Property of Valeo. Duplication prohibited
1
Valeo in China
Edouard de PireyValeo China President
Valeo Strategy
CO2 emissions reductionand 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 &
Africa14% Western
Europe37%
Property of Valeo. Duplication prohibited
3*Share of Valeo total OEM production made In Asia & emerging countries
37%*
2007
US9% Mexico
9%
SA4%
Asia27%
37%
2014
Eastern Europe &
Africa14%
Western
Eastern Europe &
Africa 14%
2013
Western
OEM sales by production regionSales including joint-ventures consolidated proportionally
Geographic repositioning
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US10%Mexico
10%
SA 3%
China13%
Asia excl. China14%
WesternEurope
36%54% in Asia& emergingcountries
US9%Mexico
9%
SA5%
China 12%
Asia excl. China14%54% in Asia
& emergingcountries
WesternEurope
37%
YTD end-September
Europe**OEM sales*** +9.6%
Production****+3.6%
Asia** excl. China
North AmericaOEM 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*
WorldOEM 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. ChinaOEM sales*** +9.7%
Production****+1.9%
South AmericaOEM 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*
ChinaOEM sales*** +35.5%
Production****+10.8%
Europe*OEM sales** +8.9%
Production***-0.2%
Asia* excl. China
North AmericaOEM sales** +4.2%
Production*** +3.8% 49% of Valeo sales
22% of Valeo sales
Outperf.+0.4pts
Outperf.+9.1pts
Outperf.+5.3pts
WorldOEM sales** +7.7%
Production***+0.7%
Outperf.+7.0ptsQ3
Q3 2014: OEM sales outpaced the global market by 7 pointsOutperformance in China of more than 20 points
Like-for-like proforma 2014
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Asia* excl. ChinaOEM sales** +5.1%
Production***-0.2%
South AmericaOEM sales** -21.7%
Production***-19.5%
13% of Valeo sales
3% of Valeo sales
Underperf.-2.2pts
13% of Valeo sales
Outperf.+20.4pts
ChinaOEM 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%
Other5%
French*18%
Other 6%
% of OEM salesSales including joint-ventures consolidated proportionally
German30%
German30%
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* Excluding Nissan** Including Nissan
Asian**26%
American22%
H1 2014
Asian** 29%
American 20%
H1 2013
Asian**26%
Asian**26%
SA5%
Asia excl. China13%China
NA19%
SA5%Asia excl.
China13%
NA22%
China and North America fueling future organic growth
% of 2013 order intake*
Asia37%**
% of 2013 OEM sales*
Asia26%
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13%China13%
Europe 50%
China24%
Europe36%
Order intake**: €14.8bn(of which Asia**: €5.5bn)
* By destination ** Excluding Access Mechanisms business
26%
OEM sales: €10.3bn
SA3% Asia
excl. China13%
China
NA
SA2%
Asia excl. China14%
NA
% of H1 2014 order intake*
Asia41%
% of H1 2014 OEM sales*
Asia26%€1.1bn
€1.6bn20%
17%
Asia fueling future organic growth, Acceleration in China
Property of Valeo. Duplication prohibited
9*OEM sales and order intake by destination including joint-ventures consolidated proportionally
China13%
EuropeChina27%Europe
Order intake: €9.1bnOEM sales: €5.4bn
€2.8bn€3.6bn
51%40%
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Property of Valeo. Duplication prohibited
11
Property of Valeo. Duplication prohibited
12
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 order 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 employeesChina 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 AssistanceSystems
Incl. Driving AssistanceSystems
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Transmission
Electrical Systems
Wipers
Lighting
Systems
Valeo in China
26262626 PlantsPlantsPlantsPlants
10101010 Development CentersDevelopment CentersDevelopment CentersDevelopment Centers
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15,000
3333 Research CentersResearch CentersResearch CentersResearch Centers
15,00015,00015,00015,000 PeoplePeoplePeoplePeople
2013GuangzhouChongqing
2014WuhanBeijing
2015Changchun
Customer Offices
Foton
Shanghai
Beijing
Changchun
Baoding
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ChangchunShanghaiHangzhouBaodingWuhu
GAC
Chongqing
WuhanWuhu
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
Underperformance
15pts Valeo OEM Sales*+34% CAGR
Outperformance
17pts
Outperformance
17pts
Double our salesevery four yearsDouble our salesevery 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
53.3 2.8 2.62.12.7
Wei
ghtin
g of
Chi
na in
Gro
up O
rder
Inta
keOrder intake ratio 3.0
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0.8 1.3
2.7 2.9 3.5
0%
5%
10%
15%
0
1
2
2009 2010 2011 2012 2013 H1 2014
Wei
ghtin
g of
Chi
na in
Gro
up O
rder
Inta
ke
H1 2.1€bn
Order intakeIn €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
160Millions 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 expertise20% CAGR
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4 14
46
96
142
1.2 1.8
3.4
0
1
2
3
4
5
0
20
40
60
80
2000 2005 2010 2015 2020Chinese 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 growthValeo Aftermarket sales growth higher than the car park growth
