Shaanxi Fast Auto Drive Group Company - FY2006

Business Highlights

Business results
- The Company achieved sales of over 2.8 billion yen (without tax) over the period of January through November 2006, a 52 percent increase compared with the same term last year. Production and sales of transmission stood at 218,964 units (up 85.1 percent year-on-year) and 214,123 units (up 76.44 percent year-on-year), respectively. The Company now controls 80 percent of the market share, up 30 percent from the 2004 level (50 percent). Among its 14 new products released in 2006, 12-shift high-power synchronized transmission system is enjoying a brisk demand, with its monthly production rate already exceeding 3,000 units.

Targets for the future
- The Company, which now focuses on transmissions for heavy-duty vehicles, will add transmissions for light-duty vehicles and passenger vehicles to its product line. It will also start developing automatically-controlled manual transmission systems, with a goal of becoming a general powertrain system supplier. Since it introduced technology from Eaton Corporation in the 1980's, the Company continued to develop its proprietary technology and expand its market presence, now achieving a 75 percent market share. On conditions of keeping its intellectual property rights to itself, the Company may tie up with foreign corporations in the future.

R&D

Recent developments
- The Company's proprietary new transmission systems under the Great King Kong brand rolled off the production line on 13 September, 2006. As a result of the Company's efforts to meet worldwide market demands, the products offer high levels of transmission efficiency and fuel consumption, along with improved durability - twice that of conventional systems. The patented China's first high performance multiple-speed mechanical transmissions for heavy-duty vehicles are expected to make a major contribution to the generational change in the Chinese heavy-duty vehicle market.

- The Company started rolling out four types of its proprietary new 12JS200T transmission systems, having passed a screening by the Shaanxi Province. The products offer stable performances, high transmission efficiency, and versatile applications with its fully synchronized double countershaft system applying a combined design for main and sub transmission cases. (From a press release on Aug. 10, 2006)

- The Company released its 2006 model-year 16JS200T transmission system for heavy duty trucks. The Company developed this new system in-house by making significant improvements to its 2003 model-year 16-speed transmission system. Based on twin countershaft high-capacity double cone synchronized mechanism and three-stage structure composed of basic transmission, front splitter group, and rear splitter group, the product offers very smooth gear shifting.

Investment Activities

Capital investment
- The Company is undergoing trials of its new automotive forging lines, into which the Company introduced the world level cutting-edge equipment. The project involving investments of over 300 million yuan. Equipped with deburring machines and an automated hot forming line, the new lines will greatly increase the Company's forging capabilities. Upon completion of the project, the Company's annual production capacity will increase to 54,000 tons.