did not go deep enough.
Magna said on Friday its second-quarter profit slipped by 7 per cent to US$313-million, or US$1.09 a share, compared with US$339-million (US$1.18) in the second quarter of 2023. Sales for the three months ended June 30 were almost unchanged at US$10.1-billion, compared with the year-earlier period.
Global auto production rose by 2 per cent in the second quarter, driven by a 6-per-cent increase in China. European and Detroit-based carmakers posted declines of 6 per cent and 5 per cent, respectively, Magna said. Including foreign-based manufacturers, production in North America rose by 1 per cent.
Magna’s results, issued before markets opened on Friday, missed analysts’ expectations. Magna shares closed at $56.07 on the Toronto Stock Exchange, down 6 per cent for the day. The stock price has fallen by about 28 per cent this year.
Magna employs more than 177,000 people at factories around the world. It was founded in 1957 by Frank Stronach, who retired as chairman in 2012. Mr. Stronach was charged in June with 13 sex crimes against 10 alleged victims dating back to 1977. Through a lawyer, he has said he denies the allegations.