HUAYU Automotive Systems Company Limited Business Report FY ended Dec. 2012

Business Highlights

Financial overview

(million yuan)
FY2012 FY2011 Rate of Change(%) Factors
Sales 57,889.22 52,298.78 10.69% -Sales of major products increased.
Operating profit 6,121.31 5,822.72 5.13% The profit increased as the sales increased.
Ordinary profit 6,222.18 5,943.01 4.70%
Net profit 5,546.10 5,345.86 3.75%
 

Supply Agreement

- SAIC Motor announced on November 5, 2012 that its Roewe E50 electric vehicle will be equipped with a synchronous electric permanent magnet motor made by Huayu Automotive Electric Systems Co., Ltd., which is a joint venture between the Company and Guizhou Aviation Industry (Group) Co., Ltd. The motor, which was developed exclusively for use in the Roewe E50, offers rated output of 38kW, measured output of 63kW, and maximum torque of 160Nm. A 160,000 kilometer test drive included test runs in harsh environment such as extremely high and low temperatures and on rough roads. Huayu Automotive Electric Systems has been developing and manufacturing mainly drive motors for medium- and high-class passenger vehicles, but it is now working on development of drive motors for commercial vehicles such as hybrid buses as well. It also launched development of power electronic boxes in May 2011 by leveraging its expertise in producing aircraft components. The company aims to start providing samples in 2013 and obtain approval for commercial production in 2014. The product is expected to become the major part of the drivetrain system of new energy vehicles, opening up opportunities to serve a large number of automakers. The company is planning to increase its capacity to produce drive motors and control systems for new energy vehicles to 750,000 units a year by 2017. (From news releases issued by multiple sources on November 19, 2012)

-Shanghai Automotive Brake Systems Co., Ltd. announced that it has produced its 100,000th brake booster assembly for SAIC-GM-Wuling. On October 28, 2012, a ceremony was held to celebrate this significant milestone. (From news releases issued by multiple sources on November 9, 2012)

 

Joint venture
-On March 1, 2013, Shanghai Xingfu Motorcycle Co., Ltd., which is a wholly owned subsidiary of the Company, announced that it has signed an agreement with Pierburg Pump Technology GmbH of Germany to establish a joint-venture company to produce automotive pumps. The new company, Huayu Pierburg Pump Technology Co., Ltd., will be capitalized at 80 million yuan, and investment in this project is expected to reach 200 million yuan. Huayu Pierburg Pump Technology will develop and produce oil pumps and provide after-sales services to its customers. (From press releases issued by multiple sources on March 4, 2013)

 

Highlights at subsidiaries and affiliates

YAPP Automotive Parts Co., Ltd

-YAPP Automotive Parts Co., Ltd., which is a subsidiary of the Company, announced that it received the following awards at the FAW Group’s Suppliers Meeting held in Changchun on January 18, 2013: the Excellent Quality Award from FAW-VW; the Cost Improvement Award from the FAW Group; and the Excellent Supplier Award from FAW Car. In addition, the company’ Wuhan Branch won the Best Supplier Award for 2012 from Dongfeng Peugeot-Citroën Automobile and the Excellent Supplier Award for 2012 from Dongfeng Passenger Vehicle. The Wuhan Branch generated 380 million yuan in sales by selling a record 467,000 fuel tanks during the year. It also developed 13 new products, of which 6 items are already been mass produced. Installation of an additional blow molding machine has raised its capacity to produce fuel filler pipes by 35,000 sets. During 2013, the Wuhan branch plans to raise its plastic fuel tank production capacity by 250,000 sets a year, while launching construction of a second plant and an R&D center to further add capacity. (From a press release, January 24, 2013)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, was awarded the 2012 Excellent Supplier Award from Changan Mazda on December 20, 2012. The company has also been chosen as the 2012 A-class Supplier by Jiangling Motor. (From a press release, January 10, 2013)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, obtained the TS16949 certification for FY2012, as its headquarters and six plants in Shanghai, Chongqing, Changchun, Chengdu and Yantai passed the renewal screening for the TS16949 quality management certificate it acquired in 2009. (From a press release, September 25, 2012)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, established YAPP Fuel Systems (Ningbo Hangzhou Bay New Zone) Co., Ltd., a wholly owned subsidiary in Ningbo on September 18, 2012. The company will invest approximately 200 million yuan in construction of a plant to produce 500,000 plastic fuel tanks a year. The new facility will be built on approximately 3 hectares of land the company already acquired in August 2012. Fuel tanks produced at the new facility will be supplied to Shanghai VW’s new Ningbo Plant. YAPP Fuel Systems will provide fuel tanks for the Volkswagen MQB-A1 platform based on a program the group won in November 2011. Its full-scale operations are scheduled to begin at the end of 2013. (From a press release, September 25, 2012)

