Yulon cuts sales forecast amid delay, trade tension

SIDE EFFECT::Vehicle sales in Taiwan will likely decline 0.8 percent to 42,000, due to uncertainty ahead of next year’s presidential and legislative elections, Yulon said

By Kwan Shin-han  /  Staff reporter

Wed, May 22, 2019 - Page 11

Yulon Motor Co (裕隆汽車) yesterday trimmed its forecast for this year’s sales by 16.67 percent to 20,000 vehicles, as the launch of its new seven-seat Luxgen URX sport utility vehicle has been delayed in Taiwan due to an accreditation issue, while the Chinese auto market appears flat amid a US-China trade dispute.

The firm told an investors’ conference in Taipei that sales of Luxgen-branded vehicles in Taiwan would reach 10,000 units this year, compared with its March forecast of 12,000.

“The new URX will hit the Taiwanese market next quarter after completing the certification process,” Yulon president Yao Chen-hsiang (姚振祥) said.

While the company usually spends between NT$6 billion and NT$7 billion (US$190.7 million and US$222.5 million) to develop a new vehicle, it would only recover about NT$2 billion, as the market is limited, Yao said.

“We plan to focus on products in higher niches and target more specific customers in the following quarters,” Yao said.

Yulon forecast that the number of vehicles sold in Taiwan this year would decline 0.8 percent to 42,000, due to market uncertainty ahead of next year’s presidential and legislative elections.

The firm has also invested in China’s auto market, but the outlook for vehicle sales there is less upbeat due to pressure from stricter environmental protection laws and the trade dispute, it said.

It lowered the sales forecast of Chinese subsidiary Dongfeng Yulon Motor Co (東風裕隆) from 12,000 to 10,000 vehicles, it added.

In the first four months of this year, vehicle sales in China declined 14.7 percent to 8.35 million units, with passenger cars falling 14.7 percent to 6.84 million, Yulon finance department general manager Steven Lo (羅文邑) said, adding that full-year sales might be less than the China Association of Automobile Manufacturers’ forecast of 28.1 million vehicles.

On a positive note, Beijing’s measures to expand its domestic market, such as lowering value-added tax from 16 to 13 percent and offering subsidies for fuel-efficient vehicles, could support sales in the second half of the year, he said.

Yulon’s net income last quarter plunged 33 percent to NT$1.04 billion from a year earlier, while earnings per share dropped to NT$0.17, company data showed.

Gross margin climbed by 2.45 percentage points to 24.97 percent, while revenue fell 14.37 percent to NT$20.24 million, the data showed.

The sale of wholly owned subsidiary Yuan Wen Investment Co Ltd (元文投資) would boost earnings per share performance by NT$1.66 this quarter, Yulon said.