2024 Guangxi Yuchai Machinery Group Co., Ltd. Sustainability Report

Foreword

The year 2024 marks the 18th consecutive year that Guangxi Yuchai Machinery Group Co., Ltd. (hereinafter referred to as "Yuchai Group") has released its sustainability report. It is also a pivotal year for the enterprise to anchor the "dual carbon" goals, foster new quality productive forces, and advance industrial transformation and upgrading. Against the backdrop of the global energy transition and the trend toward high-end, intelligent, and green development of China’s manufacturing industry, Yuchai Group remains committed to its corporate vision of "Creating value for customers with power and becoming a world-class power system supplier". Upholding its survival philosophy that "Yuchai can only survive by helping customers succeed", the Group has built a modern industrial ecosystem featuring the coordinated development of "traditional internal combustion engines + new energy power + intelligent equipment".

Covering the period from January 1 to December 31, 2024, this report fully discloses the Group’s practices and achievements in responsible governance, green development, customer value, employee growth, and social contribution. It also highlights the green innovation achievements of its subsidiary Yuchai Equipment Technology Co., Ltd. in the field of electric construction machinery, systematically presenting the complete path of the enterprise empowering the high-quality transformation of the manufacturing industry through sustainable development.

1. Standardized Governance: Laying a Solid Foundation for Sustainable Development

Yuchai Group deeply integrates the ESG concept into its entire management process, establishing a governance system aligned with international standards and industry characteristics to consolidate the institutional foundation for sustainable development.

In terms of ESG governance structure, the Group benchmarks against the CASS-ESG 5.0 China Corporate Social Responsibility Report Guidelines, GRI Sustainability Reporting Standards 2016, and the Ten Principles of the United Nations Global Compact. It has set up a social responsibility management system led by the Publicity Department of the Party Committee and formed a dedicated ESG reporting team, forming an ESG management mechanism of "overall planning by the Board of Directors, leadership by the executive team, collaboration across multiple departments, and implementation across the entire chain". In 2024, the Group conducted a materiality assessment with 1,137 valid questionnaires collected, identifying core topics such as product quality, customer responsibility, health and safety, and environmental management to ensure ESG efforts align with the demands of stakeholders.

In corporate governance and compliant operation, Yuchai Group has constructed a modern corporate governance structure with the shareholders' meeting as the core, coordinated by the Board of Directors and the Board of Supervisors, and five specialized committees under its umbrella. The 7 directors boast diversified professional backgrounds, including 3 independent directors, ensuring scientific and independent decision-making. In 2024, the Group deepened the reform of state-owned enterprises, with an 84% completion rate of 113 key reform tasks, fostering 2 "Double Hundred Enterprises" and 6 "Science and Technology Reform Demonstration Enterprises". It strictly implemented the chief legal counsel system, achieving a 100% legal compliance review rate for major decisions, rules and regulations, and economic contracts. Throughout the year, compliance training covered more than 7,800 person-times, building a strong line of defense for compliant operation.

In terms of operational efficiency improvement, Yuchai Group fully advanced the scale doubling project in 2024, achieving growth against the trend in its core businesses. Annual engine sales increased by 7% year-on-year, outperforming the industry average, and the domestic market share of multi-cylinder diesel engines ranked second in the industry. The "third track" of intelligent equipment maintained strong momentum: foundry business sales rose by 30% year-on-year, external market sales of mold equipment surged by 119% year-on-year, and digital business revenue jumped by 102% year-on-year. The engine intelligent factory was rated as one of the first batch of "Excellent-level Intelligent Factories" in China. In the same year, Yuchai’s brand value exceeded 100 billion yuan for the first time, reaching 102.059 billion yuan, leading China’s internal combustion engine industry for 19 consecutive years.

2. Green Transformation: Anchoring Dual Carbon Goals and Building a Full-Chain Low-Carbon System

Yuchai Group fully integrates the goals of carbon peaking and carbon neutrality into its long-term development strategy, building a full-life-cycle green development system from four dimensions: energy structure optimization, technological R&D innovation, green product supply, and production process energy conservation, driving the industry’s low-carbon transformation through technological innovation.

