ASIAN AUTOMOTIVE NEWSLETTER DECEMBER 2009, ISSUE 61 A Quarterly newsletter of developments in the auto and auto components markets As the global auto industry struggles, Business Development Asia LLC (“BDA”) C ONTENTS emerging Asia has remained the single is an investment banking firm which CHINA ............................. 1 significant growth region. China particularly specialises in executing cross-border HONG KONG ...................... 3 is beginning to develop into a powerful force transactions involving Asia, including I NDIA .............................. 3 in the international auto market. Chinese acquisitions, divestments, JVs and auto suppliers have traditionally been firmly restructurings. We have offices in all of JAPAN ............................. 4 focused on their home market, but this is the major Asian automotive markets, as K OREA ............................. 5 finally changing with a number turning up well as in Bahrain, London and New York. MALAYSIA ........................ 5 as bidders, sometimes successful ones, If you are interested to discuss any of the TAIWAN ........................... 6 for Western assets. Don’t expect this turn articles in this newsletter, please contact into a tidal wave, but do expect steady and me directly. significant growth as Chinese companies start to join Indian companies on the global Charles Maynard acquisition trail. Senior Managing Director, [email protected] China Auto Stock Indices for Selected Countries (12 months by 9Dec09) 350 Anhui Jianghuai Automobile (“JAC”), China a Chinese automaker, has signed an 300 agreement with NC2 Global (“NC2”), Korea a US-based truck manufacturer owned 250 by US-based Caterpillar and Navistar Japan International, to form a 50:50 JV to 200 manufacture trucks and truck parts in India China. The JV, expected to be formed by 150 US Q3 2010, will take advantage of NC2’s financial strength, technology and 100 global distribution network and JAC’s Euro medium and heavy-duty truck business, 50 including its manufacturing facilities in China. The formation of the JV is part of NC2’s strategy to produce and market a 0 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 full line of commercial on-highway trucks for markets outside of North America. Source: ThomsonOne September 28, 2009 2 AS I A N A U T O M O T I VE NEWSLETTER D ECEMBER 2009, ISSUE 61 Auto Trading Multiples for Selected Countries (11Dec09) where Eco would produce and assemble 70.0x low volume specialized light commercial 58.4x vehicles. October 16, 2009 60.0x 56.9x 50.0x General Motors has signed an agreement to sell its Hummer brand to Chinese 40.0x Sichuan Tengzhong Heavy Industries 27.6x 30.0x 23.3x Machinery for a reported US$150m. 18.6x 12.1x 16.3x Tengzhong will acquire the Hummer 20.0x 15.5x 13.0x 10.3x brand, trademark, trade names and 8.1x 9.5x 10.0x specific IP license rights necessary to manufacture Hummer vehicles. October 0.0x China India Japan Korea US EU 11, 2009 EV/EBITDA P/E Great Wall Motor, a Chinese automaker, has signed a US$6m agreement with Source:ThomsonOne Bulgaria’s Litex to build a plant to manufacture and assemble 50,000 BeijingWest (“BW”) Industries Group, series cars. November 12, 2009 units of SUVs, pickups and sedans per a Chinese investment company owned year in Lovech, Bulgaria. The project, by state-owned steelmaker Shougang Chery Automobile, a Chinese automaker, expected to begin vehicle roll out by 2011, Group, has acquired the brake and has announced plans to invest US$500m would enable Great Wall to establish its suspension unit of US auto parts to build an assembly plant in Turkey in presence in the European Union. October giant Delphi for US$100m. The sale is cooperation with its Turkish distribution 20, 2009 part of Delphi’s restructuring strategy partner, the Mermerler Group. The and includes brakes and suspension facility, which will have a minimum Huachen Automotive Group, a Chinese businesses in China, France, Mexico, capacity of 100,000 vehicles, will initially state-owned automotive group, has Poland, the UK and the US. BW will produce Chery A1 and A3 models. Chery’s acquired the Zhonghua business assets acquire the equipment, property and aim in establishing a facility in Turkey is of loss making Shenyang Brilliance Jinbei IP relating to these businesses. The to export cars to Europe without paying Automotive, a Chinese manufacturer transaction will allow BW Industries to extra custom duties. October 15, 2009 of motor vehicles and parts, from enter the premium auto chassis market. Chinese automotive group Brilliance November 3, 2009 Eco Concept (“Eco”), a special vehicle China Automotive, a 55% subsidiary engineering firm owned by Chinese of , for US$560m. The sale BMW has signed an MoU with Brilliance businesswoman Dr. Qu Li, has acquired Huachen Automotive Holding to