Hyundai comes to rescue of Sanyang Industrial Co

Hyundai Motor Co, Korea's largest automaker, will allow Taiwan's Sanyang Industrial Co (三陽工業) to make its brand of automobiles, preventing the company from shutting down after Honda Motor Co pulled out of a 40-year partnership.

Honda, Japan's second-largest automaker, severed ties with Sanyang in January to set up its own Taiwan subsidiary to sell automobiles.

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.

Toshida declined to spell out the reason for the break-up at a press conference held in Taipei, saying only that the new firm will "reduce production costs" and "increase competitiveness."

But Honda may have pulled out because of Sanyang's decision to buy three vehicle companies in China and Vietnam in 2000 from parent ChinFon Group (慶豐), local media have said.

"Sanyang will stop making Honda automobiles after our parts inventory is diminished, but Hyundai will revive us," spokesman Yeh Fong-ming (葉峰明) said.

Sanyang plans to convert its production lines to Hyundai's specifications by September and produce 4,000 Hyundai cars this year, Yeh said. Sanyang plans to produce about 6,000 Honda cars this year, compared with 17,000 in 2001.

Honda last accounted for about 6 percent of Taiwan's vehicle market, including cars imported from Japan.

Amid the nation's worst recession on record, Taiwan's automobile market contracted a sharp 17.4 percent last year, with about 347,433 cars sold, down from more than 420,467 the previous year, local media reported, citing statistics from the Ministry of Transportation and Communications.

While some industry experts have expressed optimism that sales would recover in the third quarter of the year if the domestic economy rebounds, consumers may remain cautious, said Jeffrey Shen (沈英銓), president of Ford Lio Ho Motor Co (福特六和).

"Our studies found that sales will be about 350,000 units this year," Shen told the Taipei Times during an interview in early March.