www.valeo.com.cn

2014 Beijing Auto Show Press Kit

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I – China, at the heart of Valeo’s growth strategy

II – Innovation, a key pillar of Valeo’s growth strategy

- Investing to invent the automobiles of tomorrow

- Valeo Innovation Challenge

III – Valeo unveils its major innovations at the Beijing Auto Show

- Fewer carbon emissions and more styling flexibility with all-LED headlamps

- eSkin 2 brings connectivity to the car

- The smart key passive entry/start system

- Solutions for improving cabin air quality

- i-StARS, an innovative starter-alternator solution

- An electric supercharger that combines lower fuel consumption and

enhanced performance

Appendices

- About Valeo

- Key figures

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CONTENTS

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I – China, at the heart of Valeo’s growth strategy

Valeo, a key player in the Chinese automotive industry

Valeo’s growth strategy is built on two pillars: innovation and geographic expansion in Asia and the

emerging markets. In line with this strategy, the Group is focusing on China, which is now the world’s

largest automobile market and an active player in the automotive industry of tomorrow. Within two

years, China will become Valeo’s biggest market in terms of revenue and number of employees.

Since Valeo first set up operations in Wenling, China in 1994, it has focused on becoming a key player in

the Chinese automotive industry. In addition to servicing the needs of its international customers in China,

Valeo today partners with domestic carmakers as well. Valeo develops technologies tailored to the need of

the local market in addition to global applications.

To effectively meet Chinese consumer expectations, Valeo relies on 26 production facilities, 10 development

centers and 3 research centers and five Valeo Service warehouses dedicated to the aftermarket. All Valeo

customers in China have access to a comprehensive portfolio of advanced products and solutions aimed at

improving fuel efficiency and helping drivers operate more safely.

Building a solid position in China is based on the hiring of local talent and retaining them through a

variety of training, well-being and empowerment programs. As it does in every country where it operates,

in China, Valeo focuses on developing local capabilities and providing employees with equal career

development opportunities, including promotion to management level positions. Valeo China currently has

13,000 employees. China is now the biggest country for Valeo in terms of employees.

This strategy of full integration into the Chinese industrial base enabled Valeo to outperform the market

every year from 2007 to 2011 and to double its revenue over the period. Valeo China plans to double its

sales every four years.

In 2013, China accounted for 13% of total Group revenue, versus 8% in 2011, and sales in China rose by

31%, compared to a 15% increase in automobile production. Valeo recorded 24% of its new orders in

China, with Chinese manufacturers accounting for 30% of the total.

To support this growth, Valeo continues to increase its production capacity in China. It expanded three

plants (Foshan, Wuhan and Nanjing) and built four new ones (Shenyang, Jingzhou, Wuxi and Tianjin) in

2013 and will further open new facilities notably in Chongqing, Wuhan, Yantai and Shenyang. Valeo also

plans to hire 1,500 managers and engineers this year.

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History of Valeo in China

Building the bases

1994:

1995:

1997:

Sets up first joint ventures in Wenling for wiper systems and in Shashi for climate control.

Sets up further joint ventures in Wuhan for lighting and Shanghai for electrical systems.Acquires shares in another joint venture in Shanghai for wiper systems.

Sets up a new joint venture for transmission systems in Nanjing.

Expansion

2003

2004

2005

Increases its stake in three joint ventures: 50% in electrical systems (Shanghai), 55% in wiper systems (Shanghai) and 75% in lighting systems (Wuhan).

Opens the first R&D center in Wuhan.Increases stake in Nanjing joint venture for clutches.Opens China 5 Axes School - induction programs for new employees.

Sets up new joint ventures for air-conditioning compressors in Changchun and for switches & detection systems in Shenzhen.Opens a new security systems plant in Wuxi.

Becoming Chinese in China

2006

2009

2011

2012

2013

Opens second R&D center in Shanghai.Creates a new site in Foshan for lighting systems.Acquires 100% stake of lighting systems in Wuhan.