establish a the assets of LDV, a bankrupt British provides Brilliance with an immediate second plant, with an investment of van-maker with US$125m in debt, for an earning enhancement, funds to meet US$840m, for their JV BMW Brilliance undisclosed consideration. It is reported its working capital requirements and Automotive. The new plant, to be located that Eco is backed by SAIC, a Chinese will enable Brilliance to refocus its in Shenyang, will start production automaker, on the acquisition. LDV’s management and financial resources on in 2012 and is expected to produce assets are expected to be relocated to its other profitable businesses. October 100,000 units per year of BMW’s 3 and 5 SAIC-owned MG UK facility at Longbridge, 30, 2009 3 AS I A N A U T O M O T I VE NEWSLETTER D ECEMBER 2009, ISSUE 61 JATCO, a subsidiary of Japanese Auto Price/Revenue Ratios for Selected Countries (11Dec09) automaker Nissan and world’s largest manufacturer of Continuously Variable 3.0x Transmission (“CVT”), plans to invest US$44m to establish a manufacturing 2.5x 2.5x 2.4x unit in Guangzhou. The new plant, expected to produce 140,000 units per 2.0x year, will manufacture CVTs to be used in Nissan’s Teana, Sylphy, X-Trail and 1.5x 1.5x Qashqai models. October 19, 2009 1.0x 0.8x Jiangsu Yaxing Automobile Group, 0.6x 0.6x a Chinese automotive company, has 0.5x agreed to acquire 28% of Yangzhou , a Chinese diesel Diesel Engine 0.0x engine manufacturer from Yangzhou China India Japan Korea US EU Yaxing Motor Coach, a Chinese motors manufacturer for US$7m. November 25, Source: ThomsonOne 2009 from China in 2009. November 9, 2009 other thin mechanical shaft products, Ningbo Veken Elite Group and Zhejiang for US$12m. The acquisition includes Veken Venture Investment will acquire Volkswagen plans to invest US$6bn Friend Birch’s rods and shafts technology 20% of Ningbo Swell Automobile in China over the next three years to development center, technologies and expand capacity and to introduce new Trimming Parts, a Chinese manufacturer patents, and is expected to enhance products. The investment, which would and wholesaler of vehicle parts for be financed from the cash flow of VW’s the technology, improve the quality and US$15m. Ningbo Veken Elite Group two JVs in China, Shanghai Volkswagen increase the variety of Wonder Auto’s rod will acquired 14% and Zhejiang Veken and FAW Volkswagen, is part of VW’s and shaft products. The transaction will Venture Investment 6%. November 25, strategy to strengthen its presence in expand Wonder Auto’s overall capacity 2009 China. October 22, 2009 by five million units, give access to Friend Birch’s Chinese and European Valeo, a French auto component OEM customers and provide US$2m manufacturer, has acquired the remaining Hong Kong in net income to Wonder Auto in 2010. 40% stake not held in Valeo Fawer September 23, 2009 Compressor (Changchun), a Chinese manufacturer of auto compressors, Jinzhou Wanyou Mechanical Parts, a from Fawer Automotive Parts, a unit of a wholly-owned subsidiary of Wonder Auto India Chinese state-owned automotive major Technology, a Chinese manufacturer of China FAW Group, for an undisclosed automotive electrical parts, suspension Bajaj Auto, an Indian manufacturer consideration. The transaction further products and engine accessories, of two-wheelers, has formed a JV strengthens Valeo’s presence in China. has acquired Friend Birch (HK), a (codenamed Dream) with MotoCzysz, a Valeo, which has five facilities in China, manufacturer of automotive springs, US-based motorcycle manufacturer, to expects to generate US$600m in revenues gas springs, gas spring shafts and develop an innovative vehicle packed 4 AS I A N A U T O M O T I VE NEWSLETTER D ECEMBER 2009, ISSUE 61 with futuristic innovative automotive has announced plans to build a new 290- NXR and NXG range of electric cars, while technologies to improve overall efficiency acre plant near Chennai at an investment NLE would be an exclusive distributor of without compromising on aesthetics and of US$900m spread over seven years. these vehicles in Iceland, the sales of performance. October 4, 2009 The new plant, expected to be operational which is expected to commence in 2011. by 2012, will manufacture radial tires for The alliance is part of NLE’s project to General Motors India has formed a 50:50 trucks and buses. The radial tires will develop infrastructure and services for JV with Reva Electric Car Company, an initially be sold in India with possible electric vehicles in Iceland by 2012. Indian manufacturer of electric vehicles, exports at a later stage. Michelin, which November 12, 2009 to roll out electric variants of GM’s supplies Honda, Mercedes-Benz and Chevrolet Spark small car in India and Volvo in India, currently imports most Shanghai Automotive Industry Corp select overseas markets.