(1) Systematic Deployment of Dual Carbon Actions to Consolidate the Cornerstone of Green Development

In 2024, Yuchai Group formulated a phased and quantifiable dual carbon implementation path, achieving a comprehensive energy consumption of 58.02 kg of standard coal per unit product, a year-on-year decrease of 2%. There were no environmental violations or penalties throughout the year; all wastewater and waste gas were discharged up to standard, and hazardous waste was 100% safely disposed of.

In energy structure optimization, the Group vigorously promoted clean energy substitution, deploying distributed photovoltaic power generation systems in workshops, office areas, and parking lots. In 2024, photovoltaic power consumption reached 24.16 million kWh, accounting for 12.4% of total electricity consumption. Through technological transformation of electric dynamometers, the power recovery rate of engine factory tests exceeded 90%, with an annual recovered power of 11.26 million kWh, equivalent to 3,378 tons of standard coal and a reduction of 5,922 tons of carbon dioxide emissions. The Group plans to raise the proportion of renewable energy use to 22% and clean energy utilization to 40% within the next three years.

In the application of energy-saving and consumption-reducing technologies, Yuchai Group improved energy efficiency across the entire process through multiple technological transformations such as air-source heat pumps, SVG dynamic compensation, and compressed air trusteeship. Among them, the application of air-source heat pump technology achieved a 29.2% energy-saving efficiency, reducing annual electricity consumption by 5.78 million kWh; the compressed air trusteeship model lowered the gas production unit consumption by 26.3%, saving 1.69 million kWh of electricity annually. In 2024, the Group’s environmental management training covered more than 89,952 person-times in total. It built an industry-leading sewage treatment system with an annual treatment capacity of 640,000 tons, and the effluent quality was better than the national Class II discharge standard. The proportion of reusable packaging in total packaging rose to 86%.

(2) Innovative Green R&D to Break Through Core Low-Carbon Technologies

As a national high-tech enterprise, Yuchai Group has established four R&D centers in Yulin, Nanning, Jiangsu, and Europe, equipped with 150 engine test benches and 5 vehicle test benches, and assembled a top R&D team of 2,400 members. Its national-level enterprise technology center once ranked first in the country with a score of 100.1.

In 2024, Yuchai Group continued to increase R&D investment, making all-round breakthroughs in key technologies of "low-carbonization, intelligence, electrification, and greenization". It successfully launched a series of low-carbon power products, including the domestically largest horsepower methanol range-extender product, the domestically largest megawatt-level hydrogen-fueled engine, and the gas engine with the highest mass-produced thermal efficiency in the industry. The domestically largest displacement and horsepower hydrogen-fueled engine realized vehicle-mounted demonstration operation, and the world’s first high-efficiency intelligent drive continuously variable transmission powertrain for tractors was put into batch delivery. Throughout the year, the Group applied for 562 patents, including 319 invention patents; 602 patents were authorized, including 434 invention patents. As of the end of 2024, the cumulative number of authorized patents reached 8,600, and 6 R&D achievements won national science and technology awards. In the same year, Yuchai presided over the formulation of 1 industry standard and participated in the formulation and revision of 11 national and industry standards, leading the industry’s green development with technical standards.

(3) Expansion of Green Product Matrix, Leading Zero-Carbon Revolution in Electric Construction Machinery

In the new energy power and intelligent equipment sectors, Yuchai Group has not only achieved low-carbon upgrading of traditional power but also, through its subsidiary Yuchai Equipment Technology Co., Ltd., deeply engaged in the field of electric construction machinery, launching a series of zero-carbon products such as electric skid steer loaders, electric compact excavators, and electric loaders. It has formed a green equipment matrix covering all scenarios of engineering construction, providing zero-emission and high-efficiency solutions for infrastructure, municipal administration, mining, agriculture, and other fields.

