ASIAN AUTOMOTIVE NEWSLETTER

SEPTEMBER 2008, ISSUE 56

A Quarterly newsletter of developments in the auto and auto components markets

The Asian auto sector continues to grow transactions involving Asia, including CONTENTS rapidly, as evidenced by both inbound acquisitions, divestments, JVs and and outbound M&A in the region. Given restructurings. We have offices in all of ...... 1 the flurry of activity by financial investors the major Asian automotive markets, as INDIA...... 2 as well as Western and Asian OEMs and well as in Bahrain, London and New York. ...... 4 suppliers, BDA remains committed to If you are interested to discuss any of the KOREA...... 4 keeping our readership up to date on the articles in this newsletter, please contact MALAYSIA...... 4 latest news in the Auto sector through our me directly. newsletter. THAILAND...... 4 VIETNAM...... 5 Business Development Asia LLC (“BDA”) Charles Maynard is an investment banking firm which Senior Managing Director, specialises in executing cross-border [email protected]

China Hybrid series. August 1, 2008 vehicle manufacturer, Guangzhou Automobile Industry Group. Fiat is in Zoomlion Heavy Industry discussions with the company over ArcelorMittal will establish a JV with Science & Technology Development, a possible technical collaboration in China’s Valin Group in Hunan a Chinese heavy industrial equipment which Fiat would assist Guangzhou in province to produce flat carbon steel manufacturer, has acquired 83% of Hu manufacturing a new range of passenger for the automobile industry. The new Nan Qi Che Che Qiao Chang, a Chinese . September 1, 2008 venture is expected to start operations auto component manufacturer, from the in Q4 2010 with capacity of 1.2m tpa of Hunan State-owned Asset Supervision Guangzhou Automobile Industry Corp flat carbon steel. Chinese steel capacity and Administration Commission for plans to acquire a controlling stake is expected to reach 7.5m tpa by the US$22m. June 23, 2008 in Hunan Changfeng Motors by the end of 2008 but demand still exceeds end of 2008. Mitsubishi owns 15% supply. August 18, 2008 Daimler will form its second commercial of Changfeng, which manufactures JV in China with Beiqi . Mitsubishi Pajero SUVs as well as its own Automobile, a JV between The new 50:50 JV will produce trucks Liebao brand SUVs in South China. After Ford Motor and Changan Motor, will under Foton’s Auman brand and heavy- completing the acquisition, Guangzhou establish its third production plant in duty engines using Mercedes-Benz Automobile will establish a new JV with . The plant will produce more technology. August 7, 2008 Mitsubishi. August 12, 2008 than 300,000 vehicles per year and is scheduled to come onstream in 2010. Fiat is studying the possibility of entering Guangzhou Automobile Industry Corp The plant will build the existing SUV and into a third collaboration with Chinese is considering buying Ford Motor’s 2

