Yuchai Machinery (Guangxi) Group Co., Ltd. - FY 2006

Business Highlights

Entry into small diesel engine market
In February 2006, a vehicle by Hebei Zhongxing Automobile Manufacturing, which carries the Company's small diesel engine, YC4F was announced. The Company aims to win orders from the new market, as it vigorously steps up development and production of small diesel engines in the future.

Mass production of "Euro  III " engines
In March 2006, the Company achieved a cumulative production of 1,000 diesel engines, which meet Euro III emission regulations for the first time in China. Euro diesel engines, which the Company started to produce in 2005 as eco-friendly, clean engines, are mounted mainly on buses.

Mass production of heavy duty diesel engines started at new plant to assemble 80,000 a year
The Company held a ceremony to celebrate the start of mass-production at a new heavy-duty diesel engine assembly plant in Yulin City, Guangxi Province in July 2006. The construction of the plant started in April 2004 with a total investment of 220 million yuan at the site of 16,000 square meters. The new plant has an annual assembly   capacity of 80,000 engines, mostly YC6M and YC6L heavy-duty diesel engines. Four production lines installed in the plant are devoted to assembly, painting , testing and packaging processes. They are all introduced from a German maker, Krause, Koester, and their quality and production control systems are completely furnished.

Taking orders
The Company signed a contract with a Vietnamese company to export vehicles equipped with the heavy-duty diesel engine in June 2006.
Guangxi Yuchai Machinery began to make inroads into the Southeaster Asian market. It exported about 3,000 engines to countries in Southeast Asia in 2005, and plans to export about 6,000 in 2006.

- The Company signed a contract with the Cuban Transportation Ministry to export 20,000 diesel engines. Excellent collaborative relationship and brisk export are expected to lead to further expansion of exports.

Business alliance
In May, 2006, the Company formed an alliance with Delphi Corporation dealing with diesel injection systems. Under the agreement, Delphi will supply Guangxi Yuchai with common rail systems for small cars. This includes common rail pumps, injectors, high-pressure rails, electronic control units, and other products both for the new 1.2-liter TCI series based on the Euro lll emission standards, and for conventional 2.6/2.9-liter engines. 


New products
Guangxi Yuchai Machinery Co., Ltd. announced in February that its new diesel engine, the YC6L-40, which is designed for large vehicles, rolled off the assembly line. The YC6L-40 engine is China's first diesel engine that passed the Euro 4 emission regulations. The engine was developed in-house by Guangxi Yuchai Machinery for luxury and public transportation buses. Equipped with an electronically controlled fuel injection system, this engine excels, with high output, low pollution, low noise and high durability attributes. 

- In October, 2006, Yuchai Power Machinery Co., Ltd., the engine manufacturer in the Yuchai Machinery Group, was successful in starting prototypes of the YC4100, 4102, and 4105 diesel engines after spending two years on their development process. The intercooler turbocharged engines compliant with the Euro ll emission standards are capable of meeting Euro lll regulations when upgraded. Delivering an output of 102kW, which is the highest in their class, and a maximum torque of 390Nm, these engines can be used in a wide range of vehicles and other machinery including light buses, slow-moving vehicles, tractors, industrial machinery, generators, and vessels. 

- In Dec., 2006, the Company completed developing the J5700 100-percent natural gas engines, which the company plans to bring to the marketplace, initially targeting the Thai market.

Investment Activities

New joint venture
In Jan., 2006, a plant construction project was launched at Yuchai-Anda Transmission Co., Ltd., a joint venture between Guangzhou Anda Bearing Co., Ltd. and the Company.  A total investment of 500 million yuan is being shared between the two companies, with 25% being invested by the Company and the remaining 75% by Guangzhou Anda Bearing Co., Ltd. The first phase of this project includes construction of the transmission assembly lines and inspection/testing facilities. After the completion of phase 1, the new facility will have an annual production capacity of 20,000 units, which will be raised to 200,000 units by 2010 when the second phase is finished. As a result of this expansion, the Company's aim is to become a supplier of power train assemblies that combine both existing diesel engines with additional transmissions.