China Automotive Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems supplier in China, announced today its subsidiary Great Genesis Holdings Limited has signed a definitive agreement to form a joint venture ("JV") with the Beijing Hainachuan Auto Parts Co. Ltd. subsidiary of Beijing Automobile Industrial Holdings ("Beijing Auto"). The new joint venture, Beijing Hailong Automotive System Co., Ltd., will design, develop and manufacture both hydraulic and electric power steering systems and parts at competitive prices to meet the growing power steering needs of Beijing Auto.
The new JV will be a 50%/50% ownership between CAAS and Beijing Auto, respectively. Four members of the JV's 7-person Board of Directors will be appointed by CAAS with the remaining 3 members appointed by Beijing Auto.
A new production facility is expected to be completed and operational within 18 months with a designed capacity for 300,000 units of hydraulic and 200,000 units of electric power steering systems plus parts. This structure will be located approximately 70 kilometers from the Beijing airport and 110 kilometers from the port at Tianjin to provide cost-effective shipping. The total investment is expected to approximate $20 million, with $10 million expended in the first 12 months, to be equally shared by both JV partners.
The CAAS Research Institute will work closely with the Beijing Auto Research Institute to develop the new steering models to meet the specific needs for the vehicles produced by Beijing Auto.
Mr. Hanlin Chen, Chairman of China Automotive Systems, commented, "We are very excited that Beijing Auto has selected CAAS as its trusted strategic partner for these key safety-related steering units to support their expansion plans. This JV is another milestone after our JV with Chery Auto in 2007, and Beijing Auto adds to our list of leading Chinese brands who rely on us for advanced, highly reliable steering units. Our new JV is further acknowledgement of our design and manufacturing expertise."
Beijing Automotive Industry Holding Co., Ltd. is a state-owned enterprise and has been a pioneer in China's automotive industry for a half century. It is one of China's major auto production bases and among the 8 largest automobile groups in China. It is comprised of tens of production factories and research institutes to produce 700,000 vehicles per year plus parts, in major categories such as jeeps, light-duty and commercial trucks, vans and automobiles. Among its operations are Beiqi Foton Motor Co., Ltd., Beijing Hyundai Motor Co., Ltd., Beijing Benz - Daimler Chrysler Automotive Co., Ltd. and Beijing Automobile Works Co., Ltd.