With pure electric drive as the core, the electric skid steer loader completely eliminates exhaust emissions from traditional fuel models, achieving zero carbon emissions during operation. It is perfectly suitable for scenarios with strict environmental requirements such as indoor construction, closed-space operation, urban municipal maintenance, and landscape renovation. Equipped with Yuchai’s independently developed high-efficiency permanent magnet synchronous motor and intelligent energy management system, the product’s energy utilization efficiency is over 60% higher than that of fuel models. Coupled with braking energy recovery technology, it further reduces operating energy consumption. Meanwhile, the whole machine operates at a noise level below 75 decibels, a reduction of more than 20 decibels compared with traditional models, greatly reducing noise pollution and meeting low-noise requirements such as night construction and residential area operation. In full-life-cycle low-carbon management, the product’s core structural parts are made of high-recyclability steel, the battery system adapts to the industry’s universal recycling system, and the recyclable material utilization rate exceeds 85%, realizing full-chain low-carbon control from production and use to scrapping.

The electric compact excavator focuses on subdivided scenarios such as urban micro-infrastructure, farmland water conservancy, garden maintenance, and indoor demolition. It replaces traditional diesel power with a pure electric power system, achieving zero exhaust and zero particulate emissions during operation, fundamentally solving the emission pollution of non-road mobile machinery. Through Yuchai’s exclusive motor-hydraulic system collaborative control technology, the product achieves precise matching between power output and operation demand, with comprehensive energy consumption reduced by 70% compared with fuel excavators of the same tonnage, significantly lowering customers’ operating costs. Equipped with a large-capacity lithium iron phosphate battery pack supporting fast charging, it can be charged to 80% in 1 hour and operate continuously for 6–8 hours on a full charge, meeting daily construction needs. At the same time, the product adopts an intelligent temperature control system and energy-saving control algorithm, which can dynamically adjust power output according to operating conditions, maximizing battery service life while ensuring operation efficiency, and further reducing the full-life-cycle carbon footprint.

The electric loader is developed for heavy-duty operation scenarios such as ports, mines, factory logistics, and building materials handling. It replaces traditional fuel power with a high-power pure electric drive system, achieving zero exhaust emissions. A single unit can reduce carbon dioxide emissions by more than 200 tons per year, making it a core equipment for green transformation of ports and low-carbon upgrading of factories. Equipped with Yuchai’s self-developed high-power-density motor and dual-motor collaborative drive system, the product’s peak torque far exceeds that of fuel loaders of the same tonnage, featuring fast starting and strong power to perfectly meet heavy-duty operation needs. Through advanced potential energy recovery and braking energy recovery technology, it can realize efficient power recovery under working conditions such as downhill, unloading, and deceleration, with a comprehensive energy recovery rate of over 30%. In terms of green manufacturing, the machine body is made of recyclable high-strength steel, and environmentally friendly water-based paint is fully used in the coating process, reducing VOC emissions by 80% compared with traditional processes, practicing the green environmental protection concept from the production source. Meanwhile, the equipment is equipped with remote intelligent operation and maintenance functions, which can monitor energy consumption data and equipment status in real time, helping customers optimize operation processes and further achieve energy conservation and carbon reduction.

3. Value Symbiosis: Customer-Centric, Building a Full-Cycle Service System

Yuchai Group always adheres to the core survival philosophy of "Yuchai can only survive by helping customers succeed", building a mutually beneficial and win-win value symbiosis ecosystem with customers and partners from three dimensions: green product supply, service system upgrading, and industrial chain collaborative development.

In product quality control, the Group adheres to the "zero defect" quality goal and builds a "customer-centric, full-value-chain closed-loop quality management" system, realizing full-process quality control from R&D and design, supply chain management, production and manufacturing to factory inspection. In 2024, the Group’s core product quality indicators continued to optimize: R0 decreased by 15.3% year-on-year, 3MIS decreased by 1.6% year-on-year, and the average closed-loop cycle of 6D measures shortened by 17.7% year-on-year. It obtained the national accredited calibration/testing laboratory qualification, equipped with 768 sets of high-precision measuring equipment, and is the only enterprise in the industry qualified for full-parameter calibration covering bench testing. It has successively won honors such as "2024 National Quality Benchmark" and "Guangxi Industrial Enterprise Quality Management Benchmark".