ASIAN AUTOMOTIVE NEWSLETTER SEPTEMBER 2008, ISSUE 56

Volvo business, using funds from remaining 49%. July 14, 2008 The new line is set to come online in Q2 its forthcoming IPO. Guangzhou 2009 producing the Camry model with Automotive has two existing foreign JV Piaggio will form a JV with China’s an initial capacity of 120,000 vehicles, partners, and Toyota. Auto Industrial Group for the rising to 200,000 upon completion. June is also interested in acquiring Volvo. assembly of three- and four-wheeler 19, 2008 August 4, 2008 mini-trucks. The agreement builds on an existing JV between the two to develop Chinese engine maker Chinese pickup truck maker Hebei and build vehicles based on the Piaggio will form a JV with Westport Innovation Zhongxing is in talks with General Ape mini-truck. August 1, 2008 to manufacture alternative fuel engines. Motors and Chinese auto maker FAW The partners will invest US$22m and Group to explore cooperation, including Pol-Mot Holding has formed a JV with start operations in October, with capacity possible equity ties. Zhongxing is China’s Zhongxing to assemble the of 20,000 high power LNG truck engines. a second-tier player in China’s auto Zhongxing Grand Tiger pick-up at its July 17, 2008 industry but a major maker of pickups CKD plant in Poland. The Grand Tiger is and SUVs. Zhongxing expects to sell a new model designed as a rival to the Yapp Automobile Parts has formed a 45,000 vehicles this year, including Navara/Frontier. August 1, 2008 55:45 JV with Chery Armoured Science 15,000 overseas. July 24, 2008 & Technology, a subsidiary of Chinese private automaker, Chery. The JV Mahindra & Mahindra, a listed Indian Corporation (SAIC) has formed a JV will focus on the development and automotive company, has agreed with Ssangyong Motor, the Korean manufacture of automobile plastic fuel to acquire 51% of Chinese tractor automobile manufacturer specialized tanks and is expected to start production manufacturer Jiangsu Yueda Yancheng in SUVs and recreational vehicles, to by August 2009. August 5, 2008 Tractor Manufacturing Co from Jiangsu manufacture Ssangyong’s Kyron SUV Yueda Group Co for US$26m. 18 August, and SAIC’s models in China. 2008 Ssangyong, 51% owned by SAIC, is India cooperating with the parent company Mazda Motor will establish a production to boost its presence in China. August JV with FAW Group. Mazda already has 8, 2008 Amtek Auto, an Indian auto components a sales JV with FAW Group, FAW Mazda maker, has formed a JV with Michigan’s Motor Sales. Mazda’s partnership with Chinese auto manufacturer Sichuan FormTech Industries to make automotive FAW not only comprises the sales JV, Jinyu Automobile City has acquired forgings. Amtek will take 51% in the but also the licensing of production of 64.5% of Chinese auto wholesaler Xibu venture, which will serve Europe and the Mazda6 model to the Chinese firm. Automobile City from Jinyu Holdings India. The new facility is expected to be September 17, 2008 Group, the Chinese holding company operational in 12 to 18 months. August engaged in the real estate, automotive 13, 2008 Japan’s Nissan Motors and China’s and communication businesses, for Dongfeng Motors will form a US$220m JV US$82m. June 13, 2008 Amtek Transportation Division, a to construct an engine factory in central subsidiary of Indian Amtek Auto, has China to supply Dongfeng’s expanding Toyota Motor announced that its JV formed a 50:50 JV with Missouri-based commercial vehicle operations. with Guangzhou Automobile Group will American Railcar Industries. The JV will Dongfeng will own 51% and a 50:50 invest US$380m in a second production research, develop and manufacture Dongfeng-Nissan venture will take the line at its plant in Guangdong, China. railcars for sale in India, the Middle East 3

