Valeo in China Edouard de Pirey Valeo China President 1 Property of Valeo. Duplication prohibited Valeo Strategy CO2 emissions reduction and intuitive driving Development in Asia and emerging countries 2 Property of Valeo. Duplication prohibited OEM sales produced in Asia & emerging countries at 54% 54%* 50%* Eastern Europe & Africa 14% 2013 2011 37%* Western Europe 37% Asia 27% 2007 SA 4% Mexico 9% US 9% *Share of Valeo total OEM production made In Asia & emerging countries 3 Property of Valeo. Duplication prohibited Geographic repositioning OEM sales by production region Sales including joint-ventures consolidated proportionally 2013 2014 Eastern Europe & Africa 14% Eastern Europe & Africa 14% 54% in Asia & emerging countries Western Europe 37% Asia excl. China 14% 54% in Asia & emerging countries Asia excl. China 14% Western Europe 36% China 13% China 12% SA 5% Mexico 9% SA 3% Mexico 10% US 9% US 10% YTD end-September 4 Property of Valeo. Duplication prohibited H1 2014: OEM sales outpaced the global market by near 7 pts, in line with 2013 Outperf. +6.7pts* H1 World OEM sales*** +10.3% Outperf. +6.0pts* OEM sales*** +9.6% North America Production****+3.6% OEM sales*** +6.4% 51% of Valeo sales Production**** +2.8% 20% of Valeo sales Production****+3.6% Europe** Outperf. +3.6pts* (1) (1) Asia** excl. China Outperf. +7.8pts* OEM sales*** +9.7% Outperf. +4.1pts* South America Production****+1.9% 13% of Valeo sales (1) Outperf. +24.7pts* OEM sales*** -13.3% Production****-17.4% 3% of Valeo sales China OEM sales*** +35.5% (1) Production****+10.8% 13% of Valeo sales * Like-for-like ** Europe including Africa; Asia including Middle East *** Valeo OEM sales by destination ****LMC estimates – light vehicle production (1) Sales including joint-ventures consolidated proportionally Property of Valeo. Duplication prohibited (1) 5 Q3 2014: OEM sales outpaced the global market by 7 points Outperformance in China of more than 20 points Outperf. +7.0pts Q3 Like-for-like proforma 2014 World OEM sales** +7.7% Outperf. +9.1pts Production***+0.7% Europe* Outperf. +0.4pts OEM sales** +8.9% North America Production***-0.2% OEM sales** +4.2% 49% of Valeo sales Production*** +3.8% 22% of Valeo sales Asia* excl. China Outperf. +5.3pts OEM sales** +5.1% Underperf. -2.2pts South America Production***-0.2% 13% of Valeo sales Outperf. +20.4pts OEM sales** -21.7% Production***-19.5% 3% of Valeo sales China OEM sales** +25.4% Production***+5.0% 13% of Valeo sales * Europe including Africa; Asia including Middle East ** Valeo OEM sales by destination ***LMC estimates – light vehicle production 6 Property of Valeo. Duplication prohibited Balanced customer portfolio % of OEM sales Sales including joint-ventures consolidated proportionally Other 6% French* 18% Other 5% German 30% Asian** Asian** 26% 29% Property of Valeo. Duplication prohibited German 30% American 22% American 20% * Excluding Nissan ** Including Nissan French* 17% H1 2013 Asian** Asian** 26% 26% H1 2014 7 China and North America fueling future organic growth % of 2013 OEM sales* SA Asia NA 5%excl. 19% China 13%China 13% % of 2013 order intake* NA 22% Asia 26% SA 5%Asia excl. China 13% Asia 37%** China 24% Europe 50% Europe 36% OEM sales: €10.3bn Order intake**: €14.8bn (of which Asia**: €5.5bn) * By destination ** Excluding Access Mechanisms business 8 Property of Valeo. Duplication prohibited Asia fueling future organic growth, Acceleration in China % of H1 2014 order intake* % of H1 2014 OEM sales* 20% NA €1.1bn SA 2% 17% NA SA 3% Asia excl. China 13% €1.6bn Asia 26% Asia excl. China 14% Asia 41% China 13% Europe Europe €2.8bn 51% OEM sales: €5.4bn *OEM sales and order intake by destination including joint-ventures consolidated proportionally China 27% €3.6bn 40% Order intake: €9.1bn 9 Property of Valeo. Duplication prohibited 10 Property of Valeo. Duplication prohibited 11 Property