WUHAN, China, May 3, 2018 /PRNewswire/ -- China Automotive Systems, Inc. (Nasdaq: CAAS) ("CAAS" or the "Company"), a leading power steering components and systems supplier in China, today announced it has established a new joint venture, Hubei Henglong KYB Automobile Electric Steering System Co., Ltd. ("Hubei KYB"), with KYB (China) Investment Co., Ltd. ("KYB"), a wholly owned company of Japan KYB Co., Ltd., for the development and production of electric power steering systems ("EPS") and other auto-related products.
Based in Jingzhou City, Hubei Province, China, Hubei KYB will engage in the research, development, manufacture, sales and service of automotive electric steering systems and other automotive products. Specific product categories include column-type electric power steering system ("C-EPS"), gear-type electric power steering system ("P-EPS"), rack-type electric power steering system ("R-EPS") and other automotive EPS products. The rights to EPS technologies from both parties will be transferred to Hubei KYB with full technical support for the R&D department.
Hubei KYB plans to invest approximately RMB 960 million and have registered capital of RMB 320 million. It expects to have an annual production capacity target of 5 million units to significantly penetrate the Chinese and the global EPS markets. CAAS's participation will be RMB 213.12 million for a 66.6% ownership, funded by in-kind and cash, which include the transfer of intellectual property, equipment for EPS production and cash. The Board of Directors will consist of five directors, three of whom will be appointed by CAAS including the chairman.
The joint venture will lease its operating headquarter offices and factory buildings from the existing CAAS facilities in Jingzhou City. Hubei KYB will establish an independent R&D department in Wuhan City, Hubei Province, to research and develop new products and technologies. In addition, CAAS and KYB plan to transfer all their current EPS business in the Chinese market, including the business of KYB's Japanese customers in China, to Hubei KYB.
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "This joint venture will provide great benefits to both parties. The combination of our technologies will enhance the performance and quality Hubei KYB's EPS products to increase our market position in this growing market. CAAS will also benefit by Hubei KYB suppling KYB's Japanese customers in China in addition to the potential to export to customers outside of Japan. Hubei KYB adds significant production capacity to meet the demands of KYB's customers and new research programs to build more advanced EPS systems."
As a pioneer in hydraulic technology, KYB is active in a wide range of fields, including automobiles, motorcycles, construction machinery, railroad cars, aircraft, special purpose vehicles, seismic isolation systems, vibration control dampers, and marine equipment. By developing advanced products that combine hydraulics with vibration control, power control, and systemization technology, KYB has earned the trust of customers around the world. It aims to continue earning customer and stakeholder support with its relentless drive to create the technologies and products of tomorrow. KYB has plants and companies in 23 countries and areas around the world, with business segments in Automotive Components (AC) Operations, Hydraulic Components (HC) Operations, and Others, which includes the Special-purpose Vehicles, Aircraft Components and the System Products and Electronics Components Business. Net sales for the 2017 year was 355.2 billion yen.
About China Automotive Systems, Inc.
Based in Hubei Province, the People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through eight Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 6 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Chrysler Group LLC in North America. For more information, please visit: http://www.caasauto.com.
This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. These forward-looking statements include statements regarding the qualitative and quantitative effects of the accounting errors, the periods involved, the nature of the Company's review and any anticipated conclusions of the Company or its management and other statements that are not historical facts. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Form 10-K annual report filed with the Securities and Exchange Commission on March 29, 2018, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.
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China Automotive Systems, Inc.