Financial Overview

(in million euros)

	FY2008	FY2007	Rate of change (%)	Remarks
Net sales	8,664	9,555	(9.3)	-7,045 millions euros from the OE segment (81% of the total) -1,619 million euros from the aftermarket (19% of the total)
Operating Income	(52)	319		-

Contracts
-In July 2008, the Company announced that it has signed a contract with PSA Peugeot Citroen to equip more than one million vehicles with its StARs micro-hybrid system by 2011. PSA Peugeot Citroen, the first automaker to adopt the system in volume production on the Citroen C2 and C3, has once again demonstrated its confidence in the Company for its upcoming platforms. The Company also equips the smart mhd (micro-hybrid drive) and is expected to announce additional contracts.

-In Jul. 2008, the Company announced that its StARS micro-hybrid system equips the new Mercedes A and B class.

-In Oct. 2008, the Company announced that the rear lighting of the new Volvo XC60 features its new MicroOptics(TM) technology. MicroOptics can diffuse a fully configurable light source. It is also possible to produce shading effects that give the lights a 3-D appearance.


Joint Ventures
<Russia>
-In Jun. 2008, the Company announced that it has signed an agreement for the creation of a joint venture for the production of HVAC systems with Itelma, a Russian supplier of automotive systems to Russian automakers. The new company, Valeo Climate Control Tomilino LLC, will be 95% owned by the Company and 5% by Itelma. Located in Tomilino (10 km from Moscow), the joint venture will develop, produce and sell Valeo Climate Control products and systems, including HVAC modules for passenger cars. (From a press release on Jun 18, 2008)

<India>
-In Oct. 2008, the Company announced that it has created a joint venture with the Anand Group in Chennai, India. The new company, Valeo Lighting Systems India Private Limited, will be majority-owned by the Company. The joint venture will develop, produce and sell lighting products including headlamps, rear lamps and fog lamps, for automakers serving the Indian market. (From a press release on Oct. 2, 2008)


Strengthening the Relationship with Ichikoh Industries
Strengthening the Role in the Management of Ichikoh
-In Jun. 2008, the Company announced that it has strengthened its role in the management of Ichikoh Industries Ltd., in which the Company holds almost 32% of the capital, through a new agreement on the corporate governance and management of Ichikoh. Ichikoh will be managed by two Representative Directors with equal management power who will be nominated respectively by Ichikoh and the Company and chosen from the Board of Directors. The number of Board Members will also be reduced from nineteen to nine, with six proposed by Ichikoh and three by the Company. In terms of operational management, the Company's managers will be in charge of quality, electronic engineering, purchasing, financial control and several of the industrial sites. (From a press release on June 2, 2008)

Forming a Business Tie-Up in the Area of the Mirror
-In Nov. 2008, it is announced that the Company and Ichikoh Industries, Ltd. will form a business tie-up in the area of the mirror. The Company does not operate in the mirror segment, but has elemental technologies to add value to the mirror product, such as an in-vehicle CCD camera and image analysis, while Ichikoh is intending to expand its mirror business. With this tie-up, interests of both sides will be met. Ichikoh will add value to its automotive mirrors by combining proprietary technologies of the two, such as showing a rear vision of the car on the interior mirror and enhanced safety control function using a CCD camera and sensors built on the door mirror. (From an article in the Nikkan Jidosha Shimbun on Nov. 19, 2008)


Restructuring
Divestitures
-In Apr. 2008, the Company announced a project to sell its heavy duty truck engine cooling division to the Swedish company EQT. This division comprises three manufacturing sites - in Mjallby and Linkoping, Sweden and Jamestown, New York in the United States - and employs around 900 people. (From a press release on Apr. 3, 2008)

-In Jun. 2008, it is announced that Nidec (Dalian) Limited, its wholly owned subsidiary of Nidec Corporation, has completed the purchase of the Company's automotive motor manufacturing subsidiary based in Shanghai. (From a press release on Jun 22, 2008)

Consolidation of Manufacturing Capacity
-In Aug. 2008, the Company announced a project to consolidate its rear lighting manufacturing capacity in Europe. This would imply the transfer of production from its Neuses, Germany site to other Company's sites in France and Poland. The Company's Wiper Systems manufacturing site in Neuses is not impacted by the project. (From a press release on Aug 29, 2008)

Workforce Reduction Plan (2009)
-The Company has begun implementing a plan to reduce its permanent headcount by 5,000 people worldwide. Two-thirds of the reduction will take place in Europe.

R&D Expenditure

(in million euros)

	FY2008	FY2007	FY2006
Driving Assistance	200	193	188
Propulsion Efficiency	218	230	214
Comfort Enhancement	221	242	232
Other	-	3	6
Total	639	668	640
% of operating revenues	5.5%	5.5%	5.5%

R&D Structure
-At the end of 2008, the Group has 61 R&D centers throughout the world, employing nearly 6,180 people.

Region	No. of facilities
Western Europe	35
Eastern Europe	1
North America	11
South America	-
Asia	13
Africa	1
Total	61

R&D Activities
Research Program Funded by the Government
-In Jun. 2008, the Company announced the signing of a contract with OSEO, the French state financing group, for 61 million euros in funding for its research program LOwCO2MOTIONR, which aims to improve vehicle engine efficiency and contribute to reducing CO2 emissions. The program focuses on two major innovations. The first is the camless system, in which the camshaft in engines is replaced by electromagnetic actuators that operate each valve independently. This technology reduces fuel consumption and pollutant emissions by 20% for gasoline engines. The second major innovation is a next-generation mild hybrid based on the Company's StARS+X technology. In addition to the Start-Stop function, this system features a regenerative braking function, where energy generated during braking is recovered. (From a press release on Jun 18, 2008)


Product Development
Safe4U(TM)
-In Sept. 2008, the Company developed Safe4U(TM), a new front end module that reduces the severity of pedestrian injury by 20-40%. Made by energy-absorbing materials such as malleable steel, its architecture optimizes the passive protection of the vehicle's occupants and pedestrians, and allows automakers to meet the new European Pedestrian Impact Phase 2 standard, which comes in force in 2010. Safe4U(TM) also has an active pedestrian detection system using a radar and two cameras which can distinguish pedestrians from other hazards. (From a press release on Sep. 19, 2008)

360Vue(TM)
-In Oct. 2008, the Company has launched 360Vue(TM), a new solution based on multicameras linked to ultrasonic sensors, offering 360degrees vision around the vehicle. The system detects obstacles and precisely measures distances, while a network of cameras monitors the vehicle's surroundings, making low-speed maneuvers safer. The first vehicle to be equipped with this system will be available late 2008. (From a press release on Oct 2, 2008)

Capital Expenditure

(in million euros)

	FY2008	FY2007	FY2006
Europe	415	365	437
North America	102	64	86
South America	73	32	39
Asia	48	92	87
Eliminations	-	-	(2)
Total	638	553	647

Investment in 2008
In 2008 the Company invested in production capacity for new products, and in several Product Families:
-Transmissions, with the installation of capacity in torque converters in Mexico and China
-Electrical Systems, for future micro-hybrid StARS production
-Interior Controls for the production of ultrasonic sensors in Germany
-Security Systems, with the completion of a plant in Slovakia that will supply door closing systems.
-In Brazil, the Group has extensively upgraded its facilities and increased space for its Thermal, Lighting and Electrical Systems activities.