Koyo Seiko Co. Ltd. (Japan) revealed it has received a groundbreaking contract to supply 300,000 electric power steering units (EPS) to General Motors Saturn Division for its new Ion cars. Koyo's stock (Nikkei 6473) jumped 6% on the news.

Saturn's new Ion quad coupes and sedans are high-volume vehicles, replacing the 12-year-old Saturn S series. For the calendar year through October, Saturn sold 239,000 vehicles in the U.S., expecting to end the year up 10% over 2001. By 2005, Saturn is targeting sales of over 500,000 vehicles per year.

This multi-year contract, worth at least USD $80 million, follows Koyo's success supplying the EPS systems found in Saturn Division's new VUE SUV. The VUE was the first U.S.-built vehicle to use an EPS system, although EPS has been available on the Acura NSX, Honda Insight and Honda S2000.

Koyo's Steering Systems USA division will produce the EPS units at its new plant in Roanoke, Virginia. Built on 81 acres in the new Botetourt Center industrial park, the $37 million, 260,000 square foot facility is designed to meet Koyo's 2005 target sales of 800,000 EPS units for the U.S. automotive market.

Last year, Koyo produced 2 million EPS units worldwide and forecasts 9 million by 2007. The world's automakers have embraced EPS systems as lighter in weight, adding fuel efficiency and even for safety -- if a car's engine stalls, steering assist it not lost as it is with an engine-driven hydraulic system. Fuel efficiency improvement over standard hydraulic systems can vary, but on the Ion, Koyo's EPS adds 0.7 miles per gallon.

Another advantage of EPS units are their programmability. Koyo's system for the Ion, for example, is speed-sensitive, with an integrated torque sensor and six different calibration programs available. Steering can be calibrated in response to a number of factors -- tire size, road feel, vehicle speed, and others. EPS also allows the Ion to have a smaller-than-normal steering wheel.

Many bearing manufacturers have been applying their expertise in pursuing the new electric power steering market; Koyo's systems have been used for over a decade in Japan. By early next year, Delphi will start production of its E-Steer EPS systems at its plant in Saginaw, Michigan. Delphi already supplies E-Steer for a number of smaller vehicles in the European market.