Yen pointed out that income disparity is rising in Taiwan. The company needs to produce cars that meet the needs of different consumers. For the higher end of the market, Yulon has created a separate brand known as Luxgen, with new models hitting the streets later this year.
For the lower end of the market, within the next two years the company plans to develop a low-priced car that costs between NT$350,000 (US$10,350) and NT$400,000. Yulon will create a separate company, with a startup capital of NT$1 billion, to produce and sell the vehicle. The name of the new firm has not yet been announced.
The past two to three years have been very challenging for the automobile industry, due to the global financial crisis and the increase in the price of oil. The industry has had to make numerous adjustments, while seeking ways to cut costs and increase profits.
Chen Kuo-rong, general manager of Yulon Motor Co. Ltd., further pointed out that according to World Trade Organization regulations, member countries must abolish quotas imposed on imported cars by 2010.
As Taiwan is a member of the WTO, it will be difficult for the government to prevent low-priced cars made in mainland China and India from entering the local market. Rather than letting imported cars flood the local market, Yulon intends to compete vigorously for its fair share, Chen added.
In a separate note, Yen pointed out that the electric vehicle is the trend of the future and that Taiwan stands to gain from this trend. He said that the current global demand for cars is estimated at around 70 million. If Taiwan can capture just 3 percent of this market, it would bring in more than a trillion New Taiwan dollars to the nation’s economy. As the government tries to foster Taiwan’s environmental industries, it should include electric vehicles on its agenda, Yen urged.
Luxgen will release a seven-seat multiple-purpose vehicle later this year. A sports utility vehicle is also in the pipeline, and a luxury sedan is set to hit the market in 2011. In the future, Luxgen sports cars and lithium-battery electric vehicles will also be introduced. Altogether the group has invested NT$30 billion to develop the Luxgen brand.
Some analysts believe that Taiwan’s market is too small to accommodate another brand of high-end vehicles. Yen admitted that the decision to develop Luxgen is akin to high-stakes gambling. But he expressed great confidence that the venture would succeed.
The Yulon Group includes under its name three main subsidiary companies: Tai Yuen Textile Co. Ltd., Yulon Motor Co. Ltd., and China Motor Corp. Yulon Motor Co. Ltd., with capital estimated at NT$15.7 billion, was founded in 1953. It is Taiwan’s largest automobile company.
Write to Jean Yueh at yueh@mail.gio.gov.tw