Valeo in China Edouard de Pirey Valeo China President 1 Property - - PowerPoint PPT Presentation

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Valeo in China

Edouard de Pirey Valeo China President

Valeo Strategy

CO2 emissions reduction and intuitive driving

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Development in Asia and emerging countries

OEM sales produced in Asia & emerging countries at 54%

50%*

2011 2013

54%*

Eastern Europe & Africa 14% Western Europe 37%

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*Share of Valeo total OEM production made In Asia & emerging countries

37%*

2007

US 9% Mexico 9% SA 4% Asia 27% 37%

2014

Eastern Europe & Africa 14%

Western

Eastern Europe & Africa 14%

2013

Western

OEM sales by production region

Sales including joint-ventures consolidated proportionally

Geographic repositioning

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US 10% Mexico 10% SA 3% China 13% Asia excl. China 14%

Western Europe 36% 54% in Asia & emerging countries

US 9% Mexico 9% SA 5% China 12% Asia excl. China 14%

54% in Asia & emerging countries Western Europe 37%

YTD end-September

Europe**

OEM sales*** +9.6%

Production****+3.6%

Asia** excl. China North America

OEM sales*** +6.4%

Production**** +2.8%

51% of Valeo sales(1) 20% of Valeo sales(1)

Outperf. +3.6pts* Outperf. +6.0pts* Outperf. +7.8pts*

World

OEM sales*** +10.3%

Production****+3.6%

Outperf. +6.7pts*

H1

H1 2014: OEM sales outpaced the global market by near 7 pts, in line with 2013

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Asia** excl. China

OEM sales*** +9.7%

Production****+1.9%

South America

OEM sales*** -13.3%

Production****-17.4%

13% of Valeo sales(1) 3% of Valeo sales(1)

Outperf. +4.1pts* * 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

13% of Valeo sales(1)

Outperf. +24.7pts*

China

OEM sales*** +35.5%

Production****+10.8%

Europe*

OEM sales** +8.9%

Production***-0.2%

Asia* excl. China North America

OEM sales** +4.2%

Production*** +3.8%

49% of Valeo sales 22% of Valeo sales

Outperf. +0.4pts Outperf. +9.1pts Outperf. +5.3pts

World

OEM sales** +7.7%

Production***+0.7%

Outperf. +7.0pts

Q3

Q3 2014: OEM sales outpaced the global market by 7 points Outperformance in China of more than 20 points

Like-for-like proforma 2014

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Asia* excl. China

OEM sales** +5.1%

Production***-0.2%

South America

OEM sales** -21.7%

Production***-19.5%

13% of Valeo sales 3% of Valeo sales

Underperf.

• 2.2pts

13% of Valeo sales

Outperf. +20.4pts

China

OEM sales** +25.4%

Production***+5.0%

* Europe including Africa; Asia including Middle East ** Valeo OEM sales by destination ***LMC estimates – light vehicle production

Balanced customer portfolio

French* 17% Other 5% French* 18% Other 6%

% of OEM sales

Sales including joint-ventures consolidated proportionally

German 30% German 30%

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* Excluding Nissan ** Including Nissan

Asian** 26% American 22%

H1 2014

Asian**

29%

American 20%

H1 2013

Asian** 26% Asian** 26%

SA 5% Asia excl. China 13%China NA 19% SA 5%Asia excl. China 13% NA 22%

China and North America fueling future organic growth

% of 2013 order intake*

Asia 37%**

% of 2013 OEM sales*

Asia 26%

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13%China 13% Europe 50% China 24% Europe 36%

Order intake**: €14.8bn

(of which Asia**: €5.5bn)

* By destination ** Excluding Access Mechanisms business

26%

OEM sales: €10.3bn

SA 3% Asia excl. China 13% China NA SA 2%

Asia excl. China 14% NA

% of H1 2014 order intake*

Asia 41%

% of H1 2014 OEM sales*

Asia 26%

€1.1bn

€1.6bn 20%

17%

Asia fueling future organic growth, Acceleration in China

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*OEM sales and order intake by destination including joint-ventures consolidated proportionally

China 13% Europe

China 27% Europe

Order intake: €9.1bn

OEM sales: €5.4bn

€2.8bn

€3.6bn 51%

40%

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Growth in China as part of Valeo global strategy

Absolute numbers in China RMB 12bn Sales* 15,000 At Group level (H1 2014) 27% of

• rder

intake

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15,000 employees** 26 sites** 10 development centers**

13% of sales

intake China is already Valeo’s No.1 country in number of employees China is already Valeo’s No.1 country in number of employees

*in 2013 ** as of today

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

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Transmission Electrical Systems

