MG

Thanks Mat!

Hi Vanessa,

Since Magna operates in a cyclical industry - it tends to be negatively impacted by higher rates. It will cost more for consumers to buy/lease vehicles as the interest rates on those purchases will go up. So this may impact overall demand for these products.

Keep in mind however, rates are incredibly low right now and it will take a pretty significant spike to make a difference. I mean prior to the pandemic interest rates were around 1.8% - it'll take MANY consecutive raises to get back to that level. Not saying it won't happen, but this won't happen overnight.

How can Magna overcome rising rates? Growth. The company is entering new verticals like EV and while it may impact overall growth prospects, it should still grow enough to offset interest rate impacts. I'd be worried about companies operating in cyclical industries which currently have little to no growth - those could experience negative growth in a rising interest rate environment.

Mat