Taiwanese automakers Yulon Motor Co (
Vehicle sales in Taiwan last year surpassed car distributor forecasts of 410,000 units to reach 413,000 cars. That helped Yulon and China Motor hit their annual earnings targets ahead of schedule.
Local car makers expect the growth momentum to carry into this year as the economy improves.
"This time the driving force will come from their Chinese car-making ventures instead of the home market, which will have only lukewarm growth like most mature markets in the world," said Liu Che-wei (
rising car sales
He forecast that domestic car sales would rise nearly 2 percent this year to 420,000 vehicles, compared to growth of between 10 percent and 20 percent in China, the world's fastest-growing market.
As a result, Taiwanese car makers will see their Chinese businesses account for a bigger share of their total earnings this year, he said.
Yulon Motor, the manufacturing arm of the Yulon group, will earn NT$7.35 billion, or NT$4.29 per share, this year, Liu forecast.
The prediction excludes proceeds from a scheduled share sale of Yulon Nissan Co (裕隆日產) -- a reseller unit that was spun off in a restructuring in October and a now run as a joint venture with Japan's Nissan Motor Co -- during the second half of this year.
Half of Yulon's earnings will come from its non-operating income from Yulon Nissan thanks to large-scale capacity expansion in its Chinese car manufacturing venture, Fengshen Automotive Co (
Fengshen Automotive, in which Yulon Nissan owns a 40 percent stake, is expected to increase its vehicle sales to 80,000 cars this year from 60,000 last year, Yulon Group chairman Kenneth Yan (
Last year, non-operating income accounted for a third of total earnings, said Yulon Nissan spokesman Wu Hsin-fa (
Another analyst agreed with Liu. The new Yulon Motor will benefit from Fengshen Automotive's capacity increase by posting after-tax earnings of NT$5.8 a share this year, according to Jeff Chang (張世澤), an analyst at Yuanta Core Pacific Securities (元大京華).
Commercial carmaker China Motor is expected to book bigger profits from its Chinese investment this year than Yulon Motor, as the capacity expansion of its Chinese venture, Southeast Motor Co (
Southeast Motor hopes to boost its vehicle output to about 150,000 cars this year from 80,000 cars last year, which will help push up China Motor's earnings to around NT$6 a share, from NT$5.84 a share last year, Chang predicted.
China Motor shares rose by 4.5 percent to NT$69 on the TAIEX on Friday. Yulon Motor shares remained unchanged at NT$45.4.
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