Financial overview

Contracts
- The Company supplied products for fuel supply systems, electronic control, air-conditioning and other items for new vehicle models that Honda launched. These include the Stream; Crossroad; CR-V, which is targeted for the global market; RDX, a high-end SUV; and MDX, which is a luxury SUV sold under the Acura brand.
- The Company developed and delivered new fuel supply system products such as injectors, which are more durable and corrosion resistant than current products and which are compatible with ethanol that is being launched on the market. Ethanol is attracting a lot of attention as an alternative to fossil fuel because it reduces CO2.
- As for other environmentally responsive products, the Company started production and sales of products used in gas fuel supply systems for natural gas vehicles. These products make vehicle exhaust emissions cleaner. The Company also doubled the production capacity of new gas injectors, and worked to increase sales mainly in Europe.


Building organizational structure to supply products globally
Enhancement of production capacity in Asia
- The Company worked to enhance the production capacity at Dongguan Keihin Engine Management System Co., Ltd. in China by constructing a facility to produce casting products, in June. The Company also made an extension to the existing plant facilities in September 2006, in order to respond to the expanding Chinese automobile market.
- The Company enhanced the production capacity for motorcycle carburetors at PT Keihin Indonesia by making an extension to the existing plant facilities in August 2006.
- In September 2006 the Company enhanced the production capacity for motorcycle carburetors at Keihin FIE Private Limited in India by starting full commercial operations at its second plant.
- The Company constructed a new electronic control unit plant at Keihin Autoparts (Thailand) Co., Ltd. on the site of the industrial park where the subsidiary is located. The new Thai facility has already started production.


Enhancement of production capabilities
- The Company will increase production of gas injectors, a major component of the fuel injection systems for gas engines using CNG (compressed natural gas) and LPG (liquefied petroleum gas). It plans to almost double the current monthly production capacity of Marumori Plant, which is responsible for gas injector production, to 60,000 units.

- The Company has decided to move up quality assurance process to reinforce parts production overseas. While the quality conformance process of locally procured materials has been undertaken along with trial mass production, it will carry it out in parallel with the development process.


See Investment for detail

R&D Costs for 2006 were 15,945 million yen. (Cost of sales and administrative costs were 1,067 million yen.)

Four wheel vehicle business
- Activities related to modularity, integration technology, and new production technology for fuel supply systems; and hydraulic control systems (already commercialized)
- System parts which use alternate fuels (already commercialized)
- Highly functional injectors (already commercialized)
- Products that respond to European environmental regulations on hazardous substances
- Development of highly responsive solenoids for active control engine mounts (already commercialized)
Electronics business
- High integration of engine control units (already commercialized)
- Development of the control units for four-wheel vehicles (already commercialized)
- Development of the control units for hybrid vehicles, and the power modules for drivetrains (already commercialized)
- Development of the control units for safety equipment such as air bags (already commercialized)
- Development of control units for active control engine mounts (already commercialized).

Air conditioning business

- Low priced, highly efficient scroll type compressors (already commercialized)
- Simulation tools designed for energy efficient air conditioners
- Development of high performance and compact automotive air conditioning systems (already commercialized)

Capital investment in FY 2006 was 22,538 million JPY.

The breakdown is as follows: 3,311 million JPY for motorcycle/general-purpose production facilities, 8,124 million JPY for four-wheeled vehicle production facilities, 3,279 million JPY for electronic-control-product production facilities, 1,921 million JPY for air conditioning production facilities, 1,879 million JPY for investment in research and development, and 4,022 million JPY for other investments.

Investments Overseas
Enhancement of production capacity in Asia
- The Company worked to enhance the production capacity at Dongguan Keihin Engine Management System Co., Ltd. in China by constructing a facility to produce casting products, in June. The Company also made an extension to the existing plant facilities in September 2006, in order to respond to the expanding Chinese automobile market.
- The Company enhanced the production capacity for motorcycle carburetors at PT Keihin Indonesia by making an extension to the existing plant facilities in August 2006.
- In September 2006 the Company enhanced the production capacity for motorcycle carburetors at Keihin FIE Private Limited in India by starting full commercial operations at its second plant.
- The Company constructed a new electronic control unit plant at Keihin Autoparts (Thailand) Co., Ltd. on the site of the industrial park where the subsidiary is located. The new Thai facility has already started production.

Strengthening the Production Structure
The Company will increase production of gas injectors, a major component of the fuel injection systems for gas engines using CNG (compressed natural gas) and LPG (liquefied petroleum gas). It plans to almost double the current monthly production capacity of Marumori Plant, which is responsible for gas injector production, to 60,000 units. There are increasing cases, especially in Europe, to remodel gasoline engines to CNG and LPG engines, whose fuel cost is lower. Keihin will expand production of the component to respond to orders including one from a Dutch supplier of the kits for such remodeling. While the company supplies fuel injection systems mainly to Honda, it aims to establish the competitive edge in the field by achieving higher efficiency through fulfilling the needs for LPG and CNG systems at home and abroad. (From a story in the Nikkan Jidosha Shimbun on Jun 8 2006)

The Company has decided to move up quality assurance process to reinforce parts production overseas. While the quality conformance process of locally procured materials has been undertaken along with trial mass production, it will carry it out in parallel with the development process. Prior completion of the material conformance process will ensure the same quality for parts produced overseas as those made in Japan from the beginning of local production. Keihin will introduce this new process to achieve higher competitiveness, starting with parts for the Honda 2008 models, whose production will begin in the autumn of 2007 or later. (From an article in the Nikkan Jidosha Shimbun on Jan.12 2007)

New facilities