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Global and China Automotive Wheel Industry Report, 2011-2012

2

3. Global & China Wheel Market

3.1 Global Market

Global Light-duty Vehicle Output and Popularity of Aluminum Wheel, 2006-2013

2006 2007 2008 2009 2010 2011 2012 2013

Output of Light

Vehicle (mln)

64.9 *** *** *** *** *** *** ***

Penetration Rate of

Aluminum Wheel

60% *** *** *** *** *** *** ***

Mainly applied in light vehicles, the Penetration rate of aluminum wheels in passenger vehicles has

approximated ***%, and that in trucks has been about ***%. North America characterizes higher

Penetration rate. Aluminum wheel market falls into OEM and after-sales, of which, the latter

features small shipment yet high average unit price.


3

Global Aluminum Wheel Market Size (Output), 2006-2012

2006 2007 2008 2009 2010 2011 2012

Shipment of OEM

Aluminum Wheel (mln)

155.9 *** *** *** *** *** ***

Shipment of Aftermarket

Aluminum Wheel (mln)

17.8 *** *** *** *** *** ***

Global Aluminum Wheel Market Size (Output Value), 2006-2012


4

2006 2007 2008 2009 2010 2011 2012

OEM Aluminum Wheel

(US$100 Million)

*** *** *** *** *** *** ***

Aftermarket Aluminum

Wheel (US$100 Million)

18 *** *** *** *** *** ***

2006 *** *** *** *** *** ***

Global Commercial

Vehicle Production (mln)

*** *** *** *** *** *** ***

Steel Wheel Shipment

(mln)

175 *** *** *** *** *** ***

3.2 Production by Region

Output Value of Global Aluminum Wheel Industry by Region, 2008-2011

Japan EU North America China Others

2008 23% *** *** *** ***

2009 *** *** *** *** ***

2010 *** *** *** *** ***

2011 *** *** *** *** ***

By Location of Corporate Headquarter

For now, aftermarket is still dominated by developed countries. In 2008, there were approximately

***million in the Chinese market, yet accompanied by tremendous potential; up ***% in 2009 to

reach ***million in 2010, then *** million in 2011.


5

Global Aluminum Wheel Output by Region, 2008-2011

3.5 China Aluminum Wheel Market

Aluminum wheel manufacturers in China can be divided into two categories, one is focusing on the

aftermarket, and the other is focusing on the OEM market. Large manufacturers mainly focus on

the OEM market, while small and medium-sized manufacturers mainly center on the aftermarket.

The aftermarket can be divided into domestic aftermarket and overseas aftermarket. There are

about 80-100 small manufacturers focusing on the domestic aftermarket, generally with an annual

output of less than 10,000 units. The manufacturers focusing on the overseas aftermarket are

mainly concentrated in Zhejiang, Guangdong and Jiangsu. There are as many as 3,000

manufacturers (700-900 of which are very active), some even with an annual output of less than

1,000 units.

The OEM market can also be divided into the domestic OEM market and overseas OEM market.

Those focusing on the domestic OEM market are mostly local enterprises, and those focusing on

the overseas market are mainly joint ventures or wholly foreign owned enterprises except Dicastal.

It should be noted that most of the automobile joint ventures in China, except South Korean

manufacturers, use the wheel of CITIC Dicastal which have passed stringent certifications

worldwide. Japanese manufacturers used to employ Japanese aluminum wheel, but have

increased the adoption of CITIC Dicastal’s products in recent years. Joint ventures or wholly

foreign-owned enterprises mostly address the overseas market. Chinese local automobile brands

are mainly supplied by Baoding Lizhong and Foshan Nanhai Zhongnan Aluminum Wheel.


