ASIAN AUTOMOTIVE NEWSLETTER

MARCH 2 0 0 8 , I S S U E 5 4

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

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

China

Brilliance Automobile Co and America. CIE will build three new Automobile Group Co. Isuzu is in the SAIC have agreed to jointly develop wholly owned facilities, a decision final stages of negotiations to sell and produce manual and automatic made after weathering low profit its 49% stake in Guangzhou Isuzu transmissions for passenger margins and quality control problems Bus Co to Guangzhou Automobile. vehicles, including double-clutch problems with its previous JV partner, Sales of the high-grade buses Isuzu transmissions. The project will Sandun Auto Parts. March 17, 2008 produces at the JV have slumped have designed capacity of 400,000 because of increased competition manual transmissions and 100,000 Denso Corp, the Japanese auto from low-cost buses made by local automatic transmissions. The component supplier, has established manufacturers and Korean rivals. transmissions will be built in an a bus air conditioning systems JV in February 9, 2008 existing joint facility in Shenyang China called Yangzhou Jiexin Denso that produces manual transmissions Air Conditioner. The 50:50 JV with Kasai Kogyo Co, a Japanese auto for Brilliance’s commercial vans. Yangzhou Jiexin Auto Air Conditioner interior parts supplier, is planning The two companies will increase will begin in April 2008, using the to establish a 25/75 JV with Sanwa their investment in the facility to facilities of the Chinese partner. Kogyo, an auto component supplier, Rmb1.5bn (US$210m). February 13, 2008 Initial investment in the JV will be to manufacture urethane-based car US$2.5m. February 27, 2008 ceiling panels in China which will CIE Automotive of Spain will then be sold to , Honda and establish a manufacturing base in Isuzu Motors plans to exit the other Japanese automakers. Sanwa China to supply the domestic market Chinese bus market by withdrawing will hold the majority stake in the JV. and export to Japan, Korea and North from its bus JV with Guangzhou Financial terms of the deal were not 2

ASIAN AUTOMOTIVE NEWSLETTER MARCH 2 0 0 8 , I S S U E 5 4

disclosed. February 5, 2008 Automobile. It also expects to Kangqiao Autoglass Co is owned receive orders from other automakers 50% by Yaohua Pilkington Neapco Drivelines LLC, a unit of including SAIC-GM-Wuling, Changan Glass Co, 25% by Shanghai Building China’s Group, has Group and Great Wall Motor. January Materials Co, and 25% by Hong Kong purchased the US driveshaft 30, 2008 Hai Jian Industry Co. February 6, 2008 manufacturing operations of Ford’s holding company, Automotive SAIC Motor, the Chinese vehicle Components Holdings LLC. The manufacturer, will acquire a 50.3% purchase moves Neapco into Tier stake in Shanghai Diesel Engine India 1 supplier status. The facility is Co, the diesel engine maker, from expected to generate revenues of Shanghai Electric Group, the Chinese Bosch and Igarashi Motors India US$300m to US$400m once fully mechanical and electrical equipment have established a JV for DC motors operational. Neapco plans to move manufacturer, for US$126m. January and systems for wiper, HVAC, the driveshaft business along with 2, 2008 engine cooling and window lift 300 employees to a new plant in a applications. The new company will Detroit suburb. February 15, 2008 SAIC has acquired Nanjing start operations in H2 2008. The JV, Automobile from Yuejin Motor for in which Bosch will hold a 51% stake, Japan’s NEC Electronics and the US$286m. The acquisition will will be headquartered in Chennai. FAW Group of China will jointly enable SAIC Motor to assume control February 15, 2008 develop automotive electronics in over the MG Rover facility acquired China. NEC’s China subsidiary and by Nanjing in 2005. SAIC will use Daimler will buy a 26% stake in Qiming Information Technology, a the Longbridge (UK) facility to India’s Sutlej Motors. Daimler unit of FAW, have agreed to set up a increase sales in Europe. Shanghai already has a venture with Sutlej laboratory in Changchun, NE China, Automotive, SAIC’s parent, and for buses. Under the agreement, to develop the products. Qiming Yuejin will also set up a JV called Daimler will produce the chassis and will develop devices containing Dong Hua Co to take over the Sutlej Motors will attach the body for NEC Electronics’ microcontrollers. remaining component parts, services buses, which were to be launched in Ryosan, a Japanese electronics- and other assets of Yuejin. Yuejin India in Q1 2008. January 7, 2008 component distributor, will also be will own 25% of Dong Hua. December involved in the tie-up. December 14, 27, 2007 Delphi-TVS Diesel Systems will invest 2008 US$125m in its manufacturing facility Shanghai Yaohua Pilkington as well as in its technical center in NSK Ltd, the Japanese industrial Kangqiao Autoglass Co has Chennai. Most of the investment bearings maker, will partner with increased capacity to 1.2 million will go into manufacturing common Zhejiang Wanda Group, the Chinese sets of auto glass. The increased rail systems which is forecasted auto parts supplier, to produce capacity is expected to push sales to experience significant growth electric power steering for Chinese up by 20% to RMB400m (US$55m) because of plans by major OEMs to automakers in 2009. The new in 2008. JV automakers in China, manufacture diesel variants even company will initially have capacity such as Shanghai GM and Shanghai for small cars. Delphi-TVS Diesel of 300,000 units which it will expand Automotive Volkswagen, account Systems is a JV between US-based after 2010. The new venture has for most of the increase in demand. Delphi Corp and India’s TVS Group. already won a supply contract from Shanghai Yaohua Pilkington January 11, 2008 3