Wipers Lighting

Systems

Valeo in China

26 26 26 26 Plants

Plants Plants Plants

10 10 10 10 Development Centers

Development Centers Development Centers Development Centers

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15,000

3 3 3 3 Research Centers

Research Centers Research Centers Research Centers

15,000 15,000 15,000 15,000 People

People People People

2013

Guangzhou Chongqing

2014

Wuhan Beijing

2015

Changchun

Customer Offices

Foton

Shanghai Beijing Changchun Baoding

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Changchun Shanghai Hangzhou Baoding Wuhu GAC

Chongqing Wuhan Wuhu Guangzhou Hangzhou

Chinese OEMs represent <20% of Valeo sales in China today, but ~30% of Valeo’s order intake in China Chinese OEMs represent <20% of Valeo sales in China today, but ~30% of Valeo’s order intake in China

We are growing faster than the market

30% 38% 55% 35% 36%

30% 40% 50% 60%

Valeo OEM sales growth* Automotive production**

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20% 5% 20% 24% 24% 25% 0% 13% 8% 4% 13% 12% 8% 21% 9% 12% 5%

0% 10% 20% 30%

Q1 2012 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

Strong growth ahead

Under performance 15pts Valeo OEM Sales* +34% CAGR Out performance 17pts Out performance 17pts

Double our sales every four years Double our sales every four years

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Valeo OEM Sales* +9% CAGR Production** +24% CAGR Production** +17% CAGR

*OEM sales by destination like-for-like ** LMC estimates – light vehicle production

Continuous increase in the order intake

20% 25% 30% 3 4 5

3.3 2.8 2.6 2.1 2.7

ina in Group Order Intake

Order intake ratio

3.0

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0.8 1.3 2.7 2.9 3.5

0% 5% 10% 15% 1 2 2009 2010 2011 2012 2013 H1 2014 Weighting of China

H1 2.1€bn

Order intake

In €bn

H1 1.5€bn H1 2.4€bn

Aftermarket: the next wave of growth

6.0 8.0 5 6 7 8 9 100 120 140 160 Millions Years

Car park shifting from fleet market to private owners

Chinese car park > USA car park by 2020

Vast majority of first time buyers

No habit of regular maintenance Trust in OES workshop expertise

20% CAGR

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4 14 46 96 142

1.2 1.8 3.4 1 2 3 4 5 20 40 60 80 2000 2005 2010 2015 2020

Chinese car park Average age of the car park

Source: POLK

Trust in OES workshop expertise

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 Valeo Aftermarket sales growth higher than the car park growth

Managing growth, optimizing Capex

2013

4 new sites 3 extensions

2014

4 new sites

Changchun

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

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4 new sites

2015 & onwards

4+ additional projects

Loudi Foshan/Huadu Shashi Nanjing Chengdu Tianjin Yantai Shashi Tianjin Huadu Nanjing Yantai Changchun

Valeo China’s Commitment

Four Steps Approach

Serve its traditional international customers Develop business with Chinese car makers

1994

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Be Chinese in China Develop products for the Chinese market in China Develop technologies from China

2014

Innovation for China

CO2 emission reduction

Stop-start PHEV solutions Water Charge Air Cooler Etc

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Etc

Intuitive driving

Advanced HMI Automatic driving

Valeo innovation strategy fitted to the Chinese market Valeo innovation strategy fitted to the Chinese market

Footprint of Valeo’s China Technical Centers

~2,000 development staff

Wuhan Lighting Nanjing Transmission Changchun Thermal

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3 Research Centers 10 Development Centers

Shashi Thermal Shenzhen CDA Shanghai Wiper/THS Nanjing Transmission Shanghai Electrical Wuxi CDA Shanghai Wiper Foshan Shenzhen PTS

Managing growth with the best teams

Retain

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Hire Train Retain

<9% turnover, 4-5 pts better than the market

• Incl. Expert

development

Benchmark Benchmark

Efficiency program delivering results

A comprehensive toolbox

Benchmark Kaizen activities Automation

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Automation Etc

Simple automation Simple automation Longer term programs Longer term programs

Increase productivity to offset labor cost increase in the years to come Increase productivity to offset labor cost increase in the years to come

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”

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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

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Shanghai Valeo overview

YI Pinghua Senior Site General Manager

Powertrain Systems Business Group

Four Product Groups

Electrical Systems PES

Alternators Re-Starters / Stop&Start Starters

Transmission Systems PTR

Manual Transmissions Friction Materials Hydraulic Clutch Actuation

Combustion Engine PCE

Air Charging Systems Mechanical Actuators Powertrain Sensors

Electronics PEL

Medium Power Electronics High Power Electronics （HEVs & Evs)