-YAPP Automotive Parts Co., Ltd., the Company’s subsidiary engaged in production of plastic fuel tanks, has been chosen as a developer and supplier for Changan Ford’s D568 project. The company is expecting that this business will become a stepping stone to its continued participation in Ford’s global product development projects. YAPP’s engineers are conducting development activities for the program at Ford’s Technical Center in North America. (From a press release, September 20, 2012)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, was the only Chinese supplier, which attended the awarding ceremony held in Copenhagen. In line with Volkswagen’s global expansion project, the company established new plants in India, Russia and the Czech Republic to supply its products to the automaker’s local operations. (From news releases issued by multiple sources on August 3, 2012)

-YAPP Automotive Parts Co., Ltd., a subsidiary of YAPP Automotive, is planning to establish a new plant in Mlada Boleslav, the Czech Republic to manufacture fuel tanks. The company is intending to invest more than CZK252 million (approximately 12.4 million dollars) in the facility, which will employ about 80 people and be operated by YAPP Czech Automotive Systems. This is the first time for YAPP to set up a production base in the European market, as it aims to supply its products to Scoda, which has a car assembly plant in Mlada Boleslav. The Scoda facility assembled 875,000 passenger vehicles in 2011, while expecting to produce more than 1.5 million vehicles in 2018. (From news releases issued by multiple sources on June 20, 2012)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, was awarded the Excellence in Product Development Award for 2011 M&M of India. (From a press release, June 13, 2012)

-YAPP Automotive Parts Co., Ltd., which is owned 34 percent by the Company, and Shenzhen Dibang Industry & Trade Co., Ltd. signed a contract on March 9, 2012 to establish a joint-venture company in Yangzhou, Jiangsu Province. The new company, YAPP Automotive Parts (Kaifeng) Co., Ltd.,will be located at the Kaifeng Economy and Technology Development Zone near the Zhengzhou Plant of Nissan to manufacture vehicle parts for the Nissan P32R platform. Investment in the project is expected to reach 140 million yuan. (From a press release, March 13, 2012)


-YAPP Automotive Parts Co., Ltd., which is owned 34 percent by the Company, and Shenzhen Dibang Industry & Trade Co., Ltd. signed a contract on March 9, 2012 to establish a joint-venture company in Yangzhou, Jiangsu Province. The new company, YAPP Automotive Parts (Kaifeng) Co., Ltd.,will be located at the Kaifeng Economy and Technology Development Zone near the Zhengzhou Plant of Nissan to manufacture vehicle parts for the Nissan P32R platform. Investment in the project is expected to reach 140 million yuan. (From a press release, March 13, 2012) 


Shanghai Sekely Die Technology
-Shanghai Sekely Die Technology Co., Ltd., a subsidiary of the Company, announced on June 28, 2012 that it has formed a strategic alliance with Shanghai GM. The two companies in the SAIC Group already collaborated in development of front/rear doors, engine hoods, trunk lids for the L-car/W-car in China in 2004. They also joined hands in engineering the Chevrolet Sail. Since the beginning of 2012, they have been working together in areas including die designing and production, hot-stamping technology, and aluminum parts production. By reinforcing their collaborative relationships, the two companies will step up efforts to standardize their technology and foster human resources to develop advanced new products. (From a press release, July 16, 2012)

 

Joint venture projects with non-Chinese companies

Visteon Group (China)
-The Visteon Group (China) said it has generated 39.85 billion yuan in group operating profit for 2012, which was a gain of 13 percent from the previous year’s result. Exports during the year reached 787 million dollars, an increase of 16 percent year-on-year. At an executive meeting held in January, the company set a sales target of over 50 billion yuan for 2013. (From a press release, February 10, 2013)

- Visteon previously announced that it had canceled the non-binding memorandum of understanding to transfer the majority of its automotive interior business to its Chinese joint venture, Yanfeng Visteon Automotive Trim Systems (YFV). According to the company‘s new CEO, Tim Leuliette, however, the company is continuing discussion on the possible sellout with a potential buyer. The CEO also mentioned the company’s plan to transfer the 50 percent share it owns in YFV at an appropriate time. Furthermore, the company planning to transfer its air conditioning business to its Korean subsidiary, Halla Climate Control Corp, while reducing its workforce in the U.S. from the current 20,000 to 10,000. (From news releases issued by multiple sources on September 20, 2012)