Managing growth, optimizing Capex
20134 new sites3 extensions
20144 new sites Changchun
Example: Thermal industrial strategyConcentrating component plants
Jingzhou for heat exchangers for HVACChangchun for variable piston compressorsLoudi for fixed piston compressorsFoshan for radiators
Assembly plants close to customersShashi
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4 new sites
2015 & onwards4+ additional projects
Loudi
Foshan/Huadu
Shashi
Nanjing
Chengdu
Tianjin
Yantai
ShashiTianjinHuaduNanjingYantaiChangchun
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 China2014
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 mar ketValeo innovation strategy fitted to the Chinese mar ket
Footprint of Valeo’s China Technical Centers
~2,000 development staff
Wuhan LightingNanjing Transmission
ChangchunThermal
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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
FoshanShenzhen PTS
Managing growth with the best teams
Retain
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Hire
TrainRetain<9% turnover,4-5 pts betterthan the market
Incl. Expertdevelopment
BenchmarkBenchmark
Efficiency program delivering results
A comprehensive toolbox
Benchmark
Kaizen activities
Automation
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Automation
Etc Simple automationSimple automation
Longer term programsLonger 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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Property of Valeo. Duplication prohibited
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Property of Valeo. Duplication prohibited
30
Shanghai Valeo overview
YI PinghuaSenior Site General Manager
Powertrain Systems Business GroupFour Product Groups
Electrical Systems PES
Alternators
Re-Starters / Stop&Start
Starters
Transmission Systems PTR
Manual Transmissions
Friction Materials
Hydraulic ClutchActuation
Combustion EnginePCE
Air Charging Systems
Mechanical Actuators
Powertrain Sensors
ElectronicsPEL
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 & InjectionEnergy 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 fieldfield
ArmatureReduction gear
i-Stars: Starter Alternator Reversible System
Control modulePower module
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Rear coverHeat sink
Brush holder
InterconnectorRotorStator
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 worldwideValeo’s biggest plant worldwide
Shanghai PES history
� 2014 Decision to localize Mild Hybrid Belt Starter Generator i-BSG 48V
� 2013New Plant in Pudong JinqiaoLocalization 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
WeifangKIA
Geely
JMC
JAC / Chery
Haima
BYD / CA-PSASGMWL
BYD
Chang’An Grp / Chang’An Ford / Dongfeng Xiaokang
BYD
Taiwan CMC
Toyota / GAC
Guangzhou
QorosChangshu
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 sqmOld 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
per
kilo
met
er n
orm
aliz
ed to
N
ew E
urop
ean
Driv
ing
Cyc
le (
NE
DC
)
150
170
190
210
230
250
270 United StatesUnited States
ChinaChina
EuropeEurope
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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
Gra
ms
CO
2pe
r ki
lom
eter
nor
mal
ized
to
New
Eur
opea
n D
rivin
g C
ycle
(N
ED
C)
2000 2005 2010 2015 2020 202590
110
130
150
US 2025: 109China 2020: 117
EU 2021: 95
JapanJapan
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, s ailing, etc.)
Which improves efficiency and reduces CO 2 consumption
Thanks to electrification, Hybrid cars will:
• recover energy when it is “free”
• restitute it when necessary (start, boost, drive, s ailing, etc.)
Which improves efficiency and reduces CO 2 consumption
Internal CombustionEngine
Source: 2013 Valeo Powertrain Forecast
Stop-Start massive application
Electrification forecast: China
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Emergence ofStop-Start
application
Stop-Start
Diversity of technologies– higher FULL / PHEV growth
MILDFULL
PHEV PHEV
Valeo Innovation Roadmap
Belt-driven starter-generators i-StARSStarters 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 generatorup to 70kW for full hybrids and
range extender generators
Micro Hybrids
Reinforced starters: ReStartwith or without Reflex Start
Valeo Concept on Democar
E-Machine 8-12 kW@ 48V
EDLC24 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 savingsUp 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 2013Valeo has been in production since 2013
Total Quality Approach5 Axes Method
Verification Communication
Detection
QRQCHigh 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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47
S/T lines ALT lines
Raw
materials
Unloading
Plant layout
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ALT lines
Raw
materials
Finished Goods
Loading
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