Valeo Signs Ninth Joint Venture in China, With FAW, and Announces a Series of Development Plans

BEIJING, China, April 21 --

- World Leading French Automotive Supplier Reaffirms Commitment to China's Automotive Industry

Valeo, a global leader in the automotive components industry, today announced the signing of a new joint venture with FAW, China's largest automaker. The agreement was signed by Valeo Chairman & CEO Thierry Morin and FAW Vice-President and FAWER Chairman Teng Tieqi in the presence of French Prime Minister Jean-Pierre Raffarin and Chinese Premier Wen Jiabao. This joint venture, the Group's ninth in the country, demonstrates Valeo's continuing commitment to the Chinese automotive market and strengthens the Group's eleven year presence in China. In addition, Valeo announced six other planned developments in line with its goal to bring all of its product lines and technologies to the Chinese market.

The joint venture was signed with FAWER, the parts supplier branch of FAW. The new company owned 60% by Valeo will develop and manufacture air-conditioning compressors for Chinese and export markets. The plant will be located in Changchun, the capital of the north-eastern province of Jilin.

"The Chinese market represents a key part of Valeo's future growth. With the creation of this new joint venture, Valeo will be in a better position to serve both Chinese and global automakers," said Thierry Morin, Valeo Chairman & CEO. "We are fully committed to the development of China's automotive industry and will continue to work closely with all our Chinese partners by sharing our capabilities in research, development and manufacturing."

Teng Tieqi, FAW's Group Vice-President, said: "We are proud to partner with Valeo to jointly develop cutting edge technological innovations and produce globally competitive products. Our strategic partnership with Valeo is bound by a common desire to contribute to the further development of China's automotive industry."

Other developments announced today by Valeo are:

1) A new Security Systems facility in Wuxi, 100% owned by Valeo, for the development and production of remote controls, immobilizers, locksets, steering column locks, latches and handles (start of production planned in September 2005).

2) A planned joint venture for the development and production of engine cooling systems.

3) A planned joint venture for the production of wiring systems.

4) A planned joint venture for the production of park assist sensors, a product for which Valeo is the worldwide leader.

5) A planned new 100% Valeo owned engine management systems production unit in Wuhan for the production of engine control units complying with Euro 4 regulations.

6) A new 100% Valeo owned electrical systems factory in Shanghai for the production of retarders.

Ongoing development and expertise

During 2004, Valeo increased its shareholding in three of its Chinese joint ventures to 50% or more (Shanghai Valeo Automotive Electrical Systems, Valeo Shanghai Automotive Electric Motors and Nanjing Valeo Clutch Company) and earlier this year, the Group announced the acquisition of 100% of its stake in Valeo Zexel China Climate Control.

Valeo has grown rapidly in China since it entered the market in 1994. Through its eight production facilities, sales in the region have grown to around 250 million euros. Valeo remains the uncontested leader for electrical and wiper systems in China and also has a strong presence in the lighting systems, climate control and clutches markets.

The Group's first Research and Development Center in China which opened in 2004 in Wuhan, is engaged in the cutting-edge development of advanced automotive lighting systems for both Chinese and European car makers. The center's 45 engineers (expected to reach 70 at the end of 2005) work closely with other R&D facilities around the world on joint projects for all markets.

Valeo's Asia Purchasing Office, opened in Shanghai in 2001, expects to triple its local sourcing from the current 300 million euros to 1 billion euros in three years. The office has already demonstrated its ability to identify qualified suppliers and train them where necessary to meet global standards in cost-competitiveness, quality, productivity, service and innovation.

To further enhance the competitiveness of its Chinese facilities, Valeo is training its local workforce in its proprietary 5 Axes Methodology. The 5 Axes school based in Shanghai trains managers and engineers of Valeo China plants in order to achieve world class automotive excellence. The China 5 Axes School has trained over 230 Valeo engineers and managers since its establishment in September 2004.

Valeo is an independent industrial group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 129 plants, 65 R&D centers, 9 distribution centers and employs 67,300 people in 26 countries worldwide