In the Circumstances of the First Half 2010, Valeo Demonstrates its Ability to Achieve its Profitability Objectives With an Operating Margin Level of 6.1% of Sales, the Highest Level in 10 Years

PARIS, July 27, 2010 -

    - Original equipment sales growth of 44%, higher than production growth
      in each geographic region
    - Significantly improved net income, at 168 million euros, or 3.5%
      of sales
    - Strong cash generation of 291 million euros and significant
      reduction of debt to 438 million euros at June 30, 2010
    - Upward revision of the operating margin objective for 2010 to a
      level higher than 5% of sales in current market conditions

Following the meeting of its Board of Directors today, Valeo presented
its results for the first half 2010.

Jacques Aschenbroich, Valeo's Chief Executive Officer, declared:

"The Group's first half performance in terms of operating
margin, which reached 6.1% of sales; net income, which stood at 168 million
euros; and cash flow were the result of the commitment and hard work of Valeo
teams worldwide who remained highly motivated during the crisis that hit the
company hard in 2009, to lower the break-even point for the long term. These
excellent results confirm that Valeo has again become a growth value company;
they strengthen our confidence in the future and in our ability to achieve
the objectives set in the strategic plan unanimously approved by the Board
and presented on March 10."

    In million euros          H1 - 2009   H1 - 2010     Change

    Sales                       3,472       4,787        +38%
    Gross margin                  453         856        +89%
    % of sales                   13.0%       17.9%      +4.9pts
    Operating margin (1)          (51)        292         na
    % of sales                   -1.5%        6.1%      +7.6pts
    EBITDA                        229         564       +146%
    % of sales                    6.6%       11.8%      +5.2pts
    Net income Group share       (213)        168         na
    % of sales                   -6.1%        3.5%      +9.6pts
    Free cash flow (2)             (4)        291         na
    Net cash flow (3)             (49)        241         na
    Net financial debt            841         438        -48%

    1 Operating income less other income and expenses

    2 Free cash flow corresponds to net operating cash flow less net
      disbursements on tangible/intangible assets. This indicator is
      therefore calculated before payment of interest payments.

    3 Net cash flow corresponds to free cash flow less interest payments and
      after taking into account other financial flows.

    Growth of 38% for consolidated sales and 44% for original equipment sales

    In million    Q2 2009*  Q2 2010*   Change    H1-2009   H1-2010   Change
    euros                            2010/2009*                     2010/2009

    Sales           1,848    2,478      +34%      3,472     4,787      +38%
    On a like-
    for-like basis                      +29%                           +34%
    Original
    equipment       1 490    2 059      +38%      2 743     3 957      +44%
    Aftermarket       306      371      +21%        616       722      +17%
    Miscellaneous      52       48       -8%        113       108       -4%

    * Unaudited

Thanks to a sustained level of activity in the second quarter
2010, global passenger car production continued to recover in the first half
2010, registering a 39% rise versus the first half 2009.

During the first half 2010, automotive production growth per
region was as follows:

    - Europe (and Africa): +23%, despite the end of vehicle scrapping
      programs and the stabilization of new car registrations during the
      first half 2010 (+0.2% versus the first half 2009); this is mainly
      attributable to the non-recurrent stock reduction effect in 2009 and
      to the increase in exports outside of Europe;
    - Asia (and others): +43%, mainly linked to continued growth in China
      (+45%);
    - North America: +72%, compared with a first half 2009 highly
      impacted by the drop in production and the restructuring of certain
      U.S. automakers;
    - South America: +17%.

Benefiting from a favorable automotive environment and the
outperformance of its original equipment activity on all markets, the Group
recorded, for the first half 2010, consolidated sales of 4,787 million euros,
up by 38% versus the first half 2009. On a like-for-like basis, consolidated
sales were up by 34%.

In this context, original equipment sales amounted to 3,957
million euros (83% of consolidated sales). Compared with the first half 2009,
passenger car original equipment sales were up by 40% (like-for-like), higher
than the growth of global automobile production (+39% annualized change). The
performance of the original equipment activity is notable on all of the
Group's main markets (see below).

At the same time, aftermarket sales totaled 722 million euros
(15% of consolidated sales), up by 17% versus the first half 2009 (616
million euros).