Acquires 100% stake of the joint venture for compressors in Changchun.

Opens two facilities: an electronics expertise center in Shenzhen and a new wiper systems plant in Wenling.

Acquires an 80% stake of the Chery Group’s Ruby Lighting subsidiary.Opens two new sites in Guangzhou, and one site in Wuhu.

Opens four new plants in Shenyang for lighting systems, in Jingzhou & Tianjin for thermal systems, and in Wuxi for powertrain systems.Extends three plants in Wuhan and Foshan for lighting systems, and in Nanjing for transmission systems.

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II – Innovation, a key pillar of Valeo’s growth strategy

Investing to invent the automobiles of tomorrow

Valeo Innovation Challenge

Valeo’s growth strategy is based on innovation and international expansion, particularly in Asia. The Group’s goal is to help invent automobiles of tomorrow that are safer, smarter, more fuel efficient and more enjoyable to drive.

To achieve this objective, Valeo dedicates over 10% of its OEM revenue to research and development and seeks to hire the most talented employees. In 2013, 3,100 engineers were recruited worldwide. Valeo has 9,000 researchers at 51 centers, which means that more than 10% of the workforce is involved in R&D. The Group filed 786 patents in 2013.

Thanks to the R&D teams’ hard work, Valeo achieved an order intake of €14.8 billion in 2013, with new products accounting for 30% of the total.

The Group devotes a significant portion of its research efforts to improving fuel efficiency and lowering carbon emissions. These technologies are expected to drive 75% of Valeo’s growth by 2015.

To encourage young people to get involved in designing the automobiles of tomorrow and to detect talent, Valeo created the Valeo Innovation Challenge, a global contest that invites students from engineering schools and scientific universities all around the world to imagine an innovative solution that will revolutionize the automotive industry between now and 2030.

Launched in September 2013, the contest has been a huge success, drawing 1,412 students from 455 schools in 55 countries who were divided into 969 multidisciplinary teams of which nearly 50 Chinese teams.

On April 15, a jury of experts chose the 20 best projects and each of the selected teams received €5,000 to create a working prototype.

The six teams that submit the most innovative projects will be chosen on September 16, 2014. They will then be invited to Paris to present their projects to a jury chaired by Jacques Aschenbroich, Valeo Chief Executive Officer, and comprised of eminent figures from the worlds of science and design, who will choose the three finalist teams.

The winning team will receive a cash prize of €100,000 and the second- and third-place teams will each receive €10,000.

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III – Valeo unveils its major innovations at the Beijing Auto Show

Fewer carbon emissions and more styling flexibility with all-LED headlamps

eSkin 2 brings connectivity to the car

China is set to become Valeo’s largest market. Its growth in China will focus on innovation and

technologies that are designed to enhance fuel efficiency as well as the comfort of driving increasingly

intuitive vehicles.

Valeo presents its major innovations to Chinese motorists at the Beijing Auto Show:

Valeo LED lighting systems help to reduce carbon emissions by reducing energy consumption. LED lighting is twice as efficient as xenon and five times as efficient as halogen. For equivalent lighting, LED low beams consume only 12W, compared to 65W for halogen bulbs. A vehicle with all-LED cabin and exterior lighting would emit 2.8 grams per kilometer less CO2 than a car with conventional bulbs (excluding regulatory cycle emissions).

Because LEDs are used in lighting systems that are more compact than those that use bulbs and because they allow for more freedom of styling, they provide designers, carmakers and Valeo engineers with the possibility of designing stylistically differentiated headlights that are specific to each brand, thereby creating powerful visual signatures.

The brand new Cadillac Escalade launched in the United States in 2014 features Valeo FullLED headlights.

With the eSkin 2 center console display, Valeo showcases its expertise in different fields relating to user interface systems in the passenger compartment of the vehicle. The eSkin 2 is an attractive in-car connectivity solution that can be safely used while driving.

