VW supplier Magna International tumbles amid scandal

Magna International Inc., the auto parts supplier whose biggest customers include Volkswagen AG, tumbled Tuesday amid concerns that the scandal engulfing the German automaker may crimp sales growth.

“Magna has a lot at stake here,” David Tyerman, an analyst at Canaccord Genuity in Toronto, said by telephone. “On a day like today, everyone involved with Volkswagen gets tarred with the same brush.”

Magna is Canada’s biggest publicly traded auto parts maker and got 11 per cent of its 2014 revenue from Volkswagen, according to data compiled by Bloomberg. The shares fell 4.9 per cent to $62.34 by the close of trading in Toronto, the most since Jan. 15.

VW said Tuesday 11 million vehicles were equipped with diesel engines at the centre of a widening scandal over falsified pollution controls.

VW is the sixth-biggest customer for Aurora, Ont.-based Magna, trailing General Motors Co., Ford Motor Co. and the other main German automakers, Bloomberg data show. In August, Magna was named one of 44 “Future Automotive Supply Tracks strategic partners” by VW in recognition of “outstanding performance.”

Magna’s diversified customer base may allow the company to make up any shortfall from a slowdown in volumes at VW, Tyerman said.

“This will be a hit in the short term, but the long-term impact may well be minimal,” he said. “Magna supplies other carmakers, too, and some of them are probably going to pick up share. So the losses may not be as big as what people think.”