Visteon the way forward in China Cliff Dawson

Visteon: the way forward in China Cliff Dawson, Director Asia Operations Copyright 2004, Visteon Corporation

Agenda • • Visteon Overview Key relationships in China The joint venture success model The China slowdown – impacts and responses from suppliers • Questions Copyright 2004, Visteon Corporation

Visteon Corporation • $18. 7 billion diversified manufacturer of automotive components and systems • Capable of supplying approx 40% of a vehicle’s material value • Approximately 72, 000 employees, on 6 continents, in 25 countries • Business with nearly every global Copyright 2004, Visteon Corporation

Product Lines Copyright 2004, Visteon Corporation

Visteon Asia Pacific Facts • Been in the region for more than a decade • 12, 000 employees • 34 facilities – Includes technical, manufacturing, sales and service centers • 7 key partners • Well positioned with key customers Copyright 2004, Visteon Corporation

Visteon AP Operations Yanfeng Visteon Beijing Interior Systems Interiors Compressor HCC Dalian HVAC Visteon Climate Control Beijing Al. . Radiators Visteon JV Visteon 100% Products A/C Systems, Compressors, Radiators, Condensors, Heater Cores, Evaporators, Air Handling Assy. Fan & Shroud Assembly UARCO Changchun HCC Korea Pyongtaek, Taejon, Ulsan Duck Yang Group IP, Cockpit Module Ulsan, Yesan, Asan JCS Hiroshima Interiors Yanfeng Visteon Automotive Trim System Co. , Ltd Chongqing Powertrain Cooling, HVAC, Heat Exch. Visteon Electronics Hiroshima Visteon Engine Control Systems Chongqing Yanfeng Visteon Shanghai CSIL Bhiwadi Radiator A/C Systems, A/C Hoses, Plastics (IP, Clusters, Bumpers) IP, Cluster, Trim Parts ABS, Airbag RKE, GEM IP, Seat, Door Panel Trim, Bumpers Visteon Electronic Shanghai VASI Pune Exterior/ Interiors Plastics Starter, Alternator A/C Systems, Condensers, Evaporators, Heater Cores, Controls, HVAC Assy. GEM, Clock, Amplifiers, SWAM, Cluster VASI Chennai VPCSI Chennai VTL Thailand Rayong Yanfeng Key Safety Systems HCC Thailand Rayong A/C Systems Condensers Al. Radiators, Controls, Evaporators, Heater Cores, HVAC Assy. Copyright 2004, Visteon Corporation Dongfeng Visteon Wuhan, Guangzhou, Shiyan Jiangxi Fuchang Nanchang Al. A/C Hoses A/C Systems Interior, Exterior Trim Visteon Philippines Santa Rosa Fuel Rail, FDM, Throttle Body S/W, Airbag, Side Airbag, Seatbelt

Visteon in China Changchun 1 UARCO (FAW-VW; FAW) Aluminum Radiators/Heater Cores Beijing Climate Control Interior/Exterior 2 Visteon Climate Control Beijing (Hyundai) Electronics 3 Yanfeng Visteon Beijing (Beijing Hyundai, Beijing Jeep, HVAC, Engine Cooling, Heat Exch. Components Beijing Futian) Interior systems and components Powertrain Chongqing 4 Yanfeng Visteon Chongqing. (Changan Ford) IP, Cockpit Assy, Bumper, Door Panel Changchun 1 8 Beijing 7 Shenyang 13 Dalian 7 Yantai 2 3 Shiyan 6 Chongqing 4 5 8 8 Xuzhou Shanghai Wuhan 7 6 12 8 7 8 9 1011 8 Shaoxing Nanchang Shenzhen Note: Does not include operations of Yanfeng Visteon JVs with JCI (Seat Systems) and Key (Safety Systems) 5 Visteon Powertrain Chongqing (Changan, Changan Fo Air Intake Systems, Powertrain Controls Wuhan/Shiyan/Guangzhou 6 Dongfeng Visteon (PSA, Nissan, Honda) Interior systems and components, Exterior Trim Shanghai 7 Yanfeng Visteon (SVW, SGM, SAIC, Chery, Other OEM IP, Seats, Door Panels, Consoles, Bumpers, Int/Ext Trim 8 Yanfeng Visteon Electronics (Ford, Mazda, SGM, SVW, Fiat, Other OEMs) GEM, Clock, Cluster, Radios, Amplifiers, KES 9 Visteon Asia Pacific Corporate Office 10 China Technical Center 11 China Commodity Sourcing Office Nanchang 12 Jiangxi Fuchang Climate System (Jiangling Motors) A/C Hoses & A/C Systems Assy Dalian 13 Visteon Climate China (Hyundai, Ford) Compressors Copyright 2004, Visteon Corporation

Key Relationships in China • Halla Climate Control • Beijing Automotive Industry Corporation (BAIC) • Shanghai Automotive Industry Corporation (SAIC) Copyright 2004, Visteon Corporation

Formula for JV Success: Two strong partners with an equal stake in the success of the business Visteon Advantages SAIC Advantages Technology and advanced management processes Market and local knowledge/capabiliti es One YFV Team “One Platform” Cooperation Strategy Copyright 2004, Visteon Corporation

“One Platform” Advantages SAIC: • Support SAIC’s systems-oriented business consolidation strategy • Accelerate development of Yanfeng Visteon Technical Center capabilities to support SAIC’s future development Visteon: • Leverage the resources and capabilities of Yanfeng Visteon in Shanghai to support growth of business with Visteon’s global OEM customers throughout China – Human Resources – Manufacturing / Technical Capabilities – Financial Resources • Integrate the majority of Visteon’s China business under a single management structure with a coordinated strategy Copyright 2004, Visteon Corporation

China Technical Center • Will serve as regional engineering hub for electronics and interiors • Scheduled for completion last quarter 2005 • Will include Visteon and Yanfeng Visteon engineering staff • Will house prototyping and lab facilities to support interiors and electronics • Development of products for global and regional consumption Copyright 2004, Visteon Corporation China Technical Center

China’s Auto Market Slowdown Golden period 2001 – 2004 - substantial year on year growth - opportunities for OEMs and Suppliers - hungry market • Companies setting up in this period had growth plans based on recent history • Overcapacity begins to impact the market • Controls on the economy applied in 2004 compound the situation Copyright 2004, Visteon Corporation

China’s Auto Market Slowdown • Result has been market “normalization” • China begins to “feel like” the more established automotive markets of the world • China will continue to be a positive market in which to operate • Normalization of the China market will require more sophisticated responses from suppliers Copyright 2004, Visteon Corporation

China’s Auto Market Slowdown • What are the appropriate responses to “normalization” • Strengthen partnerships developed in China • Broaden scope of established partnerships • Begin to rapidly apply established techniques – Supply chain management – Lean manufacturing – Local and regional sourcing • Look to build local capability – Design capability – Engineering and Development – Sourcing and supplier management Copyright 2004, Visteon Corporation

China’s Auto Market Slowdown • Essential but difficult • Greater autonomy and flexibility is needed • Quality and cost are the most dominant factors for successful suppliers Copyright 2004, Visteon Corporation

Summary: the way forward for suppliers • China remains the most exciting market to be in despite is slowdown and rapid change • Partnerships are the key to long term success • The “normalizing of the market” requires suppliers to provide appropriate responses to maintaining a strong position in the automotive supply base Copyright 2004, Visteon Corporation

Questions? Copyright 2004, Visteon Corporation