ASIAN AUTOMOTIVE NEWSLETTER MARCH 2 0 0 8 , I S S U E 5 4

FIAT India Automobiles (FIAPL), high-end buses in India with the terms of the deal were not revealed. a 50:50 JV between Fiat and Tata Indian unit of UK-based Caparo The company will acquire the Motors, will expand capacity and Group, targeting the fast-growing business through a subsidiary to be back integrate at its Ranjangaon commercial vehicle market. Hyundai newly incorporated and proposed facility in Pune with an additional will provide parts and production to be named, Mahindra Graphic investment of US$585m. This takes technology for Aero buses while Research and Design. January 8, 2008 the total investment by FIAPL in the Caparo India will manufacture and Ranjangaon plant to US$1bn. By sell the vehicles. Caparo India Nissan Motor and its French partner 2012, the capacity of the facility will build a facility in Chennai to Renault will spend US$1.1bn over will reach 200,000 cars, 300,000 start production in early 2009. The the next seven years to build a diesel engines, and 300,000 spare companies expect Caparo’s facility to production facility in India. The parts and accessories. In addition produce 5,100 units by 2013. March facility will begin operations in to premium cars, the facility will also 24, 2008 early 2010 and will have capacity manufacture Fiat diesel and gasoline of 400,000 vehicles by 2015. Both engines, and Tata passenger and Lumax Industries Ltd, an Indian companies will equally share the cost next generation cars. March 25, 2008 automotive light maker, will invest of the investment to build the new US$50m to modernize its existing facility in Oragadam, near Chennai. India’s Tata Motors Ltd will buy plants and set up three greenfield February 22, 2008 luxury brands Jaguar and Land Rover facilities. The company, which is from Ford Motor for US$2.3bn in a JV between Lumax Industries Auto component supplier Sona cash. Tata will continue to buy Ford of India and Stanley Electric Co Oke Gawa has acquired the engines for the acquired product of Japan, will invest in setting up precision forging business of lines. The transfer of ownership to three new facilities - one each in Germany’s ThyssenKrupp Group Tata Motors is expected to close by Singur, Pantnagar and Haridwar. for an undisclosed amount. the end of Q2, subject to regulatory The expansion will increase Lumax’s ThyssenKrupp’s precision forging approvals. As part of the agreement, overall capacity to 8.5 million light business contributes US$456m to Ford is expected to contribute up to sets from 6 million. February 12, 2008 the German firms’ overall sales. It US$600m to the Jaguar and Land operates four facilities globally, three Rover pension plans. March 26, 2008 Magnetto Automotive of Italy has in Germany and one in the US. Sona established a 50:50 JV with JBM Auto Oke Gawa is a JV between India’s Ford will invest an additional for the production of skin panels, Sona Group and Mitsubishi Corp of US$500m over the next two years body, welded parts and subsystems Japan. January 21, 2008 to expand its Indian manufacturing for 4-wheeler OEMs such as Tata, Fiat operations for small car and Tata and VW. The JV, JBM Magnetto Mitsui & Co will take a 30% stake in components. The company plans Automotive, will be established in Yamaha Motor’s wholly-owned Indian to increase the installed capacity to Pune. Magnetto is a major supplier motorcycle subsidiary by the end of 250,000 units by 2010 from 100,000 of upper and lower body structures, April 2008. The major motorcycle units for compact cars, new versions inner and outer panels, doors and lid manufacturer has plans to spend of engines and critical components systems. March 19, 2008 ¥20bn (US$190m) in India over the for the domestic and global markets. next three years, and this latest March 19, 2008 Mahindra & Mahindra will acquire move will help both companies to GR Grafica Ricerca Design, an Italian co-develop distribution and sales Hyundai Motor will manufacture auto design company. Financial networks in India. March 6, 2008 4