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Electric Motors Belt Starter Generator Stop&Start Automatic Transmissions Powershift Transmissions Friction Materials EMS ECUs Ignition & Injection Energy Conversion System Engineering & Transversal Innovation

• CO2 Emission Reduction
• Pollutants Emission Reduction
• Hybrid and Electric

Valeo Alternators

Rotor w or w/o magnets Stator 2 x 3 phases 12 diodes rectifier bridge

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Valeo Re-Starters

Magnets Magnets

Solenoid switch Rear part Field system

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Wound Wound field field

Armature Reduction gear

i-Stars: Starter Alternator Reversible System

Control module Power module

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34 Rear cover Heat sink Brush holder Interconnector Rotor Stator

Shanghai PES key facts

#1 in China, >25% market share

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Sharehoding: 50% Valeo/50% Huayu (SAIC Group) 2,000 employees >10m machines manufactured in 2013 Valeo’s biggest plant worldwide Valeo’s biggest plant worldwide

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

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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

A broad and comprehensive customer base

Beijing Changchun Harbin Shenyang Baoding Tianjin Yantai

Dong’An / Hafei FVW / FAW FAW-Daihatsu

SGM Dongyue Weifang Diesel

FAW Xiali

Jilin

Brilliance / SGM Beisheng DPCA / Dongfeng Nissan Greatwall BHMC / Daimler / Beijing Power / Beiqi Foton

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Shanghai Shenzhen Hainan Changsha Chongqing Wuhan Xian Nanchang Liuzhou Hangzhou Anhui Yancheng

SVW / SGM /

• Sh. Diesel /

SMC / Volvo

Weifang

KIA

Geely JMC

JAC / Chery

Haima BYD / CA-PSA

SGMWL

BYD Chang’An Grp / Chang’An Ford / Dongfeng Xiaokang BYD Taiwan CMC Toyota / GAC

Guangzhou

Qoros

Changshu

Strong growth of Valeo Shanghai

Sales x5 since 2005

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2005 2006 2007 2008 2009 2010 2011 2012 2013

New Valeo Shanghai facilities

In sqm

Old plant (Zhangjiang) New plant (Jinqiao) Increase Site ground area 28,914 77,813 269% Constructive area 17,685 53,023 300%

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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%

Why is hybridization a must ? (1/2)

Market context – Regulatory impact analysis

er kilometer normalized to n Driving Cycle (NEDC)

150 170 190 210 230 250 270

United States United States China China Europe Europe

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• Demanding emission regulations
• Climate/air quality (especially in China)
• End-user benefit
• Demanding emission regulations
• Climate/air quality (especially in China)
• End-user benefit

Grams CO2 per New European

2000 2005 2010 2015 2020 2025 90 110 130 150

US 2025: 109 China 2020: 117 EU 2021: 95 Japan Japan Japan 2020: 105

Why is hybridization a must ? (2/2)

Today: We are wasting “free Energy” We need a lot of Energy Today: We are wasting “free Energy” We need a lot of Energy

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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 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

Internal Combustion Engine

Source: 2013 Valeo Powertrain Forecast

Stop-Start massive application

Electrification forecast: China

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Emergence of Stop-Start application Stop-Start Diversity of technologies– higher FULL / PHEV growth MILD FULL PHEV PHEV

Valeo Innovation Roadmap

Belt-driven starter- generators i-StARS Starters and alternators Belt Starter Generator up to 15kW for mild hybrids

Conventional Systems Mild/Full Hybrids

High efficiency alternator

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Crankshaft motor generator up to 70kW for full hybrids and range extender generators

Micro Hybrids

Reinforced starters: ReStart

with or without Reflex Start

Valeo Concept on Democar

E-Machine 8-12 kW@ 48V EDLC 24 x 5000F 208 kJ Supervisor

Produced by Valeo

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Stand Alone Inverter 15 kW 48V DC/DC Converter 2 kW 60V / 12V unidirectional 208 kJ

Up to 13% fuel consumption savings Up to 13% fuel consumption savings

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

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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 Valeo has been in production since 2013

Total Quality Approach

5 Axes Method

Verification Communication Detection

QRQC High Tech Validation Labs 10 Tools

QRQC (All) 5S Work Instructions/Operator Certification Zero Rework Stop Scrap

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…for Customer Satisfaction

Analysis Verification Communication

…for Continuous Improvement …for Best Product Design … as Conditions to Produce Quality

Stop Scrap Change Control (CI 3.9) (4M Matrix) SPPC - Manufacturing / Project Launch Control (FDPR) Standardization Committee / Technical Committee PFMEA check on Genba

Recognized by our customers

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S/T lines

ALT lines Raw mat

Unloading

Plant layout

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ALT lines aterials

Finished Goods

Loading

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