China Motor Corp (中華汽車) yesterday said it is delaying the launch of new vehicle models designed by China’s SAIC Maxus Automotive Co (上汽大通汽車) and MG Motor in order to meet the government’s new localization content rules.
The company said it had planned to introduce one MG Motor model every year, including the new seven-seater multi-purpose vehicle Maxus G50 Plus later this year, but has been forced to readjust its plans due to the government’s new car assembly rules, which took effect this month.
The new regulations require carmakers to increase the share of locally manufactured components in new cars, which must account for 15 percent of total car parts during the first year, 25 percent in the second year and 35 percent in the third year.
Photo: Amy Yang, Taipei Times
“We are rearranging the introduction,” China Motor vice president Chien Ching-wu (錢經武) told an online investors’ conference yesterday. “The government’s new policy has affected our production progress and component imports. Before resuming the import of goods, we have to receive government approval by meeting the first-year requirement.”
Due to insufficient inventory of car components, China Motor last week halted taking new orders for its popular MG4 electric vehicle, Chien said, adding that they only accepted limited new orders for MG’s HS and ZH models.
Under current regulations, Chinese cars are banned from entering the Taiwanese market, so China Motor assembles MG Motor models in Taiwan using components mostly imported from China.
China Motor said it is working with partners to accelerate the adoption of locally manufactured components in order to re-start production of MG vehicles, but it would take longer for MG4 buyers to get the car they ordered.
The government’s new policy is posing risks to company profits for the second half of this year, since the restrictions are stricter than expected and went into effect in such short notice, China Motor said.
In the first half of this year, the MG series saw strong unit sales and boosted the company’s overall gross profit, the company said, adding that gross profits jumped 26.25 percent from NT$2.97 billion (US$93.35 million) in the same period last year to NT$3.75 billion.
The MG series accounted for about 40 percent of the company’s total revenue of NT$28.89 billion during the first half of the year, China Motor said.
China Motor reported 18.78 percent annual decline in net profit in the first half of the year to NT$2.46 billion, compared with NT$3.03 billion a year earlier, while earnings per share dropped from NT$5.55 to NT$4.5.
The company said the decline was due to higher non-operating income last year from its subsidiary, Tokio Marine Newa Insurance Corp (新安東京海上產險).
The insurance company booked NT$499 million in reversal of impairment losses from COVID-19 insurance claims for the first half of last year.
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