investor presentation gabelli auto aftermarket conference nov 3 2009 l.
Skip this Video
Loading SlideShow in 5 Seconds..
Investor Presentation Gabelli Auto Aftermarket Conference Nov 3 2009 PowerPoint Presentation
Download Presentation
Investor Presentation Gabelli Auto Aftermarket Conference Nov 3 2009

Loading in 2 Seconds...

play fullscreen
1 / 20

Investor Presentation Gabelli Auto Aftermarket Conference Nov 3 2009 - PowerPoint PPT Presentation

  • Uploaded on

Investor Presentation Gabelli Auto Aftermarket Conference Nov 3 2009 Power-steering Chinese Automotive Industry Safe Harbor Statement

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Investor Presentation Gabelli Auto Aftermarket Conference Nov 3 2009' - libitha

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
investor presentation gabelli auto aftermarket conference nov 3 2009
Investor Presentation

Gabelli Auto Aftermarket Conference

Nov 3 2009

Power-steering Chinese Automotive Industry

safe harbor statement
Safe Harbor Statement

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company's operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.

introduction to caas
Introduction to CAAS

Who We Are

Key Milestones

1993 – Established Jiulong to produce Integral Power Steering Gear in Heavy-duty vehicles

1997 – Established Henglong to produce Rack and Pinion Steering Gear in passenger vehicles

2001 – Signed licensing agreement with Bishop Steering for automotive power steering valve technology

2002 – Established JV Zhejiang to produce steering pump and JV Shengyang with Brilliance Auto

2003 – Signed licensing agreement with NamYang

2004 – Listed on NASDAQ Small Cap

– Selected as Exclusive Supplier for Steering Pumps for GM Joint Venture in China

2005 – Signed Licensing Agreement with Korea Delphi

2006 – Formed JV with Chery Auto

– Established JV to produce Electric Power Steering (EPS)

2007 – Launched Detroit office to develop NA business

– Won supplier contract from FAW-Volkswagen –

2008 – Won first supplier contact with global N.American OEM

– Won supplier contracts with ChangAn Auto and Dongfeng Peugeot Citroen

– Sold record 1.3 million units

China Automotive Systems is the largest supplier of power steering components and systems in China. Its subsidiary groups offer a full range of auto parts incorporated into steering systems for both passenger automobiles and commercial vehicles.

Investment Highlights

  • #1 market share in commercial vehicle
  • #2 market share in passenger vehicle
  • Key supplier to many top 10 auto makers
  • Increasing number of supplier contracts with Sino-foreign JVs
  • Strong R&D, high quality and low cost
  • Nearly 100% sales to China domestic market
our products
Our Products
  • The company’s product offering encompasses a full range of auto parts which are incorporated into steering systems for both passenger automobiles and commercial vehicles.
  • The company currently offersfour separate series of power steering sets and over 300 models of power steering and manual steering sets, steering columns, steering oil pumps, and steering hoses.

Steering Column

Steering Pumps

Rack & Pinion Power Steering Gears

Steering Hoses

fast growing chinese auto market
Fast Growing Chinese Auto Market
  • Beginning in 2009, China becomes the world’s largest auto nation
  • Auto penetration in China is currently at 5% compared with the 60% penetration in US, Europe, and Japan
  • Rising demand from low-to-mid income families whose purchasing power has increased with falling car prices
  • In 2008, China auto parts sales increased by 32% YoY, compared with 40% in 2007.
  • Auto part exports were $35.01bn in 2008, accounting 70% of total value of auto exports. (CAAM)

China domestic auto market (million units)

2001-2008 CAGR 20%

  • Source: CAAM
  • 70 million total vehicles as of Aug 20091
  • (1)Source: China, Ministry of Public Security. (2) Investment Report of China Auto & Auto Parts Industry, 2000-2008
  • (3) China auto Parts Industry Report 2007-2008, (4)AlixPartners Study Feb ’08; Analysis of China Auto Parts Market 2008-2009
leading competitive position
Leading Competitive Position

CAAS is the largest supplier of power steering components and systems in China

China has over 100 automakers. There are only 30 power steering system suppliers in China.

Safety related components = High barrier of entry

Major competitors, Shanghai ZF and FKS, are captive suppliers to specific JV automakers: Volkswagen, GM, Toyota, Honda etc.

Leaders / Market %

1) CAAS Henglong: 13%

2) Yubei: 11%

3) ZF Shanghai: 10%

4) FAW: 9%

5) Zhej. Wanda: 7%

Source: Company estimates, 2008

CAAS is able to innovate and introduce new products and manage costs much more nimbly than its state-owned or foreign JV competitors.


competitive strength
Competitive Strength

CAAS is well positioned to take advantage of the fast growing China auto parts market opportunity

  • 200+ engineers; 3 technology and R&D centers
  • 27 Chinese patents; 4 trademarks
  • Partner with Bishop Steering Technology, Namyang, Korea Delphi Automotive Systems and Tsinghua University

Strong Technology and R&D Capabilities

  • Independent supplier;
  • Quick turnaround on new platform development

CAAS 3 months vs Competitors 6-9 months

  • Approximately 30 sedan makers in China have produced nearly 70 sedan models; Chinese OEMs are demanding fast product cycles

Rapid Product Introduction

  • Offers the most comprehensive range of steering systems in both passenger and commercial vehicles
  • 4 separate series of power steering sets and over 300 various models
  • Most domestic competitors have less than half of CAAS product range

Breadth of Product Portfolio

  • Labor cost control
  • Raw material cost control
  • Inventory management
  • Manufacturing expense control

