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Motor development international

MDI CONCEPT

MDI: 17 rue des Bains – 1212 Luxemburg

Tel. : 00 352 26 26 23 25

CQFD is the French subsidiary of MDI 4ème avenue - 06510 Carros (France)

Tel. : 00 33 (0) 4 97 10 20 20 / Fax : 00 33 (0) 4 97 10 20 21

Website : www.mdi.lu E-mail : cqfd.ad@mdi.lu

Motor Development International

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The usual system: a complex and polluting logistics

Activities

Buildings

Means of production

Comparative study

Analysis of the costs

Production concept

Turnkey factories to manufacture and sell locally

Chassis workshop Bodyworks- and assembly workshop

Painting line Mechanical machining workshop Mechanical assembly workshop Vehicle assembly line Saddlery – upholstery workshop Tanks workshop

Usual production system

Production of parts and components Distribution of finished products The MDI concept simplifies the logistics Advantages of the MDI concept - on the ecological level - on the economical and social levels - on the quality level - on the marketing level

- on the costs

The MDI concept reduces the production costs Amortization

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Activities

Turnkey factories to manufacture and sell locally

From 1999, MDI imagined and invented the notion of Dealer / Manufacturer / Associate by proposing turnkey factories in order to produce and sell locally. Contrary to huge conventional assembly factories (that are particularly polluting), the MDI concept sets up numerous production micro-factories spread all over the world.

They are equipped with all the necessary workshops to manufacture 80 % of the vehicles and to commercialize their products on the spot.

The Dealers / Manufacturers / Associates are distributed on definite marketing zones and are owners of MDI factories. They carry out :

o the manufacturing of the cars o the cars sales o the organization of their after-sales network o the manufacturing of the spare parts

The factory should be located on a site near a big city, if possible in a commercial estate. A land of 15 000 m² is sufficient to set up a MDI plant.

o Ground surface ………………………………………... 4 500 m² o Show-room and commercial surface………………… 600 m² o Production area…………………………..……………. 4 000 m² o Storage surface………………… …………………..… 1 000 m²

Buildings

MDI production concept

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The totality of the means and tooling necessary to the manufacturing of the MDI cars is provided by MDI.

Chassis workshop

Assembly tooling – Gluing gauges

Bodyworks- and assembly workshop

Moulding line (MDI patent) – Production moulds – Injection tooling – Foaming moulds – Foaming

tooling – Laser cutting – 5 axis digital trimming – Template

Painting line

Preparation – Painting cabin – Painting robot – Drying room

Means of production

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Mechanical machining workshop Digital machining centre – Specific machines – Special tooling – Three-dimensional

control material - Metrology

Mechanical assembly

Specific tooling – Engine test bench – General tooling – Gear-box control

Assembly line

Tooling and handling material – Subsets assembly benches along assembly line – Storage along assembly line

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Saddlery - upholstery

Necessary means

Tanks workshop

Liners blower – Wire coiling machine – Control implements - Drying room

Storage means

Pallets carrier – Shelving – Fork-lift – Handling material

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Comparative study

Usual production system

The conventional production method (practised by the global car makers) is based on a logistics of assembly and distribution. A « giga » - assembly factory located on one spot produces the cars that are then delivered towards several countries, to distributors who redistribute the cars to the dealers.

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The usual system: a complex and polluting logistics

The « supply chain » of the present makers is divided into two large sectors:

The production of parts and components

This production phase goes through:

1) The transformation of raw material into unit parts and through the manufacturing of sub-components by subcontractors (third 3)

VANTAGES OF THE CONCEPT

ACTUAL LOGISTICS

PARTS PRODUCTION FINISHED PRODUCTS

Raw material

Sub-componentssuppliers

Componentssuppliers

ASSEMBLY FACTORY

Platforms and terminals

PP

T T

Distributors

Dealers

Customers

PP

T T

PP

T T

PP

T T

PP

T T

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2) The assembly of sub-components at the suppliers (third 2)

3) The manufacturing of main components (either at the suppliers, or in the plants of the maker's group) (third 1)

4) The final assembly

All those operations require transportation that increases CO2 emissions

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The distribution of the finished products

To bring the vehicles to the final customer, it is necessary to :

1) Store finished vehicles on platforms and terminals

2) Transport them to the importers and distributors in each selling country, who dispatch them to the dealers (by train, by truck and even by ship)

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3) Sell them through a dealers' network

4) To finally reach the end user

All the linking means between the participants (in the distribution of the finished products) require transportation that contributes to the increase of CO2 emissions.

