Yulon Motor Co (裕隆汽車) yesterday said it expects no significant impairment losses from its Chinese venture this year, but refrained from commenting on whether it would return to profit this year.
“As far as we can see, Yulon is close to fully booking the impairment losses from Dongfeng Yulon Motor Co [東風裕隆], as its cash flow” has improved, Yulon president Yao Chen-hsiang (姚振祥) told a teleconference with investors.
Potential impairment losses this year should have a mild impact on Yulon, Yao said.
The company is struggling to turn around its own-brand vehicle business and expects to sell about 3,500 units per month in Taiwan this year — above the breakeven point of 2,000 vehicles per month, it said.
Last year, the company reported record-high losses of NT$24.47 billion (US$814.82 million), mainly dragged by asset impairment losses of NT$17.6 billion — including bad debts from Dongfeng Yulon, a joint venture with China’s Dongfeng Automobile Co (東風汽車); losses from Yulon’s own-brand vehicle unit Luxgen Motor Co (納智捷); and its research unit Hua-chuang Automobile Information Technical Center (華創車電).
Yulon last year sold only 2,000 Luxgen vehicles in China, it said.
As part of its turnaround efforts, Yulon is focusing on rejuvenating its idle assets to generate more cash and on developing next-generation vehicles, such as electric and autonomous vehicles, via a joint venture with Hon Hai Precision Industry Co (鴻海精密).
The first vehicle developed by the venture, called the MBU series, would hit the market in the middle of next year at the earliest and mainly target overseas markets, Yao said.
Yulon showcased its first MBU model, a sport utility vehicle under the Luxgen brand, during the Taipei International Auto Show in December last year.
The company expects its commercial real-estate development project in New Taipei City’s Sindian District (新店) to start contributing to revenue next year upon its completion in the fourth quarter of next year.
It expects the project to yield about NT$400 million in rent per year.
Sales of new vehicles in Taiwan are forecast to shrink 1.1 percent annually this year to 422,000 units — the lowest since 2015, even without factoring in the impact from the COVID-19 pandemic, Yulon said.
The company will closely monitor the impact of the pandemic on the local market, it said, after the IMF on Tuesday predicted that Taiwan’s economy would contract by 4 percent this year.
A weak economy might reduce household income and affect consumer demand for big-ticket items such as vehicles, it added.
Yulon aims to sell 6,000 Luxgen vehicles domestically this year, same as last year, it said.
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