    Passenger car original equipment sales growth higher than the market
    growth in each geographic region

                      H1-2009  H1-2010    Change       Change      Automotive
    In million euros                    2010/2009 (like-for-like)  Production

    Europe & Africa    1,753    2,297      +31%         +31%          +23%
    Asia and others      420      697      +66%         +59%          +43%
    of which China                         +73%         +72%          +47%
    North America        245      458      +87%         +86%          +72%
    South America        203      291      +44%         +19%          +17%

During the first half 2010, passenger car production in Europe, Asia,
North America and South America increased by 23%, 43%, 72% and 17%,
respectively, versus the first half 2009. At the same time, passenger car
original equipment sales (on a like-for-like basis) were up by 31% in Europe,
59% in Asia, 86% in North America and 19% in South America.

This outperformance of the passenger car original equipment
activity in first half year can mainly be explained by:

    - the ramp-up of new product lines within the Powertrain Systems
      Business Group, mainly in Asia and North America, and within the
      Comfort & Driving Assistance Business Group, notably in Europe and
      North America;
    - a growing presence on the new platforms of most of the Group's
      customers.

All Business Groups contribute to the Group's operational performance

    Sales by Business Group:

                                           H1-2009     H1-2010        Change
    In million euros                                                2010/2009

    Comfort & Driving Assistance Systems      627         848          +35%
    Powertrain Systems                        951       1,344          +41%
    Thermal Systems                         1,012       1,447          +43%
    Visibility Systems                        904       1,186          +31%

All Business Groups contributed to the growth of the Group's consolidated
sales during the first half 2010.

The Comfort & Driving Assistance Systems and Visibility
Systems Business Groups recorded sales growth lower than that of global
automotive production (+39% annualized change) due to:

    - the relatively small weight of the Asian market in the
      Comfort & Driving Assistance Systems Business Group;
    - the relatively higher weight of the aftermarket in the
      Visibility Systems Business Group.

    EBITDA by Business Group:

                                          H1-2009       H1-2010       Change
    % of sales                                                      2010/2009

    Comfort & Driving Assistance Systems    6.1%         11.8%       +5.7pts
    Powertrain Systems                      9.0%          9.7%       +0.7pts
    Thermal Systems                         6.1%         13.3%       +7.2pts
    Visibility Systems                      4.5%         11.4%       +6.9pts

All Business Groups contributed to improving the Group's operational
performance during the first half 2010.

The Powertrain Systems Business Group recorded a lower rise in EBITDA
mainly due to:

    - non recurrent start-up costs for new plants;
    - the weight of Research & Development expenses in the area of
      electric drivelines.

Record order intake

The order intake versus original equipment sales ratio was up
significantly at June 30, 2010, reaching a record level of 1.64, or 6,478
million euros (versus 1.10 at June 30, 2009, this low level being linked to
the postponement of orders during the crisis in 2009) with a similar level of
performance among the different Business Groups.

Sharp improvement in operating results

During the first half 2010, the gross margin rate amounted to 17.9% of
sales (or 856 million euros) versus 13% of sales (or 453 million euros)
during the same period in 2009.

The Group's operating margin (before other income and expenses) totaled
292 million euros, or 6.1% of sales, versus -1.5% of sales in the first half
2009 (at -51 million euros), the highest margin level achieved in 10 years.

R&D efforts, particularly in the area of CO2 emissions reduction,
increased by 14% to total 267 million euros, or 5.6% of sales (versus 234
million euros, or 6.7% of sales during the same period in 2009).
Administrative and selling expenses amounted to 297 million euros, or 6.2% of
sales (versus 270 million euros, or 7.8% of sales during the same period in
2009).

Other income and expenses in the first half totaled -31 million euros, or
-0.6% of sales, notably including provisions for social costs relating to the
plan for setting up the new organization announced in March 2010. Operating
income totaled 261 million euros, or 5.5% of sales versus -88 million euros
during the same period in 2009, at -2.5% of sales.

Income before taxes showed a profit of 226 million euros versus a loss of
186 million euros during the same period in 2009:

    - The cost of the net financial debt totaled 32 million euros,
      up by 52% versus the same period in 2009. This change is the result of:
      - the renegotiation of confirmed bank lines in the context of
        a degraded credit market;
      - the cost of carry of the gross financial debt in the context
        of particularly low short-term interest rates;
    - Other income and financial expenses showed a net expense of 14 million
      euros compared with a net expense of 37 million euros during the same
      period in 2009 (of which 16 million euros in losses from currency and
      raw material hedging);
    - The share in the results of associated companies showed a
      profit of 11 million euros.

The effective tax rate stood at 22%, notably including the recognition of
deferred tax assets in certain countries. After taking into account the
minority interests' share of 9 million euros during the period, the net
income Group share totaled 168 million euros, or 3.5% of sales versus a loss
of 213 million euros during the same period in 2009.