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The MDI concept simplifies the logistics

o No distributors o No intermediate stocks

o Less suppliers: 80% of the vehicle are achieved on the spot

o The assembly plant is replaced by several MDI factories

o The suppliers are selected in view of reducing the costs, the logistics and the

transport

o The purchases for all the factories are managed by the MDI Trading Group in order to derive profit from bulk purchases

Considering the number of MDI factories necessary to the production of the same amount of cars produced in a conventional plant, the MDI concept enables:

o A reduction of the CO2 rate caused by the transport of raw material and finished cars

o A reduction of the logistics costs

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VANTAGES OF THE CONCEPTMDI CONCEPT SIMPLIFIES LOGISTICS

PARTS PRODUCTION FINISHED PRODUCTS

Raw material suppliers

Sub-componentssuppliers

Componentssuppliers

ASSEMBLY PLANT

Platforms and terminals

PP

T T

Distributors

Dealers

Customers

PP

T T

PP

T T

PP

T T

XXXXXX

XX

X X

XX

XX X

X

XX

XX

XX

XXX

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Advantages of the MDI concept

By way of example, to produce the same number of cars as a usual maker in his assembly factory, 50 MDI's concept factories are required, that is to say:

To sum up, the MDI concept requires (in relation to the usual production mode):

Only 1/3rd of the land surface is necessary with MDI concept

VANTAGES OF THE CONCEPT

Usual plant MDI production concept

Production : 375 000 cars 7 500 cars 375 000 cars

1 PLANT 50 PLANTS

Only 1/4th of the plant surface is necessary with MDI concept

30% more workforce are employed with MDI concept

Only 1/5th of the investment is required with MDI concept

Land surface : 2 370 000 m² 15 000 m² 750 000 m²

Plant surface : 880 000 m² 4 350 m² 217 500 m²

Workforce (2 shifts) : 4 650 - 120 - 6 000 -

1/3rd

of the land surface

1/4th of the built surface

1/5th of the investment amount

30 % more labour

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On the ecological level

o Only one third of the ground surface is necessary o Better distribution of the energy used for production o No pollution due to the transport of the finished products

On the economic and social levels

o The currency remains in the country no need for change

o Creation of local employment no population transfer o Sharing out of the knowledge and of the know-how

On the quality level

o A car produced every ½ hour careful production quality o Use of techniques that are not compatible with mass production

From the marketing point of view

o Customers buy cars that are produced locally (especially public services) o Reduction of import duties/taxes (very high in some countries)

On the costs

o The MDI plants are small and easy-to-manage infrastructures (SME) o Logistics expenses are drastically reduced o No stocks of spare parts. These are manufactured « after-time »

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Analysis of the costs

The MDI concept reduces the production costs

Hereunder, a quick analysis of the costs' distribution on the selling price of a vehicle reveals the important margin made by a Dealer / Manufacturer / Associate who has acquired an MDI's concept factory.

Amortization

(- 2% for the MDI concept) This is the amortization portion that includes the buying price of the factory, the tooling, the machines, etc. In the case of a MDI plant, simple manufacturing methods enable to reduce the impact of that amortization on the selling price.

Purchases

(- 4% for the MDI concept) The reduction of the percentage concerning the purchases is due to the fact that 80 % of the car are really produced on the spot. That integration allows reducing the number of intermediate suppliers. The purchases are made through a MDI Trading Group for all the production factories.

CONVENTIONAL CAR MDI AIR CAR

VANTAGES OF THE CONCEPT

Amortization 4% Amortization 2%

Purchases 32% Purchases 28%

Production costs 11% Production costs 6%

R & D 5% Royalties 10%

Logistics 8% Logistics 1%

Commercial costs 18% Commercial costs 7%

Dealer commission 18%

Overheads 4% Overheads 8%

Gross margin 2% Gross margin

SELLING PRICE / COST ANALYSIS

38%

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Production costs

(- 5% pour the MDI concept) Those production costs are related to the staff and to the various running charges. Simple production techniques, as also the use of already existing public services (no need for integrated services, such as banks, buses, catering, safety, etc.) enable to reduce the production costs by 50 %.

Royalties

(+ 5% for the MDI concept) Whereas a usual car maker reinvests about 5 % of a car's selling price into the R&D, MDI deducts 10 % of that selling price as royalties. Those 10 % will be used for the R&D, but also towards:

o the participation in international motor-shows o the publicity worldwide o the commercial and strategic management o the marketing resources o the dividends for the shareholders

Logistics

(- 7% for the MDI concept) Only the transport and delivery of raw materials, as also the transport of the parts that are not manufactured in the plant, are part of the logistics of the MDI concept. The suppression of some steps, such as:

o transport of parts and subsets o cocooning and protection during transport o storage o transport of the cars to the terminals o transport of the cars to the dealers o preparation of the cars before selling o reparation of damages caused during transport (10% of the total production)

allows reducing the logistics costs by about 7 %.

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Commercial costs

(- 11% for the MDI concept) In this item, only the wages of the salespeople, the commissions and the local publicities play a part in the MDI concept. Whereas in the case of the usual car makers, the international motor-shows, the publicity worldwide, the commercial and strategic offices, as also the marketing resources are counted.

Dealers' commission

(- 18% for the MDI concept) No commission for dealers, since the MDI production unit itself is the dealer.

Charges

(+ 6% for the MDI concept) Since the production factory is a SME, it will not be able to negotiate the charges (social or for electricity supply, for example) to the same extent as the big car makers. This analysis of costs allows calculating the important margin that a Dealer / Manufacturer / Associate can get, thanks to the MDI production concept.