ASIAN AUTOMOTIVE NEWSLETTER SEPTEMBER 2008, ISSUE 56 and SE Asia. June 23, 2008 Group, for US$4m. Federal Mogul manufacture under its well-known acquired the engine bearings unit Swaraj brand. July 30, 2008 The Ashok Minda Group, an Indian from the Anand Group’s Gabriel. The supplier of security systems, driver combined sales of the engine bearings German commercial vehicle maker MAN information systems and interiors to division and Perfect Circle are estimated Nutzfahrzeuge is in discussions to automotives, has acquired 100% of at US$75m. August 13, 2008 acquire a majority stake in MAN Force German interior component supplier Trucks, the Company’s 30:70 JV with Schenk Plastic Solutions. Schenk is a JBM Auto, an Indian auto component Indian car maker Force Motors (formerly supplier of plastic parts and components manufacturer, will invest US$100m to Bajaj Tempo). The MAN Force Trucks with two plants in Germany and one in construct three greenfield plants over JV, located in Pithampur, was formed in the Czech Republic. June 26, 2008 the next two years as part of newly- November 2005, upgrading a two-year formed JVs with Italian component old technical collaboration. September Bosch will start manufacturing anti-lock maker Magneto, Ashok Leyland and 17, 2008 braking systems in India next year. The Renault-Nissan. The plants will be company will also introduce navigation located in Chakan, Pantnagar and Minda Industries (MIL), the auto systems and ultra quiet alternators as Chennai respectively. August 13, 2008 components manufacturer and flagship part of its Indian growth strategy. Bosch company of the NK Minda Group, is had announced a total investment of Japan-based JTEKT Corp, previously bidding for Italian full-service switch US$547m in India from 2006 to 2010 known as Toyoda Machine Works, has products supplier Vimercati. Vimercati in order to continue expanding. July 16, formed a JV with India’s Micromatic is valued at US$50m-US$55m. MIL is 2008 Grinding Technologies to produce interested in European acquisitions. machine tools for engines and August 18, 2008 US-based Delphi, a global supplier of transmissions. JTEKT, with a 25% stake mobile electronics and transportation in the Toyota Motor Corporation, will Renold, the UK precision engineering systems, is investing US$72m in a provide most of the technology to the company, has acquired 75% of the plant to produce electronics and safety new company, Toyoda Micromatic Industrial Chain Business of LG management systems in Chennai, Machinery India. JTEKT will take a 75.5% Balakrishnan & Bros Ltd (LGB), an India. This expansion will enable Delphi stake in the JV and Micromatic will own Indian manufacturer of automotive to vertically integrate hardware and the remaining 24.5%. August 20, 2008 and industrial chains, for US$13m software production. July 4, 2008 including earn-outs. LGB will provide Koki Technik Transmissions, the German an established manufacturing base and US auto parts maker Federal-Mogul is auto components conglomerate, and the sales distribution network to Renold in building its seventh plant in India in Best Group, an Indian auto components India. June 25, 2008 Chennai. The plant will come online in manufacturer, have agreed to form September 2009 and produce brake and an US$18m 50:50 JV to manufacture The India-based Ruia Group, which friction components for light vehicles, transmission shifting parts. July 9, 2008 has a controlling interest in tire maker commercial vehicles and railways. Dunlop India, has acquired British auto August 8, 2008 Mahindra & Mahindra has agreed to component manufacturer Schlegel acquire the remaining 35% of Punjab Automotive Europe. Ruia plans to Federal Mogul has acquired 51% of Tractors Ltd (PTL), a listed Indian tractor establish a Schlegel manufacturing Perfect Circle, a manufacturer of engine maker, for an equity consideration plant in India for mixing, extrusion and pistons and part of the Indian Anand of US$15m. PLT’s will continue to finishing work. The existing UK plant 4

