Automotive Technology Group has signed an $8 million distribution agreement with Chinese automotive distribution group, Huachuang Zhenxin, for the exclusive distribution of ATG's Sprintex Supercharger products in China.
Automotive Technology Group has signed an $8 million distribution agreement with Chinese automotive distribution group, Huachuang Zhenxin, for the exclusive distribution of ATG's Sprintex Supercharger products in China.
The full statement is below:
Leading Australian clean automotive technology company Automotive Technology Group (ATG)
(ASX: ATJ) is pleased to announce that it has signed a $8 million distribution agreement with leading Chinese automotive distribution group, Huachuang Zhenxin Automobile Technology Development Co Limited (Huachuang) for the exclusive distribution of ATG's Sprintex® Supercharger products in China.
This agreement will give Huachuang the exclusive rights to market and sell ATG aftermarket automotive products including its patented low emissions, high fuel efficiency Sprintex® Supercharger in China, Hong Kong, Macau and Taiwan.
Under the terms of the agreement, Huachuang will purchase Sprintex Supercharger products to
the value of approximately A$2 million in the first 12 months of the agreement, and approximately A$3 million in each of the second and third 12 month periods of the agreement.
The agreement is for a period of 3 years from 1 March 2010. These dollar amounts represent the aggregate of the monthly minimum purchases required by Huachuang to maintain its exclusive distribution rights.
The supercharger kits will initially be developed by ATG at its state of the art Perth facilities and will then be delivered to Huachuang for final fitting and conversion to Chinese specifications.
ATG will provide all necessary technical support, which will include; installation training, accessories development training, and Electronic Control Unit training.
The agreement will also see Huachuang undertake the development of supercharger kits. All supercharger kits developed by Huachuang will include an ATG Sprintex® Supercharger.
Huachuang will also implement a marketing plan to promote the ATG products in each country covered under the agreement.
Huachuang's primary business is the wholesaling and retailing of automotive parts and accessories, among other products, in China and ATG is of the view that the agreement will provide its products with great reach and exposure in the Chinese market.
ATG managing director Steven Apedaile said: "We are delighted to have reached this agreement with Huachuang, as it is a reflection of the successful joint efforts in product development between our Company and Huachuang. China is now the world's largest automotive market with sales of more than 13 million vehicles for 2009 and over 2.8 million vehicles sold over the first two months in
2010.
Our agreement with Huachuang represents a major opportunity for the Company to continue to grow its brand and generate significant sales revenues in China."
Huachuang's General Manager Joe Li said: "We used to be very strong in the turbo market, but we have now divested our turbo sector assets in favour of the Sprintex® distribution opportunity in what is a rapidly expanding market for supercharger systems for the aftermarket in Greater China.
We have a very strong market position in the Chinese market, and we look forward to building on that with ATG and its market leading Sprintex Supercharger product range in the Greater China region where we aim to become number one in the supercharger market in China."
The ATG Sprintex Supercharger product delivers lower exhaust emissions with greater fuel efficiency and performance from automotive engines. Testing (SAE standard J1723) confirms a world class reputation for the Sprintex Supercharger as one of the best superchargers for automotive applications.
In addition, the Sprintex Supercharger also has major applications in the industrial compressor market.
