Yulon Motor Co (裕隆汽車) said yesterday that its joint venture with China’s Dongfeng Motor Corp (東風汽車) in Hangzhou, Zhejiang Province is expected to start marketing Luxgen-brand sports utility vehicle (SUV) models in September.
Shortly thereafter, Dongfeng Yulon Corp (東風裕隆) will manufacture and sell Luxgen multi-purpose vehicles (MPV) and other sedan models as Yulon seeks to tap the Chinese market of 20 million vehicles, company chairman Kenneth Yen (嚴凱泰) told shareholders at the company’s annual general meeting in the Sindian District (新 店), New Taipei City (新北市).
The 3.4 billion yuan (US$525.5 million) venture Dongfeng Yulon was set up last year with the aim of producing Luxgen cars and electric vehicles with an annual capacity of 120,000 vehicles during the first stage. Yulon expects to sell up to 200,000 Luxgen cars in China over the next five years, with total sales of 25 billion yuan.
“We continue to believe that auto sales in Taiwan and China will remain strong, and that Luxgen cars will be well received in China,” Citigroup analyst Dave Chiou (邱義昇) said yesterday in a client note.
As for green vehicles, Yulon last year introduced the Luxgen 7 MPV electric vehicle model and is now participating in a government program to put 3,000 electric cars in 10 trial zones by 2013.
The Ministry of Economic Affairs launched a six-year electric vehicle development program in October last year, hoping to increase the number of electric cars on the roads to 60,000 by 2016.
The program, which offers tax rebates and subsidies, is expected to generate NT$120 billion (US$4.14 billion) for the manufacturing sector and NT$31.2 billion for the service sector, as well as provide 24,000 jobs, according to the ministry.
However, Yen told reporters after the shareholders’ meeting that one of major factors holding back the popularity of electric vehicles was the availability of battery recharging stations.
At yesterday’s meeting, shareholders approved a plan to distribute a cash dividend of NT$1 per share after Yulon’s earnings reached the highest level in five years, at NT$5.23 billion or NT$2.65 a share.
Yulon, the nation’s third-largest automobile maker and sole distributor of Nissan cars, posted revenue of NT$31.998 billion last year, up 52.8 percent from the previous year, as the company sold 52,550 vehicles in Taiwan, up 42.2 percent year-on-year.
Overall car sales in Taiwan last year rose 11.3 percent from a year earlier to 328,000 units thanks to the nation’s rapid economic recovery, but last year’s growth rate of 11.3 percent was lower than the 28.3 percent increase to 294,423 units reported in 2009, according to data compiled by the Ministry of Transportation and Communications.
Citigroup yesterday maintained a “buy” rating on Yulon shares and raised its target price for the stock from NT$82 to NT$83, citing the company’s strong domestic auto sales.
Citigroup also revised upward Yulon’s unit sales to 54,775 units this year from the previous estimate of 52,650 units and expected unit sales to exceed 61,000 units next year.
Shares in Yulon rose 0.15 percent to NT$65.6 yesterday.
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