ASIAN AUTOMOTIVE NEWSLETTER SEPTEMBER 2008, ISSUE 56 will also receive US$7m in investment manufacturer, for US$77m, completing producer. Mann + Hummel originally for expansion. July 10, 2008 a 100% takeover of the company. July bought a 13% stake in Dongwoo in 28, 2008 1993. Dongwoo will be renamed Mann Tokai Rika, a Japan-based auto + Hummel Dongwoo. July 2, 2008 equipment maker, and the NK Minda Group have agreed to form a 70:30 JV, Tokai Rika Minda India Pvt Ltd, Korea to produce auto components. Both Malaysia companies expect to invest US$22m Beacon, a Cayman Islands-based into the new JV to establish a new investment firm, has acquired 11% Oriental Holdings of Malaysia and greenfield facility in Bangalore. June of Kumho Tire, a listed Korean tire its majority shareholder Boon Sie 26, 2008 manufacturer, from Cooper Tire & will form a JV with Honda Motors to Rubber Company, a listed US-based produce motorcycles in Malaysia. Volvo Group has established a 50:50 manufacturer of replacement tires, for Honda Motors will acquire 50% of Kah JV, VE Commercial Vehicles, with Indian US$107m. August 5, 2008 Assembler, Oriental’s wholly-owned automotive company Eicher Motors. subsidiary, for US$4.5m. Honda Motor The JV will contain all of Eicher Motor’s Bosch and Samsung SDI established a holds a 4% stake in Oriental and is truck and bus operations as well as 50:50 JV to make lithium-ion batteries. a substantial shareholder of other Volvo Group’s Indian truck sales, and The JV company will be called SB subsidiaries of Oriental. August 1, 2008 truck and bus service operations. The LiMotive, and will be headquartered Volvo Group paid US$286m for its in Korea. SB LiMotive will produce stake in the JV. August 22, 2008 lithium-ion battery systems for electric vehicles. To achieve this, the JV Thailand partners will jointly invest US$300m Japan - US$400m over the next five years. China International Marine Containers September 1, 2008 (CIMC) has taken 82% of a JV with Eaton and Nittan Valve, the Japanese Sumitomo Corp to make chassis for engine valve manufacturer, will Halla Stackpole, a Korean producer trailers used in the transport of ocean- establish a 49:51 JV to supply engine of auto components, has acquired bound containers. The plant will be valves and valve actuation products. the sintering business unit of Korean based in Rayong. Sumitomo has an The new company, Nittan Global Tech, Saeron Automotive for US$11m. Halla existing JV with CIMC and Fuji Heavy will be based in Tokyo. The venture will Stackpole is a JV between Stackpole, Industries in Qingdao producing target Japanese and Korean automobile a Canadian auto parts manufacturer, environmental service vehicles and and engine manufacturers. Eaton has and Halla Engineering & Construction, equipment. July 17, 2008 worked with Nittan for 30 years, and a Korean civil engineering and housing the two currently operate the US construction services company. June Fuji Technica, a leading Japanese die Engine Valve Company JV in South 18, 2008 maker, has entered the Thai market by Carolina. August 5, 2008 forming a 40:60 JV with Aapico Hitech, Mann + Hummel, a German automotive Thailand’s leading supplier of dies and Toyota Motors has agreed to acquire components producer, has acquired jigs. Aaapico Hitech will use the JV to the remaining 52.3% of Central Motors, the remaining 87% of Dongwoo Co, sell automotive components to the the Japanese auto components a Korean automotive components Thai OEM market. May 28, 2008 5

ASIAN AUTOMOTIVE NEWSLETTER SEPTEMBER 2008, ISSUE 56 Vietnam

To submit stories to the Asian Automotive China-based Lifan Group will construct Newsletter, please contact Charles Maynard a car assembly plant in Vietnam, in in New York at (1) 212 265 5300 or email spite of potentially decreasing demand [email protected]. in Vietnam’s automobile sector due to increased car taxes and fees. Lifan plans to invest US$50m in a factory that would produce 50,000 cars annually for the Vietnamese and export markets. July 2, 2008

ccd Business Development Asia is an NEW YORK LONDON investment banking firm which Euan Rellie, [email protected] Andrew Huntley, [email protected] Charles Maynard, [email protected] Business Development Asia Ltd assists multinational companies Business Development Asia LLC 10 Crown Place in expanding their businesses in The Economist Building, 11th Floor Clifton St 111 West 57th St, New York, NY 10019 London, EC2A 4FT, United Kingdom Asia through JVs, acquisitions, T (212) 265-5300 T (44) 20-7655-3500 divestments and capital raising. F (212) 265-4300 F (44) 20-7655-8913 For further information on BDA’s BAHRAIN MUMBAI services or on any of the articles in Tamer Makary, [email protected] Rohit Singh, [email protected] this newsletter, please contact the Business Development Asia Business Development Asia 2119 Al Moayyed Tower 898 Notan Plaza, Suite 4A offices listed. Seef District Turner Road, Bandra (West) Manama, Bahrain Mumbai 400050, India T (973) 17567914 T (91) 22-2643-0290 F (973) 17567901 F (91) 22-2643-0291

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