Tue, Aug 03, 2010 - Page 12 News List

Yulon to make Luxgen in China

RESEARCH AND DEVELOPMENT The new venture is set to produce about 120,000 vehicles a year with total investment expected to eventually reach 3.4 billion yuan

By Jason Tan  /  STAFF REPORTER

Shares of the nation’s biggest automaker, Yulon Motor Co (裕隆汽車), rallied nearly 7-percent — the daily limit — yesterday after the company received the go-ahead to make its Luxgen brand cars in China.

Shares of Yulon closed up 6.92 percent to NT$39.4 on the Taiwan Stock Exchange.

Dongfeng Yulon (東風裕隆), a joint venture between Yulon and China’s No. 4 automaker Dongfeng Automobile Co (東風汽車), has ­received official approval from the Chinese authority to manufacture cars in the world’s biggest automotive market, the company said in a statement yesterday.

Yulon, which holds 50 percent of Dongfeng Yulon, planned to invest 755 million yuan (US$111.5 million) in the venture, which will have 1.55 billion yuan in initial capital.

This marks Yulon’s second car making venture in China.

Dongfeng Yulon will be located in Hangzhou, Zhejiang Province, the statement said.

Yulon’s shares have risen 4.5 percent since early this year and have jumped 20 percent in the past 12 months, outpacing other auto shares on the TAIEX, which are up 12 percent in the past year.

“This project will enhance the research and development capability of Taiwan’s auto industry and help push exports of Taiwan’s auto component makers,” the statement said.

The venture is set to produce 120,000 vehicles per year in the initial stage, with models ranging from sports utility vehicles, multi-purpose vehicles and sedans, the statement said, adding total investment would eventually hit 3.4 billion yuan.

Taiwan’s auto production currently stands at 280,000 units a year.

Dongfeng Yulon’s first-phase production facilities are expected to be ready by the end of next year, with both parties to jointly handle recruitment, equipment purchase, safety recognition and the sales network.

Yulon, which mainly produces cars for Nissan in Taiwan through a licensing agreement with its Japanese partner, has a previous joint venture in China called South East Motor (Fujian) (東南汽車).

While the statement did not specify the models to be produced by Dongfeng Yulon, the Chinese-language Economic Daily News said the venture would mainly manufacture Luxgen vehicles — Yulon’s first attempt at building its own brand.

The first Luxgen, a 2.2-liter ­minivan for family use, was unveiled in Taiwan in September last year. Since then Yulon has received orders from more than 10,000 local motorists, Luxgen said.

The Luxgen project has cost Yulon about NT$15 billion (US$472 million) since it started four years ago.

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