Cost Control

solution strong cost management
Solution: Strong Cost Management

Cost pressures will continue as the ASPs of autos decline in China

Only suppliers with effective cost control measures can continue to maintain margins

  • CAAS’ Cost Management Measurement
  • Continued technological innovations
    • Reduce overall manufacturing and processing cost developed through in-house R&D advancements
  • Reduce the cost of raw materials
    • Volume purchase of major raw materials through a bidding process
    • Optimize product design to reduce the raw material wastage in the process of production
  • Reduce manufacturing expenses
    • Improve productivity of current labor hours through more efficient use of the new equipment

(Over USD 20M spent on high grade equipment in the past 3 years)

    • Set “targets” to controlmanufacturing overhead
main customers
Main Customers
  • More than 50 customers
  • Revenue contribution from Passenger vehicle accounted 66% in 2008
  • None of customers accounts for more than 20% of total revenue
  • Signature western brands: FAW-Volkswagen, Dongfeng Peugeot, GM Wuling

Driving Force: passenger vehicle products

Unit millions

* Source: company analysis FY 2008

2008 passenger vehicle summary
2008 Passenger Vehicle summary

Market share by brand origin in 2008

Decelerating growth, 6.8M cars sold, up 7.3%


  • Market leader VW growth slowed to 12.5%
  • Runner-up GM unit sales increased by 6.1%
  • Peugeot declined 6.2% YoY


  • FAW Toyota unit sales up by 17%YoY
  • Hyundai posted a strong 27.4%YoY growth
  • Nissan demonstrated over 20% YoY growth


  • Home-grown brands occupied 26%market
  • 2008 is a transition year for Chinese brands
  • Chery, Geely unit sales growth slowed
  • Winner: BYD grew 77%

* Source: CAAM, China Daily,,

2008 commercial vehicle summary
2008 Commercial Vehicle summary

Post- Euro III Standards

  • Overall demand growth slowed: 14.1% YoY growth
  • Nearly 477,000 heavy trucks sold and 943,516 light duty truck sold
  • Heavy and medium duty growth slowed, but light truck continue to climb
  • Futon has 29% of light duty truck market and 15% of total truck market in China
  • Local brands dominated 90% heavy duty market. Sinotruk Top 5 globally
  • Sales by units
  • 2008 sales

Breakdown truck unit sales, by type


* Source: CAAM, company analysis

government policies in 09
Government Policies in 09
  • Stimulus packages
    • Since Jan, tax reduction to 5% for 1.6L engine vehicles
    • Subsidies to Agricultural market – RMB 5 billion
    • Since Aug, subsidies to replace older, polluting vehicles with National IV
  • NDRC raised fuel price in Sept
    • Gasoline up by RMB 0.22 per liter
    • Diesel increased by RMB 0.26 per liter
  • Further financial support to intermediates
    • CBRC allows auto lease and auto financing companies to issue bonds
  • More stringent emission standard by SEPA
    • Nationwide implementation of vehicle emission certificate since Oct
    • “Yellow sticker” (non-compliance) vehicles become regulation targets
  • Accepted WTO ruling to abolish 25% tax on some imported auto parts
    • Revitalizes CKD market
2009 9m highlights
2009 9M Highlights

PV prod 7.1m and 37% YoY increase

PV sales 7.2m and 41% YoY increase

Price cut 0.6% Vs 1.3% in 08 and 4% in 07

“Inside Out”

Mini and small car sales in Coastal, Central, West markets up 15%, 28% and 36% YoY, respectively

“Size Matters”

Small car (< 1.6 liter) – 5 m units sales, 60% YoY increase, nearly 70% total PV sales

“Home Run”

National brands sold 3 m units and secured #1 mkt share

National brands dominate commercial vehicle market – 2.4 m units sales, up 17% YoY and truck market recovery continues

3 tier markets


* Source: CAAM, Four-in

growth strategy
Accelerate international expansion through direct sales and partnerships

Continue to develop relationships with top tier international automotive OEMs and component manufacturers

Search for good acquisition targets with solid distribution channels

Build channel relationships to capture aftermarket opportunity

Establish international office to pursue business development and R&D

Grow market share in China by partnering with fast growing OEMs

Penetrate existing clients’ different lines of products

Approach low margin foreign brands who import parts

Focus on continuous improvement in production efficiency and quality

Expand production to meet growing demand

Introduce new products through R&D

Growth Strategy

International Market

Domestic Market

Main goal: developing relationships and winning contracts in US and Europe

Benefits of Electric Power Steering: fuel efficient, environmental friendly and higher margin

robust organic revenue growth
Robust Organic Revenue Growth
  • Top line grew 370% over the last 7 years – all organic growth
  • CAGR 21% between 2002 and 2008
  • Revenue growth continued in 2008 despite the economic downturn

YoY 22%

USD millions

USD millions

FY04-08 CAGR 21%

driving bottom line growth
Driving Bottom-line Growth

USD millions

USD millions

YoY 22%

YoY 39%

balance sheet
Balance Sheet

($ in thousands)






Accounts and Notes Receivable






Property and Equipment, Net



Total Assets



Accounts and Notes Payable



Bank Loan



Minority Interest



Total Liabilities



Total Shareholders Equity



Free-Cash-Flow in the first half of 2009: USD 8 Million

investment highlights
Investment Highlights

China is the world’s largest car market

Fast growing China auto parts industry

High barrier of entry to the safety related components

Leading market share

Diversified customer base

Key supplier to Chinese home-grown auto makers

High quality products, strong R&D and competitive pricing

Well positioned for potential export opportunities


thank you investors@caasauto com www caasauto com
Thank You!

Power-steering Chinese Automotive Industry