- Connectivity:

The center console lets drivers access all their smartphone services and applications via the vehicle dashboard. This means that drivers can obtain traffic information in real time, use a navigation system that updates maps automatically and access personal data such as their address book and music.

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The smart key passive entry/start system

Motorists no longer need to rummage through their pockets or purse to find their car key. Thanks to Valeo’s smart key solution, cars can be locked and unlocked remotely.

The smart key utilizes a low frequency/radio frequency connection that allows the key to communicate with the car over a distance of up to 500 meters. When the car’s lock system receives a signal from the smart key, the doors unlock automatically, and to enter the car all the driver needs to do is pull on the door handle. Likewise, when the driver walks away from the car the doors lock automatically. Starting the car works the same way. When the key is in the vehicle, in the driver’s pocket or purse for example, simply pressing the start button will start the engine.

First offered in premium and mid-range vehicles such as the Peugeot 508, the Citroën DS5 and the Toyota Yaris in Europe, the smart key is quickly becoming a standard option for entry-level vehicles.

In China, some Chery vehicle models already feature the Valeo smart key. Two other Chinese brands will offer the smart key on new models scheduled for rollout in 2014.

- Safety:

- Style:

To ensure driver and passenger safety, Valeo has implemented a filtering system that limits driver distraction by only allowing access to applications that are compatible for use while driving. The console’s ergonomic features were also designed to improve safety.

For example, a detection device senses the approach of the driver's hand and automatically activates the screen to deliver relevant information.

To help drivers feel at home, the center console display offers the same features they’re used to having on their smartphones and tablets. These include sleek styling, touch screen, ergonomic design and screen and buttons that become opaque when not in use. For an ultimate quality effect, Valeo employed special finishing and ambient lighting technologies. Particular efforts were also made to integrate the screen into the curved surface of the console for enhanced, seamless styling.

Valeo’s human-machine interface expertise also extends to other areas. To increase safety, Valeo is also addressing the need to develop risk-monitoring systems that detect when drivers are drowsy or stricken by a medical problem. It is developing different types of algorithms and sensors (both direct contact and non-contact) that are designed primarily for the steering wheel unit. The purpose of these systems is to analyze the driver’s state of fatigue, send a warning signal to alert the driver if necessary or, in an urgent situation, trigger an alarm to notify emergency responders and bring the vehicle to a stop.

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Solutions for improving cabin air quality

In order to protect the health of car users and improve their comfort and well-being, Valeo has developed

new patented cabin filters that trap dust and particles ranging from 0.3 µm to 10µm in size.

- A new filter that traps ultra-fine cabin particles

- A cabin filter with anti-allergen properties

Valeo has developed a filter that purifies the air inside the car by stopping fine particles and ultra-fine

particles (between 1 µm and 0.1 µm). As a result, the Group already complies with China’s new air pollution

standard for particulate matter that will come into effect in 2016. The filter will be available this year.

Made from close-knit, reinforced fibers, the Valeo filter, “Very High Efficiency PM2.5”, reduces particles inside

a vehicle to levels that meet World Health Organization Air Quality Guidelines (25µg/m3 per day) in regions

such as northern China, where the concentration of particles can reach up to 900µg/m3.

This filter will be available from this year.

Valeo produces combination air filters with activated carbon layers that absorb harmful gases and unpleasant

odors. Going even further, it has also developed combination filters with anti-allergen properties that in

addition to trapping dust, harmful gases and odors also neutralize allergens. The filters have a surface coating

made from polyphenol, a natural plant extract that catches pollen allergenic particles. Patented by Valeo, this

innovation was launched in Europe in early 2013.

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i-StARS, an innovative starter-alternator solution

The i-StARS starter-alternator combines the functions of two normally distinct devices: the starter, which starts

the engine, and the alternator, which produces the electricity the car needs. The combination of these two

functions in the same product ensures the stop-start functionality and also provides a light hybrid solution,

called micro-hybrid.

