Yulon Motor says profits down on higher costs

Yulon Motor Co (裕隆汽車), the Taiwan partner of Japan's Nissan Motor Co, posted a 20 percent drop in first-quarter profit to NT$1.49 billion (US$47 million) from NT$1.86 billion a year earlier, as costs increased.

Sales climbed 8.4 percent to NT$14.3 billion, the Miaoli-based Yulon Motor said in a filing to the Taiwan Stock Exchange yesterday.

Yulon's China business had its profit margins squeezed last year by declining sales and the higher cost of steel plates. The pace of growth in its China car sales dropped to 15 percent last year after surging 50 percent in 2002 and 76 percent in 2003.

Increasing competition forced carmakers to slash prices, encouraging customers to postpone purchases on anticipation of further discounts. The price of steel sheets used in car assemblies rose, with increasing demand for the metal from China.

For this year, Yulon estimates sales will rise 10.7 percent to NT$45.5 billion, according to its Jan. 13 forecast. The company aims to sell 72,700 cars this year, 22 percent more than the 71,100 units sold last year, it said at that time.

China Motor Corp (中華汽車), the nation's biggest automaker by market value, posted a 40 percent decline in first-quarter profit to NT$1.12 from NT$1.85 billion a year earlier, as production costs increased and sales growth stalled.

For last year, the company had a profit of NT$5.4 billion, down 28 percent from NT$7.5 billion in 2003, China Motor said in a separate filing to the exchange yesterday. Sales rose 0.9 percent to NT$17.2 billion.