The Uncertain Future of Magna Steyr: From Overflow Factory to Single Vehicle Production
The Challenges Faced by Magna Steyr
Magna Steyr, the renowned overflow factory in Graz, Austria, is currently facing an uncertain future due to the termination of contracts, leaving it with only one vehicle to manufacture. As a long-standing contract manufacturer, Magna Steyr, a division of Canadian automotive giant Magna International, has successfully produced over four million units of 34 different models.
Reduced Production and Uncertainty
However, the plant’s future is now at risk as it is set to solely produce the Mercedes-Benz G-Class. The financial report for the second quarter ending on June 30th stated that Magna Steyr’s Graz plant is experiencing uncertainty. This uncertainty is primarily attributed to the bankruptcy of Fisker, the planned end of production for the Jaguar E-Pace, Jaguar I-Pace, BMW Z4, and Toyota Supra, as well as Ineos’s decision to halt the Fusilier program.
Magna Steyr faced significant challenges with Fisker’s bankruptcy, as it had played a significant role in the development and production of the Fisker Ocean electric SUV. The company incurred a $261 million impairment hit in the first quarter and had to revise its 2026 sales outlook by $600 million due to the end of Fisker production.
In June, Ineos also canceled the Fusilier program, which was intended to develop a smaller electric and extended-range hybrid SUV. Additionally, the production of the electric Jaguar I-Pace and E-Pace will cease in December, following Jaguar Land Rover’s decision to discontinue five Jaguar models this year.
The Future of Magna Steyr
While Magna Steyr still retains the contract to produce the Mercedes G-Class, the plant’s capacity far exceeds the sales volume of the G-Class. Furthermore, the reduced content supplied by Magna for the G-Class has forced the company to revise its sales outlook by $900 million in 2026.
Magna Steyr’s full-service business model, which involves developing, building, and supplying parts, is more lucrative than assembly alone. However, the contract manufacturing business model itself is under threat, as OEMs in Europe and China currently have excess vehicle assembly capacity. Premium brands, including Mercedes, JLR, BMW, Audi, and Aston Martin, are increasingly reducing volume and increasing prices, rendering overflow plants like Graz redundant. Additionally, manufacturers are bringing parts manufacturing in-house due to the shift towards electric vehicles.
Magna Steyr is now looking to China as a potential solution, aiming to produce vehicles for brands seeking to localize in Europe and avoid tariffs. The company currently produces Arcfox-branded cars for the BAIC Group in China through a joint venture. However, competition from other European countries vying for new investments in automotive manufacturing is fierce.
Conclusion
Magna Steyr, once an overflow factory of choice for car makers in the UK and Germany, is now facing an uncertain future. With the termination of contracts and a shift in the automotive industry, the plant’s production has been reduced to a single vehicle. To overcome these challenges, Magna Steyr must adapt its business model and explore new opportunities, such as collaborating with Chinese manufacturers and attracting investments to secure its future in the ever-changing automotive landscape.
