China Automotive Forms $150 Million Joint Venture
The 20-year joint venture deal will be headed by a representative of China Automotive’s Henglong unit, which will appoint three of the five board members.
China Automotive Systems Inc. (Nasdaq: CAAS) has agreed to create a $150 million joint venture with KYB (China) Investment Co. Ltd. to make and sell automotive electric steering systems, the company disclosed today in a regulatory filing.
Under terms of the agreement, CAAS said its subsidiary, China Automotive Systems Inc., would own two-thirds of the new joint venture, Hubei Henglong KYB Automotive Electric Steering System Co. Ltd. The company said the target markets of the new Hubei Henglong joint venture would be China and international markets, excluding Japan and markets the companies already serve.
China Automotive is one of the largest suppliers of power steering systems in the world, with $499 million in sales last year. The international company has reported that China accounts for more than three-quarters of its business and the U.S. accounts for 17 percent. By far, its top customer last year was Fiat Chrysler North America, which contributed more than 14 percent of its overall revenue in 2017.
KYB (China) is part of the giant auto and industrial parts maker, KYB Corp. Formerly called Kayaba Industry Co. Ltd., the company was founded nearly 100 years ago and has more than $3 billion in annual sales.
The 20-year joint venture deal will be headed by a representative of China Automotive's Henglong unit, which will appoint three of the five board members, the company said.