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Formosa Automobile inks draft contract with Skoda

"The deal can get us access to distribute the components common to Audi and Volkswagen-branded cars in Taiwan."

Jacky Yueh, assistant vice president at Formosa Automobile

Formosa Automobile Corp (台朔汽車), the auto-manufacturing arm of Formosa Plastics Group (台塑集團), confirmed yesterday that the carmaker has signed a draft agreement with Skoda Auto AG to introduce the Czech vehicles into Taiwan, probably by the end of this year.

The company said it hoped the planned deal will enrich its product mix while strengthening its position in Taiwan's after-market industry.

"We have signed a preliminary agreement with Skoda to introduce their cars into Taiwan," Formosa Automobile's assistant vice president Jacky Yueh (樂嘉祺) said in a phone interview yesterday.

The two parties are expected to formally ink the pact sometime in the fourth quarter of this year after ironing out issues regarding pricing policy and which models are to be introduced, he said.

In an attempt to impress the nation's high-end automobile buyers with an upscale brand image, Formosa Automobiles plans to introduce Skoda's large sedan the Superb, which is priced at around NT$2 million (US$64,000) and equipped with a 2-liter engine and high-tech interior facilities like a sunroof powered by solar energy, which enables users to open and close it without starting the car, Yueh said.

The automaker also plans to roll out less expensive sedans, like the Fabia, which comes with a 1.4-liter or 1.9-liter engine, and the Octabia, which is available in a 1.6-liter or 1.9-liter model, the industry veteran said.

Formosa Automobile, founded in 1998 with technology obtained from South Korea's Daewoo Motor Co, currently manufactures and distributes Matiz cars and Magnus sedans in Taiwan.

However, the company has a minimal market share, with sales of around 5,000 Matiz cars and 1,500 Magnus sedans last year. This accounted for only 1.39 percent of the 484,000 new vehicles sold locally in the same period.

Entering into an alliance with Skoda could help Formosa Automobiles to expand its product lineup and break into the nation's after-market industry, Yueh said.

Along with Volkswagen AG and Audi AG, Skoda is an affiliate of German auto giant VW Group. Consequently, Skoda uses chassis and components common to these two brands.

"The deal can get us access to distribute the components common to Audi and Volkswagen-branded cars in Taiwan ... and we will offer consumers more reasonable prices," Yueh said.

Taikoo Motors Taiwan (太古汽車), which distributes Audi and Volkswagen cars locally, had tried to clinch a dealership agreement with Skoda after Formosa Automobiles expressed interest, apparently in a bid to hinder Formosa Automobiles' access to components, an industry insider told the Taipei Times.
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