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Sanyang braces for drop in sales

The Sanyang Industry Co (三陽工業) is bracing for a drop in domestic sales this year, despite a newly formed partnership with Hyundai Motor Co, the world's seventh largest automaker, Sanyang's chairman Huang Shi-hui (黃世惠) said last Saturday.

Huang, also chairman of the ChinFon Group (慶豐集團) which owns Sanyang, said this year's sales would be rough after the company terminated a 40-year partnership with Japan's second-largest automaker Honda Motor Co in January.

"There has long existed a stereotype about Korean vehicles among Taiwanese consumers -- that Korean cars are cheap and made poorly," said Sanyang Spokesman Yeh Fong-ming (葉峰明), citing unpleasant experiences with many Taiwanese consumers over the past decade.

"In the past some local sales agents for Korean brandnames did not offer appropriate after-sale services, with some even shutting down their businesses unexpectedly," Yeh said.

Sanyang is expected to sell as many as 16,000 cars this year, down about 5.9 percent from last year, according to Yeh.

"We still have an inventory of about 8,000 Honda vehicles that we must sell this year. And we also target sales of some 8,000 Hyundai cars this year," Yeh said.

Under the new pact with Hyundai, Sanyang will start to market and manufacture the Korean cars in Taiwan in the second half of the year, according to president Huang Kuang-wu (黃光武).

"We will initially introduce Hyundai's recreational Matrix and sporty Coupe [models] into the country," Huang said. "Then we will begin to manufacture Hyundai Elantra models -- both 1,600cc and 1,800cc sedans -- in September."

The Sanyang president declined to spell out the company's strategy for revamping the image of Korean vehicles, saying only that the company will "do its best" and "spend a lot money" to achieve that goal.

But he said the partnership with Hyundai is the company's best strategy for the Taiwan market.

"Together with Hyundai, which is the world's seventh largest automaker with an annual output of 2.6 million vehicles last year, I believe Sanyang will become one of the top-5 automobile companies in Taiwan next year and one of the top three in the domestic sedan market within the next three years," Huang said.

In fact, the ChinFon Group has been collaborating with Hyundai since November 1999 when Chin Chun Motor Co (慶眾汽車), an affiliated unit, formed a technology alliance with the Korean automaker to manufacture and sell Hyundai vehicles in Taiwan.

Over the last three years, Chin Chun has sold Hyundai's Atos-Prime, Santa Fe and Trajet models here, but will focus exclusively on Hyundai's XG line of luxury cars in the future, Huang said. "Sanyang will lead Chin Fon's auto business unit in the future," he added.

As for overhauling the local reputation of Korean-made cars, rival carmaker Formosa Automobile Corp (台塑汽車) executive vice president Tseng Sheng-cheng (曾盛誠) said "I'm not saying it is impossible. I'm saying it will take a lot of effort in terms of production, service and image."

Also troubled by its ties to Korea, Formosa rolled out its first automobile -- the Magnus -- at the end of 2000 through a technology pact with Korea's Daewoo Motor Co. Thus far Formosa has sold about 5,000 Magnus 2,000cc sedans in Taiwan.

"We had initially encountered consumer resistance while trying to market our cars," Tseng recalled.

But the company gradually made a turn-around last year by emphasizing its vehicles were a combination of local and European quality standard parts, Tseng said.

Formosa has fared well in selling its 1,300cc Matiz models since unveiling the new lineup in January this year.

"For the first four months we have sold 2,100 Matiz cars, with Nissan's March our biggest competitor in the market," Tseng said.

The company targets sales of 8,000 Matiz this year, he added.
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