17.12.2008 – 18:37

Valeo Management Services

Sharp Drop in Automobile Production Leads Valeo to Adapt its Headcount and Revise its 2008 Objectives

Paris (ots/PRNewswire)

Valeo today transmitted to the
European Works Council a plan to adapt its headcount in order to deal
with the sharp drop in automobile production. Consultations will be
held with employee representatives on the measures envisaged.

The global automobile market has been highly impacted for several
months by the financial crisis which led to a consumer credit
squeeze, and by the ensuing economic crisis. In September 2008, new
vehicle sales in Europe reached their lowest level in a decade. The
decline in automobile production accelerated in the fourth quarter of
2008: output is expected to drop by over 20% worldwide, by nearly 30%
in Western Europe and by 38% in France. For 2009, Valeo anticipates
no improvement in production levels compared with the fourth quarter
of 2008.

Given this situation, and despite the measures already
implemented by the Group, Valeo must reduce its permanent headcount
in order to maintain its competitiveness. A reduction in headcount of
around 5,000 employees is planned worldwide, including around 1,600
in France and 1,800 in other European countries. At the end of
November, the Group employed 54,000 people, including 15,400 in
France. At the same time, Valeo is continuing and reinforcing its
cost reduction plans and rigorous cash management.

Following consultations with employee representatives, Valeo will
propose a plan prioritizing voluntary departures and will provide
individualized support for all affected employees.

The sharp drop in global automobile production is expected to
result for Valeo in a decrease in sales of around 25% in the fourth
quarter and a negative operating margin for the same period. The
Group forecasts an operating margin for 2008 of around 2.6%.

"Faced with a worsening global economy, and against a backdrop of
sharply declining automobile production, Valeo is adapting to the
situation in order to maintain its competitiveness. The Group is
taking the appropriate measures which will enable it to continue to
strengthen its competitive positions," declared Thierry Morin,
Chairman and CEO of Valeo. The Group also recalls that it has
sufficient financial resources and no significant debt reimbursement
due before January 2011.

Valeo is an independent industrial Group fully focused on the
design, production and sale of components, integrated systems and
modules for cars and trucks. Valeo ranks among the world's top
automotive suppliers. The Group has 121 plants, 61 R&D centers, 9
distribution centers and employs 54,000 people in 27 countries
worldwide.

For all additional information, please contact:
    Kate Philipps,
    Group Communications Director,
    Tel: +33-1-40-55-20-65
    Remy Dumoulin,
    Investor Relations Director,
    Tel: +33-1-40-55-29-30

Contact:

For all additional information, please contact: Kate Philipps, Group
Communications Director, Tel: +33-1-40-55-20-65; Remy Dumoulin,
Investor Relations Director, Tel: +33-1-40-55-29-30