Wed, Dec 13, 2006 - Page 12 News List

Yulon looking to break into Chinese car rental market

SUZHOU STRATEGY The automaker is ignoring the example of Hertz, which earlier this year announced that it was pulling out of China


Leading Taiwanese automaker Yulon Motor Co (裕隆汽車) plans to invest US$6 million in cash in setting up a Chinese unit in order to tap into the infant car rental market in the world's third-largest automobile market, targeting Taiwanese and foreign businessmen.

Yulon made the latest move a year after local competitor Hotai Motor Co (和泰汽車) spearheaded the auto rental market in China by receiving the go-ahead from the government late last year. But Hotai, which distributes Toyota and Lexus brands in Taiwan, is still waiting for an approval from the local government in Shanghai to operate the business.

Vehicle financing company Taiwan Acceptance Corp (裕融企業), 54-percent owned by Yulon, said the government approved its Chinese investment plan, worth US$6 million to set up a unit in Suzhou via its car rental subsidiary Carplus Auto Leasing Co (格上租車).


"The Suzhou unit will offer vehicle leasing, car maintenance and other services," Taiwan Acceptance said in a statement to the Taiwan Stock Exchange on Monday.

To compete with in excess of 2,000 auto rental businesses in China, Taiwan Acceptance said that it would initially targeting Taiwanese and foreign businessmen in Suzhou as potential customers in need of short-distance travel.

Earlier this year, Hertz Global Holdings Corp, one of the world's biggest auto rental firms, said it planned to pull out of China's nascent auto rental market, in spite of the market's potential growth, according to China's state-run news agency Xinhua said.

Great expectations

The report also said that China's auto rental business is expected to rise by 50 percent in composite annual rate to 300,000 to 400,000 cars worth 18 billion yuan (US$2.3 billion), by 2015, citing unspecified research report.

Yulon cut its earnings forecast for this year by 33 percent last month to NT$2.11 per share, from an earlier estimate of NT$3.16 a share, citing weak private consumption.

Adjusted revenues for this year were NT$26.8 billion, 40 percent lower than the NT$46 billion estimated previously, it said.

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