(Reuters) - Canadian auto parts maker Magna International Inc MG.TO on Thursday forecast lower 2020 sales and scrapped its partnership with Lyft LYFT.O to co-develop self-driving technology as it said it would instead focus on developing assisted driving technology.
Magna blamed the stronger U.S. dollar, the sale of its fluid pressure and controls business, and estimated lower light-vehicle production in Europe for its lower sales outlook.
The end of the partnership with Lyft to develop self-driving technology was driven by Magna’s belief that growth in the near and medium term - out to 2025 - is more in the driver-assisted market, called the L1, L2 and L3 market, said Swamy Kotagiri, who was promoted to president on Thursday.
“It’s a refocus on the assisted driving part of autonomy,” he told Reuters in a telephone interview.
While Magna will cease working with Lyft on developing self-driving technology, it will still collaborate with the company on various software and hardware programs, he said. Magna invested $200 million in the U.S. ride-hailing firm in 2018 to manufacture self-driving cars. (reut.rs/2Nx7zxQ)
Magna said its 2020 operating margins would improve due to lower spending on developing assisted and autonomous technology as well as the end of the Lyft-related spending.
Kotagiri told Reuters that, excluding Lyft, the company’s spending on developing technologies for autonomous and electric vehicles was rising.
Magna Chief Executive Don Walker said on a conference call with analysts that the auto sector has become “more realistic” about how fast various autonomous technologies will penetrate.
Chief Financial Officer Vince Galifi emphasized that Magna will invest “where we’re going to get a higher volume.”
Magna’s current advanced driver-assistance systems business is running above $550 million, but the growth is lumpy and the big increase in revenue comes beyond 2022, Galifi said.
The Ontario, Canada-based company said it expects 2020 sales to be between $38 billion and $40 billion and net income attributable to be in the range of $1.8 billion to $2 billion.
Analysts on average expect Magna to report revenue of $39.97 billion and profit of $1.94 billion, according to IBES data from Refinitiv.
Reporting by Ben Klayman in Detroit and Shradha Singh in Bengaluru; Editing by Aditya Soni and Jonathan Oatis
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