In the city, a car spends nearly 35% of its time at standstill, with the engine running unnecessarily at a slow

speed. The stop-start system automatically shuts down the engine when the vehicle is stopped, thereby

reducing CO2 emissions by around 6% and by up to 15% in city driving.

The i-StARS starter-alternator is a non-invasive solution in terms of engine architecture. It replaces a

conventional alternator and the fact that the power and control electronics are integrated at the rear of the

device make it easier to install in the engine compartment. The i-StARS starter-alternator is compatible with

both manual and automatic transmissions.

In alternator mode, the unit’s power electronics improve its output, making it the most efficient alternator in

the micro-hybrid market. In starter mode, the device provides a silent, vibration-free, instantaneous engine

start (400 milliseconds), thanks to a permanent link to the crankshaft through the belt drive.

The i-StARS starter-alternator adapts to all stop-start situations. It stops the vehicle engine when the

speed drops to below 8 km/h for automatic transmissions and 20 km/h for manual transmissions, when

decelerating.

With Nissan, Valeo has introduced a new generation of the system called i-StARS Boost. Combined with an

additional battery, it provides regenerative braking in addition to stop-start functionality. The system also

delivers electronic assistance to the engine via the belt drive when additional torque is needed, for example

when accelerating. Thanks to this improvement in fuel economy and an over 3% reduction in CO2 emissions,

Nissan obtained hybrid vehicle certification in Japan.

These advantages make the i-StARS starter-alternator with integrated electronics, a pragmatic hybrid and

fuel-reduction solution for carmakers.

It has been installed on two million vehicles since 2004.

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An electric supercharger that combines lower fuel consumption and enhanced performance

In response to increasingly strict carbon emissions regulations, carmakers are focusing on reducing engine

size. This downsizing is generally brought about by the use of a turbocharger powered by exhaust gases,

resulting in a longer response time called turbo lag.

Valeo is the first automotive supplier to offer a range of electric superchargers that overcome this problem.

Unlike a turbocharger, an electric supercharger functions independently of the air loop. It is driven by an

electrical motor integrating switched reluctance technology that responds instantly (300 milliseconds). As a

result, it delivers torque on demand, thereby eliminating turbo lag.

The instantaneous response increases driving comfort and enables carmakers to optimize shifting to boost

fuel efficiency. Used with a 12-volt electrical architecture, it can reduce fuel consumption by 10%. When

coupled with a Valeo energy recovery system, electric superchargers can be used to create a cost-competitive

hybrid solution that delivers fuel savings of 15% to 20% in standard European and Chinese driving cycles.

Requiring little change to the powertrain architecture, the system can be integrated rapidly and at a lower

cost on new and existing vehicles.

A conclusive demonstration of the electric supercharger system was carried out on 1 to 2.4-liter naturally

aspirated engines as well as on 1 to 4-liter turbocharged gasoline and diesel engines. Valeo has developed

an electric supercharger for conventional 12 and 24-volt vehicle architectures and up to 27-volt “floating”

systems using ultracapacitors. The system has now been developed for use with future architectures of 48

volts, with the goal of significantly improving power and efficiency.

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Appendices

About Valeo

Key figures

Ranked among the world's top automotive suppliers, Valeo is fully focused on the design, production and sale

of components, integrated systems and modules for the car and truck industry in both the original equipment

and replacement segments.

It develops innovative technologies that provide optimal safety, enhanced driving comfort and greater energy

efficiency.

The Group offers solutions that reduce the consumption of internal combustion, hybrid and electric vehicles,

as well as the weight and energy use of components.

Valeo is comprised of four Business Groups (Powertrain Systems, Thermal Systems, Comfort and Driving

Assistance Systems, and Visibility Systems), as well as Valeo Services in the aftermarket segment.

74,800 employees

Operations in 29 countries

124 production facilities

12 distribution platforms

16 research centers

35 development centers

€12.1 million in 2013 sales, up 9% on 2012

Almost €1.1 billion invested in research and development

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www.valeo.com.cn