Manufacturing News

GKN China to invest 5.3 billion yuan to expand driveline product line

British supplier GKN Automotive says it plans to invest $850 million (5.3 billion yuan) in China through its joint venture with Huayu Automotive Systems Co. to meet growing demand for all-wheel drive, hybrid technologies and driveline components.

The joint venture will make its investment over the next five years, CEO Andrew Smith told Automotive News China last month at the Shanghai auto show.

Smith said GKN plans to open a factory for its joint venture in Chengdu, and it plans to expand production at plants in Shanghai, Chongqing, Wuhan, Changchun and Yizheng.

GKN Huayu Driveline Systems Co. was established in 1988. Until recently, the partnership produced traditional driveshaft products. In 2013, GKN expanded its product line to include awd plus drivelines for electric cars and hybrids.

"If you look at the percentage of global vehicles which are hybrid and pure electric vehicle, it is a small number -- 5 percent or less," Smith said. "In 2025, it will be around 40 percent."

GKN's joint venture also expects to open a technical center in December in Shanghai. The center will provide r&d for complete driveline systems, software development and vehicle testing.

GKN Automotive, which includes GKN Driveline and GKN Powder Metallurgy, has 11 plants across China. Last year, the division's Chinese revenue totaled 8 billion yuan.

Although auto sales growth has flattened this year, Smith is bullish about China's long-term prospects. He expects annual auto production in China to grow 42 percent by 2022 to reach 32 million vehicles.

And he expects GKN sales will outpace the market. In part, that's because demand for certain products is so strong. For example, Smith expects production of awd vehicles will surge 140 percent by 2022.

"If you supply two driveshafts to a front-wheel-drive car, it costs maybe $100 for a vehicle set," Smith said. "But if you supply the complete all-wheel-drive system, it can be 10 times as much."

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