of Valeo. Duplication prohibited 12 Property of Valeo. Duplication prohibited Growth in China as part of Valeo global strategy Absolute numbers in China At Group level 27% of order intake RMB 12bn Sales* 15,000 employees** 26 sites** (H1 2014) 10 development centers** 13% of sales China is already Valeo’s No.1 country in number of employees *in 2013 ** as of today 13 Property of Valeo. Duplication prohibited Valeo is a worldwide leader as well as a Chinese leader in all its businesses Thermal Systems Comfort & Driving Assistance Systems Incl. Driving Assistance Systems Electrical Systems Transmission Wipers Lighting 14 Property of Valeo. Duplication prohibited Valeo in China 26 Plants 10 Development Centers 3 15,000 15,000 Research Centers People 15 Property of Valeo. Duplication prohibited Customer Offices 2013 Changchun Guangzhou Chongqing Foton 2014 Beijing Wuhan Beijing Baoding 2015 Changchun Shanghai Hangzhou Baoding Wuhu Shanghai Wuhu Wuhan Hangzhou Chongqing Guangzhou GAC Chinese OEMs represent <20% of Valeo sales in China today, but ~30% of Valeo’s order intake in China 16 Property of Valeo. Duplication prohibited We are growing faster than the market 60% 55% Valeo OEM sales growth* Automotive production** 50% 38% 40% 35% 36% 30% 30% 24% 13% 12% 8% 10% 0% 5% 12% 9% 8% 13% 5% 4% 0% Q1 2012 21% 20% 20% 20% 25% 24% Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 *OEM sales by destination like-for-like ** LMC estimates – light vehicle production 17 Property of Valeo. Duplication prohibited Strong growth ahead Double our sales every four years Out performance 17pts Under performance 15pts Valeo OEM Sales* +34% CAGR Valeo OEM Sales* +9% CAGR Production** +17% CAGR Production** +24% CAGR 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 *OEM sales by destination like-for-like ** LMC estimates – light vehicle production 18 Property of Valeo. Duplication prohibited 2019 2.7 Order intake ratio 2.1 3.3 2.8 2.6 3.0 5 30% 25% 4 20% 3 15% 2 2.7 1 Order intake In €bn 0.8 2.9 H1 1.5€bn 1.3 3.5 H1 2.1€bn 10% H1 2.4€bn 0 5% 0% 2009 2010 2011 2012 2013 H1 2014 19 Property of Valeo. Duplication prohibited Weighting of China in Group Order Intake Continuous increase in the order intake Aftermarket: the next wave of growth Car park shifting from fleet market to private owners Millions 160 8.0 Years 9 8 140 120 7 6.0 6 100 20% CAGR 5 80 142 3.4 60 40 1.8 46 20 0 2 1.2 4 14 2000 2005 Chinese car park 1 0 2010 2015 2020 Average age of the car park Vast majority of first time buyers No habit of regular maintenance Trust in OES workshop expertise 4 3 96 Chinese car park > USA car park by 2020 50% of current car park will exit warranty period in the next 3 years Maintenance parts consumption to rise Valeo Aftermarket sales growth higher than the car park growth Source: POLK 20 Property of Valeo. Duplication prohibited Managing growth, optimizing Capex 2013 4 new sites 3 extensions 2014 4 new sites 2015 & onwards 4+ additional projects Example: Thermal industrial strategy Concentrating component plants Jingzhou for heat exchangers for HVAC Changchun for variable piston compressors Loudi for fixed piston compressors Foshan for radiators Assembly plants close to customers Shashi Tianjin Huadu Nanjing Yantai Changchun Changchun Tianjin Yantai Nanjing Chengdu Shashi Loudi Foshan/Huadu 21 Property of Valeo. Duplication prohibited Valeo China’s Commitment Four Steps Approach 1994 - Serve its traditional international customers Develop business with Chinese car makers Develop products for the Chinese market in China 2014 Develop technologies from China Be Chinese in China 22 Property of Valeo. Duplication prohibited Innovation for China CO2 emission reduction Stop-start PHEV solutions Water Charge Air Cooler Etc Intuitive driving Advanced HMI Automatic driving Valeo innovation strategy fitted to the Chinese market 23 Property of