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Fri, Jan 11, 2002 - Page 18 News List

Honda to sever ties with Sanyang

LOCAL SUBSIDIARY Japan's second-largest automaker is ending a decades-old relationship with the Taiwanese manufacturer in an effort to increase its competitiveness

By Kevin Chen  /  STAFF REPORTER

Honda Motor Co will soon set up shop in Taiwan, ending a 41-year partnership with Taiwan motorcycle-maker Sanyang Industrial Co (三陽工業), the Japanese company announced yesterday.

Japan's second-largest automaker will initially spend NT$170 million to set up the subsidiary with operations beginning in March, said Satoshi Toshida (土志田諭), managing director of Honda, at a press conference yesterday in Taipei.

Honda has recently submitted an application to the government to establish the new company, called Honda Taiwan Co.

Toshida declined to spell out the reason for the break-up, saying only that the new firm will "reduce production costs" and "increase competitiveness."

The new entity will primarily manage Honda's motorcycle and automobile sales, after-sales services and spare-parts supply in Taiwan.

"At the same time, it is very important for Honda to devote itself further to building its brand image in Taiwan, both in its motorcycle and automobile businesses," Toshida said.

The Japanese executive, however, didn't elaborate on whether Honda will set up a manufacturing site or seek another local manufacturing partner, saying it will import cars and motorbikes from Japan and other areas during the initial period.

Since 1961 Honda has been working with Sanyang in making and marketing the Japanese brand of motorcycles and cars -- including the popular Accord and Civic models -- in Taiwan. But in recent years, the Taiwanese company has become a well-known motorcycle maker and a competitor to Honda.

Admitting that its partnership with Honda had broken up, San-yang said it will announce possible partners by the end of this month, said company spokesman Yeh Feng-ming (葉峰明).

"We began searching for a new partner in the middle of last year. With 40 years in this line of business, we have no intention to exit the market," Yeh said.

Yeh added that Honda's decision to end the partnership is in line with its global business strategy.

"Honda wants to establish a concrete organization worldwide with the appropriate resources; therefore they wanted to have direct control of Taiwan retail operations," Yeh said.

"We refused the offer," he added. Currently Honda holds a 12.52 percent stake in Sanyang.

But an industry source told the Taipei Times that Honda was aiming to take more control of Sanyang's board in order to help stem a slide in Taiwan sales as rivals expand imports following the nation's admission to the WTO on Jan. 1.

Honda's sales in Taiwan fell 44 percent last year to about 20,000 units, according to Honda.

"Honda will be experiencing short-term pain due to the lack of a domestic sales network. But since Honda is a strong and respected brand, we don't think the problem will be prolonged," said Yang Hsiang-chuan (楊湘泉), a manager at Hotai Motor Co (和泰汽車), which distributes Toyota automobiles in Taiwan.

But there's not going to be a significant impact on Taiwan's import car market as Honda cars made up less than 1.5 percent of total number of cars sold last year, Yang added.

Taiwan's automobile market contracted a sharp 17.4 percent last year, with about 347,000 cars being sold, down from more than 400,000 in the previous year. Meanwhile, the market for import cars in Taiwan shrank by 11.5 percent last year, though cars imported from Europe and Japan fared better than cars imported from the US and Korea, local media reported last week.

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