German automaker Volkswagen AG reportedly may set up an assembly plant in central Taiwan, sources said.
Speaking during a June 14 interview on air with local television commentator Sisy Chen, Premier Wu Den-yih said representatives of a leading global automobile manufacturer interested in establishing an assembly plant in Taiwan visited him at his office last week.
Without revealing the name of the automaker, Wu added that Woody T. J. Duh, director-general of the Industrial Development Bureau under the Ministry of Economic Affairs, was slated to accompany the reps on a survey visit to a local industrial park in preparation for possibly establishing a factory on the island by the end of June. Wu also noted that the visit was the company’s second to Taiwan.
Industry insiders pointed out that the company in question was Volkswagen AG, who could set up shop at the Changbin Industrial Park in central Taiwan after conducting a feasibility assessment of the planned investment.
In 1991, Volkswagen had partnered with Chinfon Trading Group and jointly invested NT$4.8 billion (US$148.37 million) in the establishment of Chin Chun Motor Co. Ltd. to produce the Volkswagen Transporter T4 front-engined van on the island. However, with the two firms constantly at loggerheads over business operations, the relationship eventually ended on bad terms, with the German automaker deciding to pull out of Taiwan in the wake of the Asian financial crisis in 1997.
Recently, the Swire Group Taiwan invited Volkswagen to again invest in establishing an automobile assembly plant on the island after learning that sedans would be included on the early harvest list of items subject to tariff concessions under the planned cross-strait economic framework agreement.
The group had originally approached the German auto giant last year, suggesting they work together to find an OEM manufacturer to produce Volkswagen vehicles in Taiwan for resale in mainland China. However, as the Industrial Development Bureau reached a preliminary consensus in negotiations with local automakers that only vehicles produced by manufacturers that set up plants in Taiwan would qualify for tariff concessions under the planned ECFA, the Swire Group Taiwan revised its strategy, proposing to Volkswagen to jointly establish an assembly plant on the island.
Sources with Shanghai Volkswagen said as the planned investment involves a number of issues, including import quotas and basic costs, VW AG already tasked its Shanghai company to evaluate the plan’s feasibility. The assessment will look at estimated volume of vehicle sales to the mainland, as well as at division of labor with plants located in Southeast Asian countries.
Volkswagen concluded that annual production would have to reach at least 100,000 vehicles to achieve an economy of scale, and that investment in the new Taiwan plant would amount to between NT$3 billion and NT$5 billion.
To date, assembled vehicles have yet to be included on the early harvest list of items under the planned ECFA, which is widely expected to be signed later this month. (SB)