The Group's improved operating performance, along with a
strict management of investments and working capital, enabled Valeo to
generate a free cash flow (less financial interest) of 291 million euros in
the first half 2010.

Net cash flow, after interest payments and the taking into
account of other financial elements, amounted to 241 million euros in the
first half.

As a result, Valeo had as of June 30, 2010, a cash balance of
1,132 million euros. The Group also benefits from a program of confirmed
bilateral credit lines worth 1,116 million euros.

Net financial debt totaled 438 million euros at June 30, 2010,
down by 284 million euros versus December 31, 2009 (722 million euros).

The leverage ratio (net financial debt to EBITDA) was down sharply, at
0.4 times EBITDA (calculated over 12 months rolling) versus 1.1 at end
December 2009. The gearing ratio (net financial debt to net shareholders'
equity excluding minority interests) stood at 30% of equity, down by 29
points compared with December 31, 2009 (59% of equity).

Highlights

On March 25, 2010, Pardus Capital Management issued a
statement in which it announced the "resumption of ordinary course operations
and the lifting of the suspension on withdrawals effective March 31, 2010",
adding that it was giving investors the choice "to remain invested in the
Fund for at least one year or to convert to a distribution class and receive
cash and securities over time."

Following this statement, Pardus Investments Sarl declared two
lower threshold crossings to the French AMF:

    - By letter dated June 1, 2010, Pardus Investments Sarl declared having
      crossed on May 28, 2010 under the threshold of 15% of the capital and
      voting rights, bringing its stake to 14.88% of the capital and
      14.45% of the voting rights;
    - By letter dated July 20, 2010, Pardus Investments Sarl declared having
      crossed on July 15, 2010, the threshold of 12% of the capital and
      10% of voting rights, bringing its stake to 10.01% of the capital and
      9.72% of the voting rights;

As part of the implementation of its strategy, Valeo announced the
following initiatives during the first half:

    - the sale of its lighting modules activity became effective on June 30,
      2010; the Group had announced this planned sale on February 25,
      2010, in line with its strategy to divest non-strategy activities;
    - the acquisition, announced on May 19, 2010, of 100% (versus 66.7%
      previously) of the electrical systems production entity based in Pune,
      India, which manufactures alternators and starter motors for passenger
      cars.

On June 9, Valeo announced the launch of its second generation
Stop-Start system in the third quarter 2010 by PSA Peugeot Citroen. This
system, coupled with the HDi diesel engines of the Peugeot and Citroen
brands, will be featured on both manual and automated manual transmission
models and will equip a million vehicles by 2013. The micro-hybrid system
automatically cuts off the vehicle's engine at a red light or in a traffic
jam and restarts it when engine power is solicited. CO2 emissions are reduced
by 5g per kilometer on average, and by up to 15% in congested urban traffic.

On May 26, 2010, Valeo announced the creation of an Advisory
Board whose main mission is to provide Management with an international
perspective on Group issues and strategy, as well as support for operations
in regions where Valeo wishes to develop its presence. The Advisory Board,
chaired by Erich Spitz, a former member of the Valeo Board of Directors,
comprises five top-level figures who are experts in the Group's businesses
and markets.

2010 Outlook

Thanks to the continued recovery of automotive production
noted in the first half 2010, and despite the end of vehicle scrapping
programs in Europe and the macro economic uncertainties that may impact the
economic situation in the fourth quarter, Valeo is revising upwards it
forecast for production in its main markets in 2010:

    - In Europe, an increase of 6%;
    - In Asia, an 18% rise, thanks in particular to continued
      growth in China;
    - In North America, an improvement of 30%;
    - In South America, a rise of 10%.

Based on this scenario, and thanks to controlled costs and the
implementation of its new organization, Valeo affirms its confidence and is
revising upwards its operating margin level objective for the full-year 2010
to a level higher than 5% of sales in current market conditions.

Next event

Third quarter 2010 sales, to be published on October 21, 2010 after
closing of the stock market.

Valeo is an independent industrial Group fully focused on the
design, production and sale of components, integrated systems and modules for
the automotive industry, mainly for CO2 emissions reduction. Valeo ranks
among the world's top automotive suppliers. The Group has 117 plants, 21
Research centers, 40 Development centers, 10 distribution platforms and
employs 56,000 people in 27 countries worldwide.

For more information about the Valeo Group and its activities,
please visit our web site www.valeo.com.

For additional information, please contact: Kate Philipps, Valeo Group Communications Director, Tel.: +33-1-40-55-20-65; Thierry Lacorre, Valeo Group Investor Relations Director, Tel.: +33-1-40-20-39