ZF Shanghai Steering Co., Ltd.
-ZF Shanghai Steering Systems (Yantai) Co., Ltd. said its 13 millionth steering system has rolled off its production line on December 11, 2012. The ZF subsidiary started constructing a plant in September 2010, completed it and launched production operations in 2011. By 2014 when production reach full capacity, the company is expected to become one of the largest manufacturers of steering systems by producing 4 billion yuan worth of products, while generating 1 billion yuan in pretax profit. (From news releases issued by multiple sources on December 29, 2012)

-ZF Shanghai Steering Systems Co., Ltd., a joint venture between ZF and the Company, has started to mass-produce its column-type electric power steering systems for Shanghai Automobile’s proprietary electric vehicles. The development project for the power steering systems was led by Shanghai Automobile, which received technical support from ZF. The production launch has become another major breakthrough in the company’s EPS business, following its achievement in producing EPSdp in China in 2010. (From a press release, August 10, 2012)


Yanfeng KSS (Shanghai) Automotive Safety Systems Co., Ltd.
-Key Safety Systems (KSS) announces that its joint venture partnership YFKSS - Yangfeng Key Safety Systems (Shanghai) received the Chery Inc. Best Quality Supplier Award. (From a press release on March 16, 2012)

-Key Safety Systems (KSS) announced that its joint venture partnership YFKSS - Yangfeng Key Safety Systems (Shanghai) received the JAC Best Supplier Award. (From a press release on March 14, 2012)

-Key Safety Systems (KSS) announced that its joint venture partnership YFKSS - Yangfeng Key Safety Systems (Shanghai) received the SVW (Shanghai Volkswagen) Excellent Supplier Award. (From a press release on March 12, 2012)

-Key Safety Systems (KSS) announced that its joint venture partnership YFKSS, Yangfeng Key Safety Systems (Shanghai) received a technology award from SGM (Shanghai General Motors). (From a press release on March 8, 2012)

R&D

R&D Expenditure

(in million yuan)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
R&D Expenditure 1,059  2,426 2,040


Technological cooperation

-February 16, 2011, Shanghai Behr Thermal System Co., Ltd., which is a subsidiary of Shanghai Sanden Behr Automotive Air Conditioning Co., Ltd., and Shanghai Jieneng Automotive Technology Co., Ltd. of the SAIC Group signed an agreement to conduct a joint development project on thermal control systems for new energy vehicles. Behr's Shanghai operation will play an important role in the field, as Behr of Germany and the SAIC Group are fostering collaboration in the thermal control technology. The collaboration will also help Shanghai Behr enhance local business and improve customer services. (From news releases issued by multiple sources on February 16, 2011)

Investment Activities

Capital Investment Projects

(as of Dec. 2012 )
Project Planned amount of investment (in million yuan) nvestment made in 2012 (in million yuan) Funds
Retooling spring production facility at China Spring Corporation Limited 31.25 18.36 Own funds
Expanding production capacity of compressors at Shanghai Sanden Behr Automotive Air Conditioning Co., Ltd. 10.05 9.04 Own funds
Retooling production facility at Shanghai Superior Die Technology Co., Ltd. 29.65 0.06 Own funds
Retooling production facility at Shanghai Tractor & Internal Combustion Engine Co., Ltd. 201.68 29.48 Own funds
Plant construction at Shanghai Tractor & Internal Combustion Engine Co., Ltd. 525.99 163.71 Own funds
Project of engines at Shanghai Union Automobile & Tractor Industry Trade Co., Ltd. 13.19 0.17 Own funds
Retooling production facility at Shanghai Automotive Brake Systems Co., Ltd. 28.59 9.72 Own funds
Vacuum boosters assembly line at Shanghai Automotive Brake Systems Co., Ltd. 18.78 14.81 Own funds
Retooling production facility at Yanfeng Visteon Jinqiao Automotive Trim Systems Co., Ltd. 592.33 83.51 Own funds
Retooling production facility at Yanfeng Visteon Automotive Electronics Co., Ltd. 34.44 123.20 Own funds
Retooling production facility at Shanghai Yanfeng Johnson Controls Seating Co., Ltd 2,194.23 728.39 Own funds
Retooling production facility at Yanfeng Visteon (Chongqing) Automotive Trim Systems Co., Ltd. 330.80 120.11 Own funds
Retooling production facility at Yanfeng Visteon  Automotive Trim Systems Co., Ltd. 608.73 224.87 Own funds