ASIAN AUTOMOTIVE NEWSLETTER MARCH 2 0 0 8 , I S S U E 5 4

Austrian ZKW Zizala Lichtsysteme Korea. In addition, it will double control of the Korean automobile will acquire a 26% stake in the capacity at an existing facility in parts maker. Halla has signed a automotive lighting manufacturer Hungary. In Brazil, Hi-Lex will bring preliminary agreement with Sunsage, Neolite Industries for an undisclosed on stream a JV with an Italian firm which was set up by private equity amount, with an option to increase to supply auto parts to European firm CCMP Capital Asia and Affinity its stake up to 40%. All existing carmakers. Two new facilities will be Equity and is Mando’s largest automotive lights operations of built in China to meet the demands shareholder. January 21, 2008 Neolite would be injected into of Japanese and local automakers. the proposed JV and the existing February 23, 2008 Kia Motors will build transmissions company would be renamed Neolite at its vehicle assembly plant being ZKW Lightings Pvt Ltd. The first new Takata Corp, a Japanese company, built in Georgia. The factory also facility is expected to come on-line is constructing a facility for seat will supply transmissions to Hyundai by 2009 with capacity to produce 2.5 belt parts in northeastern Mexico. Motor in Alabama. In return, Hyundai million lamps. December 30, 2007 The company is investing US$20m will supply engines from its Alabama in the project, which is located in vehicle assembly complex to Kia’s Monterrey. Scheduled to begin plant when the Kia plant opens in Indonesia operations in Q3 2008, the facility late 2009. Hyundai has one engine will make metal buckles with a plant building V-6s and is building Mitsubishi Fuso Truck and Bus capacity of up to 2 million sets a a second to make four-cylinder Corporation (MFTBC), the Japanese month. Buckles produced there engines. March 3, 2008 bus and truck manufacturer, will be assembled into finished has acquired a 32.3% stake in products at four seat belt factories Mitsubishi Krama Yudha Motors the firm operates in Mexico. It is Malaysia and Manufacturing (MKM), the also considering exporting buckles to Indonesian auto components Brazil. January 31, 2008 Japanese automaker Suzuki Motor manufacturer, from Mitsubishi and Japanese trading firm Itochu Motors for an undisclosed Corp have agreed to form a JV with consideration. MFTBC has also Korea Malaysian conglomerate DRB-Hicom acquired an 18% stake in Krama to promote and sell Suzuki Motor Yudha Tiga Berlian Motors (KTB), the Denso, the Japanese auto parts vehicles in Malaysia. DRB-Hicom Indonesian distributor of MFTBC’s supplier, will dissolve its capital will hold 40% of the enlarged Suzuki commercial trucks and cars. December alliance with Korean auto air Malaysia, with Suzuki Motor owning 23, 2007 conditioning system maker, 40% and Itochu with the remaining Doowon Climate Control, due to the 20%. February 12, 2008 uncompetitive strength of the Korean Japan won. Denso has agreed to sell its 33.4% stake in the JV to Doowon Thailand Hi-Lex Corp, a Japanese specialized- Climate Control for ¥2bn (US$18.6m). cable manufacturer, will increase February 21, 2008 American Axle and Manufacturing production in emerging economies, (AAM) will construct a manufacturing building facilities to manufacture Korea’s Halla Engineering & facility in Rayong. The 8,361 automotive window and door Construction will buy a 72.4% stake m2 facility will manufacture the regulators in China, Brazil, India and in Mando for US$694m, regaining company’s drive train products, with 5

ASIAN AUTOMOTIVE NEWSLETTER MARCH 2 0 0 8 , I S S U E 5 4 preliminary production planned for The JV will be called Minth Aapico with truckmaker Thonburi to next year. February 19, 2008 (Thailand) Co Ltd. February 27, 2008 assemble pickup trucks and other vehicles. Tata Motors’ venture with Minth Group, the Chinese maker of VW and India’s Tata Motors will Thonburi is to build up to 35,000 plastic auto parts for passenger cars, build assembly facilities in Thailand. one-ton pick-up trucks a year over the is setting up a Bht178m (US$5.7m) The two automakers are the latest next three to five years. January 4, 2008 JV in Thailand to access the ASEAN carmakers to answer the country’s market. Minth is taking a 60% stake call for fuel-efficient “eco” car in the JV with Thailand’s Aapico factories. VW applied for approval Hitech plc, and the two firms are to invest US$807m in a facility that To submit stories to future editions of this building a 7,000 m2 facility for metal would build 100,000 units, 65% newsletter, please contact Ms. Sora Ahn and plastic trim and body and roof of which would be exported. Tata in New York on 212-265-5300 or email components in Rayong province. already has a venture in Thailand [email protected].

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

Charles Maynard, HONG KONG SHANGHAI Paul DiGiacomo, [email protected] Jeff rey Wang, [email protected] Senior Managing Director Business Development Asia (HK) Business Development Asia Co Ltd [email protected] #1206 Lippo Centre, Tower 1 The Center, #1602, 989 Changle Road 89 Queensway, Hong Kong Shanghai 200031, China T (852) 2537-9565 T (86) 21-5407-5580 Sora Ahn, Senior Associate F (852) 2537-4406 F (86) 21-5407-5680 [email protected] SEOUL TOKYO Hans Kim, [email protected] Yuuichiro Nakajima, [email protected] Vineet Tyagi, Analyst Business Development Asia Business Development Asia K.K. #1201, Gwanghwamun Offi cia 4F, T3 Gates [email protected] 163 Sinmunno 1-Ga, Jongno-Gu 3-8-25 Toranomon, Minato-ku Seoul 110-999, Korea Tokyo 105-0001, Japan www.bdallc.com T (82) 2-3276-3150 T (81) 3-3433-5803 F (82) 2-3276-3155 F (81) 3-3433-5269 [email protected]