In service system construction, Yuchai has built a "worry-free and efficient" service brand and a global service network. Domestically, it has 31 overseas marketing departments and 6,410 professional authorized service stations, with a service radius controlled within 50 kilometers; overseas, it has 555 service agents, realizing 24-hour global joint guarantee. The service system is equipped with 65 industry experts, 6,061 service craftsmen, and 65,000 service personnel, promising "2-minute response, 5-minute order receiving, 30-minute departure, 1.5-hour on-site arrival, and 6-hour completion", with service efficiency leading the industry. In 2024, the Group took the lead in launching an intelligent diagnostic reasoning system in the industry, promoting 4,233 sets of intelligent diagnostic instruments, with an intelligent diagnostic accuracy rate of over 95%. Customer satisfaction in truck, bus, general machinery, and marine power sectors rose to 88.03, 91.55, 89.12, and 89.5 respectively, hitting a record high.

In industrial chain collaborative development, Yuchai deeply cooperated with upstream suppliers and downstream OEMs, establishing the YC Strategic Alliance. It built a green supply chain with 31 core strategic suppliers to promote collaborative emission reduction across the industrial chain; jointly developed the world’s first fully variable valve heavy-duty commercial vehicle engine with Schaeffler, and maintained more than 40 years of in-depth cooperation with Dongfeng Liuzhou Motor with a supporting share of over 80%, realizing technology sharing and market win-win. Meanwhile, the Group actively promoted the overseas expansion of China’s power industry. In 2024, its first overseas factory was completed and put into operation in Thailand, and the Vietnam engine factory project was officially signed and landed. Products are exported to more than 180 countries and regions worldwide, providing green and low-carbon power solutions for global customers.

4. People-Oriented: Building a Harmonious Yuchai and Supporting Employee Growth

Yuchai Group always upholds the concept of "putting builders first", deeply integrating employee development with corporate development, and building a harmonious and stable labor relationship from four dimensions: rights protection, talent cultivation, production safety, and employee care, creating a warm and sense-of-belonging corporate home.

As of the end of 2024, Yuchai Group had 13,199 employees, including 17.73% female employees and 9.66% ethnic minority employees. The Group strictly abides by national labor laws and regulations, resolutely prohibits child labor and forced labor, rejects all forms of employment discrimination, and guarantees equal employment opportunities and career development rights for all employees. The Group adheres to the system of workers' congress and factory affairs disclosure. In 2024, the workers' congress filed and completed 6 employee proposals, and solved 48 employee demands through the employee voice platform. The labor contract signing rate and social insurance coverage rate both reached 100%. It built 11 female employee care rooms to provide special protection for nearly 2,000 female employees, effectively safeguarding employees' legitimate rights and interests.

In talent cultivation, Yuchai has built a full-chain talent training system of "attraction, cultivation, utilization and retention", established dual career development paths for management and professionals, implemented the competitive appointment, hierarchical adjustment, and incompetent exit mechanism for managers, forming a talent development atmosphere of "the capable rise, the mediocre fall, and the inferior are eliminated". In 2024, the Group launched 24 special training programs of "Cultivating Forest, Cultivating Talents, and Cultivating Excellence" covering 259 person-times, and carried out 167 post capability improvement training sessions covering 1,597 person-times. As of the end of 2024, the Group had 288 employees with senior professional titles, 1,617 with intermediate professional titles, 277 senior technicians, and 616 technicians, and built 15 national and autonomous regional model worker studios. In the same year, Group employees won 5 first prizes in the Guangxi Staff Professional Skills Competition and national second and third prizes in the China Innovation Method Competition, achieving historic breakthroughs.

In production safety and occupational health, Yuchai has established a sound HSE management system and work safety standardization system. In 2024, it successfully achieved the safety goal of "four zeros" (zero fire accidents, zero serious injuries, zero minor injuries, and zero environmental pollution incidents). Throughout the year, 1,022 potential safety hazards were rectified with a 100% rectification closed-loop rate; 617 safety education and training sessions were held covering 90,764 person-times, with a 100% full-staff training coverage rate, and was once again rated as a "Guangxi Autonomous Region Safety Culture Construction Model Enterprise". The Group prioritizes the adoption of low-hazard and low-noise production processes and equipment, and provides employees with a full range of national standard personal protective equipment. In 2024, the overall qualified rate of occupational hazard factor detection reached 97.5%, and the noise detection qualified rate reached 94.51%, increasing by 4.27% and 6.78% year-on-year respectively, comprehensively protecting employees' occupational health.