6

Ranking of Top 20 Aluminum Wheel Manufacturers in China (by Revenue), 2010-2011

(Unit: USD mln) 2010 2011

Citic Dicastal ** **

Lioho Machinery ** **

Zhangjiagang Alink ** **

Baoding Lizhong ** **

Zhejiang Wanfeng Auto Wheel ** **

Sheng Wang Auto Parts (Prosperous International) ** **

Jinfei Machinery ** **

Ningbo Baodi ** **

Foshan Nanhai Zhongnan Aluminum Wheel ** **

Binzhou Mengwei Dicastal ** **

Shanghai MingQi Aluminum Industry ** **

Fu Cheng Aluminum ** **

Yueling ** **

Sanmenxia Dicastal Wheel ** **

Seyen Heavy Industries ** **

Shenyang Durui ** **

Tianyang Aluminum Alloy 48 90

Chin Ho Li 75 81

Taishan Stonewell International 63 80

Huatai Aluminum Wheel 119 75

Due to the good aluminum wheel export situation in 2011, a lot of aluminum wheel projects were

launched, mostly in Shanxi, Inner Mongolia, Jiangsu and Jiangxi where there are cheap electricity

and alumina resources. The project investors have no idea that the OEM wheel market threshold

is very high and the export market is highly competitive and oversupplied.

Aluminum Wheel Projects under Construction in China

Investor Location Investment

(RMB mln)

Designed

Capacity

(10,000 units)

Scheduled

Date of

Production

Remark

Taiyuan Donglv

Aluminum

Taiyuan,

Shanxi

295 100 2013

East Asia Aluminum

Industry

Huhhot 1000 2014

China Zenix Auto

International Limited

(Zhengxing Wheel

Group)

Zhangzhou,

Fujian

2100 2013 The investor is the largest steel

wheel manufacturer in China

Shandong Better Dongying, 500


7

Wheel Shandong

Luoyang Xinwang

Investment and

Taiwanese Yuan Feng

Industrial

Xin’an,

Henan

Jiaozuo Biaoma

Wheel Manufacturing

Jiaozuo,

Henan

300 300

Dongfeng Huatai

(Tianmen) Wheel

Jinzhou,

Hubei

400 Production expansion

Zhejiang Jinfei Kaida

Wheel

Zhalute,

Inner

Mongolia

500 440 2013 Phase I project has an investment

of RMB 200 million, a design

capacity of 1.2 million aluminum

wheels, and will be put into

production in 2013; Phase II

project has an investment of RMB

300 million, a design capacity of

3.2 million aluminum wheels, and

will be put into production in 2015.

Yihuang,

Jiangxi

600 200 Oct.2012

Guangxi Songchuan

Industrial Group

Fusui,

Guangxi

600 200 2013

Zuwei Auto Parts

Yizheng

Yizheng,

Jiangsu

600 2013

Jiangsu Lianyungang

Tongzhu Nonferrous

Metal and Nanjing

Dicastal Huashun

Wheels

Yuncheng,

Shanxi

2000 500 2013 The project will be built in three

phases and five years, with an

initial investment of RMB 500

million.

Shanxi Wenxi

Yinguang Magnesium

Industry Group

Wenxi,

Shanxi

730 200 2013 Magnesium alloy

MingQi Aluminum

Wheel Yizheng

Yizheng,

Jiangsu

1000 800 Jun.2012

3.6 China Steel Wheel Market

Steel wheel are mainly for commercial vehicle market and cross-type passenger vehicle market,

with higher proportion of aftermarket than aluminum wheel market, enjoying step-by-step

improving market concentration. Large commercial vehicle groups all tend to complete wheel

assembly internally, nevertheless, there still exist a considerable number of small steel wheel

enterprises in the vast aftermarket.


8

Market Shares of Major Manufacturers in Chinese Steel Wheel Market, 2010 (by Value)

Market Shares of Major Manufacturers in Chinese Steel Wheel Market, 2010 (by

Shipment)

Revenue 2010 (RMB mln) Shipment (mln)

DONGFENG *** ***

ZENIX *** ***

FAW Fuwei *** ***

Xingmin Wheel 1,340 ***

Jingu *** ***

Bengbu Jianghuai Wheel *** ***

Jining Wheel *** ***


9

GKN Wheels *** ***

Others *** ***

Data of FAW Fuwei refers to wheel assembly, including tire and brake.

