(Yicai) June 12 -- Xinzhi Group said it has been named the designated supplier of motor components of German auto giant Volkswagen Group.

Volkswagen notified Xinzhi that it was selected as the designated assembly supplier of stators and rotors for the carmaker's new energy vehicle electric drive project, the Taizhou-based firm announced late yesterday.

Due to a confidentiality agreement, Xinzhi did not disclose further information regarding the deal, including the expected supply amount, period, and annual sales income.

Becoming a designated supplier of Volkswagen is a significant milestone for the future development of Xinzhi, with this being the firm's first direct order from a carmaker, it noted. It is also a key step for the company's shift to a Tier 1 from a Tier 2 supplier, marking a breakthrough in the global strategy of its new energy business from zero to one, it added.

The tie-up with Volkswagen will be conducive to Xinzhi's further overseas expansion, bagging more orders from carmakers, and further growth in the NEV motor market, according to the Chinese firm.

Xinzhi mainly makes electric motor parts used in cars, e-bikes, and home appliances. Its auto business sales revenue was CNY2.8 billion (USD386 million) last year, accounting for 60 percent of its total, according to its annual earnings report. Its overseas sales reached CNY543 million (USD74.9 million), or 11.8 percent of its total, with its clients including Valeo, Bosch, and BorgWarner.

Shares of Xinzhi [SHE: 002664] closed up 1.34 percent to CNY12.87 (USD1.77) apiece in Shenzhen today, after jumping by as much as 2.3 percent in the morning trading session.

Editor: Martin Kadiev