Tong Yang gets its Daimler deal

Tong Yang Industry Co (東陽實業), one of Taiwan's largest automobile parts makers, yesterday said it had secured a much-wanted partnership with DaimlerChrysler AG by agreeing to supply components to the German-US automaker's Chi-nese unit.

DaimlerChrysler Vans (China), a joint venture between DaimlerChrysler and Taiwanese commercial vehicle maker China Motor Corp (中華汽車), is scheduled to begin operations in 2005. The Fuzhou-based venture is predicted to churn out an annual output of 400,000 vehicles.

"DaimlerChrysler chose Tong Yang as one of several auto components suppliers," said Fancy Hsu (許芳華), Tong Yang's public relations manager. "We plan to ship the parts ordered from our Chinese units."

The deal will give a boost to the Tainan-based company's original equipment manufacturing busi-ness, which now only makes up 20 percent of Tong Yang's total sales, Hsu said. She declined to give further details of the deal.

Tong Yang shares climbed NT$2, or 3.88 percent, to close at NT$53.5 on the TAIEX yesterday.

The company's proposed contract business with DaimlerChrysler has been viewed as a sign of substantial progress made by local auto parts makers. For Tong Yang, its operation of 11 factories in China, including one in Fuzhou, might have helped it to win the contract when DaimlerChrysler sent a delegation to Taiwan in March in search of potential auto parts suppliers.

Taiwanese companies exported NT$107.7 billion worth of auto parts last year, a 19 percent rise from 2002, with a big portion of that amount going to American retailers and auto maintenance service providers rather than automakers, according to statistics provided by Taiwan Transportation Vehicle Manufacturer's Association (台灣區車輛工業同業公會).

Foreseeing limited impact on the auto industry from China's curbs on excess investments, Tong Yang will keep unchanged its Chinese expansion plan totalling NT$100 million this year, said Tong Yang chairman Michael Wu (吳永豐).

"We will not slow our expansion because of Beijing's moves," Wu said. "With all our plants fully loaded, we still cannot meet the thriving demand there."

Far from worrying that Beijing's stringent measures to tighten credit and investment may deal a blow to Chinese car sales, Wu said he did not expect any setbacks for his company.

With the global economy rebounding, Wu said he expects his company's sales to grow 15 percent this year from NT$6.67 billion reported in 2003. This figure does not include sales from overseas units.

In the year's first four months, Tong Yang posted record-high earnings of NT$515 million on revenues of NT$2.39 billion.

Wu made the remarks on the sidelines of a press conference for the annual International Auto and Motorcycle Parts and Accessories Show, organized by the Taiwan External Trade Development Council (外貿協會). The show will run May 24 to 27 in Taipei.

The trade fair is expected to attract about 5,000 overseas buyers this year, nearly 30 percent more than the 3,879 registered in 2002. The trade show was suspended last year due to SARS outbreaks.