3.7 Ranking of Global Aluminum Wheel Manufacturers

Ranking of World’s Top 25 Aluminum Alloy Wheel Manufacturers by Revenue,

2010-2011

2010 2011

RONAL 864 ***

DICASTAL *** ***

CMW *** ***

SII *** ***

ROBRET *** ***

ENKEI *** ***

Hayes Lemmerz *** ***

ALCOA *** ***

Lioho Machinery *** ***

UNIWHEEL *** ***

ALINK *** ***

LIZHONG *** ***

ALINK *** ***

ShengWang Auto Part *** ***

Jinfei Machinery *** ***

Ningbo Baody *** ***

Kosei Aluminum *** ***

Foshan Nanhai Zhongnan Aluminum Wheel *** ***

Binzhou Movever Dicastal Hub *** ***

Shanghai MingQi Aluminum Industry *** ***

Taishan Fucheng Aluminium *** ***

Yueling *** ***

YHI *** ***

KWC *** ***

Shenyang Dooray Wheel *** ***

(Unit: $mln)


10

4. Aluminum Wheel Manufacturers

4.4 Sanmenxia Dicastal Wheel Manufacturing

Sanmenxia Dicastal Wheel Manufacturing Co., Ltd. is a professional manufacturer of aluminum

alloy automotive wheels. It’s invested by Chuangtong (Hong Kong) Holdings Limited (32%) and

CITIC Dicastal Wheel Co., Ltd (40%). Link Hong Kong Investment Limited held 28% stake. Later,

Henan Coal and Chemical Industry Group Company Limited, the largest coal enterprise in Henan,

acquired all the stakes except that of Dicastal.

At present the company's annual production capacity is approximately 3 million units.

In January-February 2012, the company manufactured ** wheels, completing **% of the annual

plan, up 6.77% year on year; in February, the sales volume was** units, up 20.18% year on year;

the sales volume in January-February was** units, up **% year on year; the output-sales ratio

reached 100%; in January-February, the company achieved sales of RMB ** million, recovered

RMB ** million, and the fund recovery rate was 104.55%.

Revenue and Operating Margin of Sanmenxia Dicastal Wheel Manufacturing,

2004-2011

2004 2005 2006 2007 2008 2009 2010 2011

Revenue (RMB mln) 26 **** **** **** **** **** **** ****

Operating Income (RMB mln) -3 **** **** **** **** **** **** ****

Operating Margin -11.5% **** **** **** **** **** **** ****


11

Shipment and Average Price of Sanmenxia Dicastal Wheel Manufacturing, 2006-2010

2006 2007 2008 2009 2010

Shipment (10,000) 223 **** **** **** ****

Average Price (RMB) 211 **** **** **** ****

Tel: 0398-2916771 0398-2916422

Fax: 0398-2917154 0398-2861275

Website: http://www.smxwheel.com


12

5. Automotive Steel Wheel Manufacturers

5.2 China Zenix Auto International

China Zenix Auto International Co., Ltd, established in June 2003, has an annual production

capacity of 15 million automotive wheels, with its comprehensive strength ranking third in China

vehicle wheel industry.

Headquartered in Zhangzhou, Fujian Province where Zenix have manufacturing facilities

(including main administrative offices, a research and development center, a test center and

employee dormitories) with an aggregate floor area of approximately 121,630 square meters.

Zenix also have four other manufacturing facilities (including offices and employee dormitories) in

Langfang, Hebei Province, Chengdu, Sichuan Province, Hefei, Anhui Province and Benxi, Liaoning

Province with an aggregate floor area of approximately 138,040 square meters, 47,303 square

meters, 37,670 square meters and 26,740 square meters, respectively. In addition, Zenix have a

research and development center at each of manufacturing facilities in Langfang, Hebei Province

and Hefei, Anhui Province.