Valeo. Duplication prohibited Footprint of Valeo’s China Technical Centers ~2,000 development staff Changchun Thermal Wuhan Lighting Nanjing Transmission Shanghai Wiper Shanghai Electrical Shanghai Wiper/THS Wuxi CDA Shashi Thermal 3 Research Centers 10 Development Centers Foshan Shenzhen PTS Shenzhen CDA 24 Property of Valeo. Duplication prohibited Managing growth with the best teams Retain Train Incl. Expert development <9% turnover, 4-5 pts better than the market Hire 25 Property of Valeo. Duplication prohibited Efficiency program delivering results A comprehensive toolbox Benchmark Benchmark Kaizen activities Automation Etc Simple automation Increase productivity to offset labor cost increase in the years to come Longer term programs 26 Property of Valeo. Duplication prohibited Valeo committed to China Strong commitment of Valeo to China All technologies available, all Valeo tools implemented incl. 5 Axes, Mother-Daughter, etc. Full localization and continuous support of global organization R&D and projects localized: “Invented with China” Support all OEMs, international OEMs as well as Chinese OEMs Strong commitment of teams, “Be Chinese in China” 15,000 people, comprehensive career path offers, Top employer 2,000 development staff, local teams and international experts Turnover under control A winning strategy Sales to double every 4 years in the future, as was the case in the past Valeo China becoming Valeo’s No.1 country 27 Property of Valeo. Duplication prohibited 28 Property of Valeo. Duplication prohibited 29 Property of Valeo. Duplication prohibited Shanghai Valeo overview YI Pinghua Senior Site General Manager 30 Property of Valeo. Duplication prohibited Powertrain Systems Business Group Four Product Groups Electrical Systems PES Transmission Systems PTR Combustion Engine PCE Alternators Manual Transmissions Mechanical Actuators Starters Hydraulic Clutch Actuation Powertrain Sensors Re-Starters / Stop&Start Friction Materials Air Charging Systems Belt Starter Generator Automatic Transmissions EMS ECUs Ignition & Injection Electric Motors Powershift Transmissions Electronics PEL Medium Power Electronics High Power Electronics （HEVs & Evs) Energy Conversion System Engineering & Transversal Innovation -CO2 Emission Reduction -Pollutants Emission Reduction -Hybrid and Electric 31 Property of Valeo. Duplication prohibited Valeo Alternators Stator 2 x 3 phases 12 diodes rectifier bridge Rotor w or w/o magnets 32 Property of Valeo. Duplication prohibited Valeo Re-Starters Field system Solenoid switch Rear part Magnets Reduction gear Armature Wound field 33 Property of Valeo. Duplication prohibited i-Stars: Starter Alternator Reversible System Power module Stator Rotor Heat sink Control module Brush holder Interconnector Rear cover 34 Property of Valeo. Duplication prohibited Shanghai PES key facts #1 in China, >25% market share Sharehoding: 50% Valeo/50% Huayu (SAIC Group) 2,000 employees >10m machines manufactured in 2013 Valeo’s biggest plant worldwide 35 Property of Valeo. Duplication prohibited Shanghai PES history 2014 Decision to localize Mild Hybrid Belt Starter Generator i-BSG 48V 2013 New Plant in Pudong Jinqiao Localization RSM14, NRG11 2012 Localization ESW22, ESW24 2011 Localization FGt, Mechatronics, ESM14, FS18, FG20+, FG23 2009 Localization VALEO Products FG 2007 Localization VALEO Products D7R Mar. 2005 Localization VALEO Products TG/TS Dec. 2003 VALEO increased share to 50% Aug. 2001 Localization VALEO Products SG Mar. 1998 New Plant in Pudong Zhangjiang Hi-Tech Park Jan. 1997 Localization VALEO Products VI/D6RA Feb. 1995 Setup of JV Property of Valeo. Duplication prohibited 36 A broad and comprehensive customer base Brilliance / SGM Beisheng FAW Xiali Dong’An / Hafei BHMC / Daimler / Beijing Power / Beiqi Foton DPCA / Dongfeng Nissan FAW-Daihatsu Harbin Changchun Greatwall Jilin FVW / FAW Beijing Shenyang