Kwang Yang Motor Co (光陽工業), which sells scooters and motorcycles under the KYMCO (光陽) brand, yesterday said it is under mounting pressure to increase prices amid a surge in raw material costs.
Local scooter and motorcycle manufacturers have so far absorbed rising costs to avoid scaring away consumers, while automakers have adjusted prices upward by 3 to 5 percent to reflect cost pressure.
“Based on changes in prices for raw materials, Kwang Yang faces an increase of more than NT$1 billion (US$35.6 billion) in costs this year,” Kwang Yang chairman Allen Ko (柯勝峰) told reporters on the sidelines of a media briefing in Changhua County yesterday, at which the firm introduced its new AK550 Super Touring scooter.
Photo: Yen Hung-chun, Taipei Times
“Hiking prices and reducing promotional activities is becoming inevitable,” Ko said.
He did not disclose how much prices would need to rise to cover the additional costs, despite market speculation that local scooter manufacturers are looking at a 5 percent hike as prices for materials used in scooter chassis, exhaust pipes and tires have increased.
The COVID-19 pandemic has significantly dampened scooter and motorcycle sales in Taiwan as people have avoided going out and curtailed spending on big-ticket items amid economic uncertainty, Kwang Yang said.
“The market will see a significant decline this year,” Ko said.
Scooter sales are expected to contract about 18 percent this year to about 850,000 units, compared with 1.03 million units last year, the company said.
Kwang Yang expects sales of gasoline-powered scooters in Taiwan to hold steady next year, as the pandemic is under control in the nation, Ko said, adding that Kwang Yang aims to defend its No. 1 position next year.
He said that he is optimistic about sales of electric scooters next year on the back of an extension of a government subsidy program.
He did not provide a detailed forecast of electric scooter sales.
Kwang Yang said it is Taiwan’s No. 2 electric scooter maker after Gogoro Inc (睿能創意).
It plans to expand its battery-swapping stations and aims to boost the number of its distributors to 100 next year from 30 this year, Kwang Yang said.
The company’s overseas expansion is expected to start bearing fruit next year as it makes inroads into the European market, Ko said.
It has resumed talks with potential partners to sell its scooters and Ionex battery-swapping system as the COVID-19 situation has improved, he said.
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