Revenue and Operating Margin of China Zenix Auto International, 2004-2011

2004 2005 2006 2007 2008 2009 2010 2011

Revenue (RMB mln) 635 **** **** **** **** **** **** ****

Operating Income (RMB mln 11 **** **** **** **** **** **** ****

Operating Margin 1.7% **** **** **** **** **** **** ****


13

Revenue and Gross Margin of China Zenix Auto International, Q1 2009-Q4 2010

09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q3

Revenue (RMB mln) 391 **** **** **** **** **** **** ****

Gross Profit (RMB mln) 54 **** **** **** **** **** **** ****

Gross Margin 13.8% **** **** **** **** **** **** ****

In 2008, 2009 and 2010, the aggregate sales attributable to Zenix’s five largest customers

(including the PRC aftermarket, PRC OEMs and international sales) accounted for 28.3%, 21.7%

and 23.0% of revenue, respectively. Tata Motors, Zenix’s largest customer worldwide in 2008 and

2010 and second largest customer worldwide in 2009, accounted for 12.9%, **% and **% of

Zenix’s revenue for 2008, 2009 and 2010, respectively. Zenix’s largest customer worldwide in

2009 accounted for **% of revenue for that year.

PRC aftermarket sales accounted for **%, **% and **% of Zenix’s revenue in 2008, 2009 and

2010, respectively. PRC OEM sales accounted for **%, 3**% and **%, respectively, of Zenix’s

revenue for the same periods. International sales accounted for**%, 15.4% and **%.


14

Revenue of China Zenix Auto International by Business, 2008-2011

2008 2009 2010 2011

PRC aftermarket sales 39 **** **** ****

PRC OEM sales **** **** **** ****

International sales **** **** **** ****

Gross Margin of China Zenix Auto International by Business, 2008-2009

2008 2009 2010

PRC aftermarket sales 24.3 **** ****

PRC OEM sales **** **** ****

International sales **** **** ****


15

Revenue of China Zenix Auto International by Product, 2008-2011

2008 2009 2010 2011

Tubed steel wheels 72 **** **** ****

Tubeless steel wheels **** **** **** ****

Off-road steel wheels **** **** **** ****

Wheel components **** **** **** ****

Gross Margin of China Zenix Auto International by Product, 2008-2010

2008 2009 2010

Tubed steel wheels 17.1 **** ****

Tubeless steel wheels **** **** ****

Off-road steel wheels **** **** ****

Wheel components **** **** ****


16

Cost Structure of China Zenix Auto International, 2008-2010

2008 2009 2010

Raw material costs 82.5 **** ****

Utilities **** **** ****

Depreciation **** **** ****

Direct labor costs **** **** ****

TAXES **** **** ****

Subsidiaries of Zenix

China Zenix Auto International (Zhangzhou Base), founded in 1996, is the headquarters of China

Zenix, covers a land area of 600-plus mu, and has more than 3,300 employees. It can

manufacture 25,000 wheels per day, and its products are mainly supplied to East China, South

China, Southwest China and exported overseas.

Zenix Chengdu Wheel Co., Ltd has formed an annual capacity of 1.2 million wheels.

On August 13, 2004, China Zenix Auto International established Zenix Benxi Wheel Co., Ltd. as its

production base in North China in reliance on the abundant iron & steel resources in Benxi city,

Liaoning province, China.

It took only three months and a half to compete the construction of Zenix Benxi Wheel and it was

put into production on December 23, 2004. What’s more, the company formed an annual

production capacity of three million wheel rims and one million wheels.


17

Zenix Langfang Wheel Co., Ltd. started construction on April 6, 2005, covering a land area of 500

mu. Phase I wheel rim steel project started trial operation on August 30, 2005, the profile steel

wheel project was put into production on November 22, 2006; Phase II tubeless wheel project was

launched at the same time, and will form an annual capacity of 350,000 tons of wheel rim steel and

5 million sets of profile steel wheels upon completion.

China Zenix Auto International founded Zenix Hefei Wheel Co., Ltd. in Hefei city, Anhui province,

China, covering a land area of 130 mu, and the company started construction at the beginning of

2006 and was put into production on November 23, 2007. In Q1 2010, the output value of the

company reached RMB140 million, equal to the output value in full-year 2008. And it strived to

achieve an output value of RMB 800 million and even more than RMB 1 billion in 2010. It only

needs thirty workers to produce 1,200 sedan wheels on the new production lines in comparison

with the need of over eighty workers to produce 1,000 units on the old lines. The customers of the

company mainly consist of JAC Motors, Chengdu Nanjun Automobile, Great Wall Pickup, Xiamen

Jinlong, etc.

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