SGM Dongyue Yantai Baoding Weifang Diesel Tianjin Weifang Xian KIA Yancheng Changshu Shanghai BYD Qoros Anhui Chongqing Hangzhou Wuhan Nanchang Changsha Geely Liuzhou Chang’An Grp / Chang’An Ford / Dongfeng Xiaokang SVW / SGM / Sh. Diesel / SMC / Volvo JAC / Chery Guangzhou JMC Shenzhen BYD Taiwan CMC SGMWL Toyota / GAC Hainan BYD / CA-PSA Haima 37 Property of Valeo. Duplication prohibited Strong growth of Valeo Shanghai Sales x5 since 2005 2005 2006 2007 2008 2009 2010 2011 2012 2013 38 Property of Valeo. Duplication prohibited New Valeo Shanghai facilities Old plant (Zhangjiang) New plant (Jinqiao) Increase Site ground area 28,914 77,813 269% Constructive area 17,685 53,023 300% Industrial surface 12,724 37,005 291% Offices & other 4,151 12,917 311% R&D laboratory 810 3,101 383% In sqm 39 Property of Valeo. Duplication prohibited Why is hybridization a must ? (1/2) Grams CO2 per kilometer normalized to New European Driving Cycle (NEDC) 270 United States Market context – Regulatory impact analysis 250 230 China 210 190 Europe 170 150 Japan 130 China 2020: 117 US 2025: 109 Japan 2020: 105 EU 2021: 95 110 90 2000 2005 2010 2015 2020 2025 • Demanding emission regulations • Climate/air quality (especially in China) • End-user benefit 40 Property of Valeo. Duplication prohibited Why is hybridization a must ? (2/2) Today: We are wasting “free Energy” We need a lot of Energy Thanks to electrification, Hybrid cars will: • recover energy when it is “free” • restitute it when necessary (start, boost, drive, sailing, etc.) Which improves efficiency and reduces CO2 consumption 41 Property of Valeo. Duplication prohibited Electrification forecast: China Source: 2013 Valeo Powertrain Forecast Internal Combustion Engine Stop-Start massive application Diversity of technologies– higher FULL / PHEV growth Emergence of Stop-Start Stop-Start MILD FULL PHEV PHEV 42 Property of Valeo. Duplication prohibited Valeo Innovation Roadmap Mild/Full Hybrids Conventional Systems Belt-driven startergenerators i-StARS Starters and alternators Belt Starter Generator up to 15kW for mild hybrids High efficiency alternator Reinforced starters: ReStart with or without Reflex Start Crankshaft motor generator up to 70kW for full hybrids and range extender generators Micro Hybrids 43 Property of Valeo. Duplication prohibited Valeo Concept on Democar Produced by Valeo Supervisor E-Machine 8-12 kW@ 48V EDLC 24 x 5000F 208 kJ DC/DC Converter 2 kW 60V / 12V unidirectional Stand Alone Inverter 15 kW 48V Up to 13% fuel consumption savings 44 Property of Valeo. Duplication prohibited Valeo Range Extender for a German premium car Petrol electrical generating set Series hybrid: petrol engine used to generate electricity To extend range up to 240-340km (vs 130-160km) Able to provide energy for driving even with empty battery SOP Sept 2013 in Valeo Poland 28Kw Machine direct coupling with engine crankshaft Water cooled with max: 120°C air/80°C coolant Voltage range/Eff.: 200-450V/93% Valeo has been in production since 2013 45 Property of Valeo. Duplication prohibited Total Quality Approach High Tech Validation Labs 5 Axes Method 10 Tools QRQC QRQC (All) 5S Work Instructions/Operator Certification Zero Rework Stop Scrap Detection Verification Communication Change Control (CI 3.9) (4M Matrix) SPPC - Manufacturing / Project Analysis Launch Control (FDPR) Standardization Committee / Technical Committee PFMEA check on Genba …for Best Product Design …for Customer Satisfaction … as Conditions to Produce Quality …for Continuous Improvement 46 Property of Valeo. Duplication prohibited Recognized by our customers 47 Property of Valeo. Duplication prohibited Plant layout Unloading Raw materials S/T lines ALT lines Finished Goods Loading 48 Property of Valeo. Duplication prohibited 49 Property of Valeo. Duplication prohibited
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