In employee care, Yuchai continued to do practical things and solve problems for employees in 2024. It consoled 371 employees in difficulty and distributed more than 710,000 yuan in consolation funds; supported 12 employees' children in schooling and issued 28,000 yuan in grants; provided free health care services for more than 1,000 front-line production employees, and organized 29 staff film screenings covering 13,800 person-times. Meanwhile, the Group established 15 staff cultural and sports associations, holding more than 500 cultural and sports activities and 9 staff sports events throughout the year, covering 3,089 employees, continuously enhancing employees' sense of belonging, gain, and happiness.

5. Responsibility Commitment: Giving Back to Society and Spreading Warmth

Yuchai Group always upholds the mission of state-owned enterprises, actively participates in rural revitalization, public welfare volunteer services, and social public welfare undertakings, gives back to society with practical actions, and promotes the sharing of corporate development achievements with society.

In rural revitalization, Yuchai innovated the "customized sales" assistance model, carried out regular agricultural and sideline products exhibition and promotion activities to help villagers in assisted areas broaden income channels; took "volunteer +" activities as the carrier to upgrade the assistance model from "blood transfusion" to "blood generation", creating a replicable "Yuchai Model" for rural revitalization; provided grants to children from impoverished families through the "Spring Bud Program", empowering rural revitalization through education and nurturing new forces for rural development.

In volunteer services, the Yuchai Volunteer Corps and its detachments carried out 496 volunteer service activities in 2024, including Spring Festival couplet delivery, free home appliance repair, summer free tutoring, unpaid blood donation, and public welfare markets, with 4,591 volunteers participating and a total volunteer service duration of 20,520.5 hours. It jointly held 2 unpaid blood donation activities with Yulin Red Cross Society and blood station, with a total blood donation volume of 16,800 ml, and won the title of "Love Unit for Unpaid Blood Donation".

In caring for the next generation and social public welfare, Yuchai continued to carry out public welfare student assistance activities. Before Children’s Day in 2024, it donated funds and materials totaling 30,000 yuan to local schools and kindergartens; awarded scholarships and grants to employees' children in the autumn semester, and carried out summer free tutoring activities covering 101 employees' children. Meanwhile, the first set of China’s driver health exercises independently developed and supported by the Group was rated as an excellent work of new-era health science popularization, promoting the national health cause with practical actions and winning the title of "National Advanced Collective in Science Popularization Work".

6. Future Outlook

2025 is a crucial year for Yuchai Group to advance the scale doubling project and achieve high-quality development. Facing the historical opportunities of global energy transition and manufacturing upgrading, Yuchai Group will always adhere to the "concentric diversification" development strategy centered on the power system, continue to strengthen the two core tracks of traditional internal combustion engine power and new energy power, vigorously expand the "third track" of intelligent equipment, and accelerate the construction of a modern industrial system.

In green development, the Group will continue to increase R&D investment in low-carbon and zero-carbon technologies, accelerate the iteration of new energy power technologies such as methanol and hydrogen fuel, and promote the large-scale application of hydrogen-fueled engines, hybrid powertrains and other products. Meanwhile, it will promote the continuous upgrading of Yuchai Equipment’s electric construction machinery products, continuously enrich the product matrix of electric skid steer loaders, electric compact excavators, electric loaders, etc., deepen full-life-cycle low-carbon management, and provide more Yuchai solutions for the zero-carbon transformation of non-road mobile machinery.

In sustainable development, the Group will continue to improve the ESG governance system, deepen energy conservation and carbon reduction across the entire process, and strive to complete the renewable energy and clean energy utilization goals ahead of schedule; continue to deepen collaboration with upstream and downstream industrial chains, jointly build a green supply chain, and promote the low-carbon transformation of the entire industry; always adhere to the people-oriented development concept, continue to protect employees' rights and interests, support employee growth, and actively participate in social public welfare and rural revitalization. While achieving high-quality corporate development, it will continue to create greater economic, environmental and social value, steadily move toward the vision of "becoming a world-class power system supplier", and contribute Yuchai’s strength to the high-end, intelligent and green development of China’s manufacturing industry and the achievement of the national "dual carbon" goals.