Branding of Taiwan's New Luxgen Cars: Sharing the Experience at 2009 TIBF

Homegrown automobile brands have always been a nearly impossible dream for Taiwan, where the domestic market is so limited (with annual sales peaking at 550,000 units but running at only 230,000 units or so during the past three years) that few companies would dare to try to make such a dream come true. The challenge is even greater amidst the current global economic downturn, during which even Toyota reported the first red ink in its history.

Nevertheless the Luxgen, the second try at own-branding by Taiwan's Yulon Group (the island's largest automobile manufacturing conglomerate), is entering the market with competitive products and a clear branding strategy. The people of Taiwan are eagerly looking forward to Luxgen's success, which-if it actually happens-will not only prove the development, innovation, and manufacturing capabilities of the local automotive industry, but will also give consumers around the world a chance to drive a high-tech vehicle that integrates Taiwan's well-respected information technology (IT), energy technology (ET), and vehicle industries.

K.C. Hu, president of the Luxgen Motor Co., unveiled the branding strategy for the Luxgen, the first model of which, a 2,200cc multi-purpose van (MPV), is scheduled for introduction late this year. A pure-electric or hybrid model may follow at the Taiwan International Branding Forum (TIBF) 2009.

Hu's sharing of his experiences at the branding forum answered questions about the timing for introducing own-brand cars, and eliminated some doubts about the firm's big investment in the Luxgen project.

The Yulon Group has poured about NT$20 billion (US$615.4 million at NT$32.5:US$1) into its own-brand dream so far, excluding the cost of mold/die development and the building of a new production facility.

Logic Thinks of New Brand

Yulon is facing tough new challenges in its effort to transform itself from a local assembler of foreign-brand cars (as the local assembler of Nissan, Mitsubishi, GM, and Chrysler models) and a recipient of foreign technology into a 100% carmaker with capabilities covering the gamut from product development to production.

"The logical thinking behind the Luxgen brand includes three major elements," Hu said: "resources, ice-breaking, and positioning. Most people will think about innovative technology when they see or hear about Audi, about exciting driving in a BMW, or about good quality and durability in a Toyota. Luxgen wants to integrate all available resources on the island and create a new car brand that incorporates Taiwan's strongest advantages and is able to outstrip Toyota."

"Taiwan already has some world-class nameplates in the international market," He commented, "such as High Tech Computer Corp. (HTC), which makes advanced and innovative smartphones that rival Apple's iPhones, and Acer, which is about to replace HP to become the world's second-largest notebook PC brand. Now, the island needs an international car brand because everything is ready for it-except for a company that dares to do it. Yulon is that company."

Yulon (Luxgen) is behind Toyota now, Hu conceded, but insisted that the combination of "Yulon + IT" will change the overall landscape-and that is the "icebreaker."

"Our icebreaker is simple," he explained. "We are using the Auto+IT concept to create an intelligent vehicle with the best touch feeling and quality, but with a price that is affordable; and we're using the Auto+ET concept to create leader-of-the-pack electric cars that save energy and reduce carbon emissions, and can become mobile power carriers as well-the electric vehicles can be recharged at night or during troughs in electricity use, and in the morning these mobile power-supply units can be driven to work where they can supply power for office buildings or public power grids."

So, Hu said, the Luxgen brand will be positioned as the world's first fully intelligent car and fully intelligent electric vehicle.

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Brand Values

Hu went on to say that Luxgen has several brand values: a brand thinking that is based on the user, that produces the world's first intelligent electric car, a leading status achieved by Auto+IT, integrated global competitiveness achieved by resource integration, and quality and safety.

User-based brand thinking, Hu explained, breaks away from the Yulon Group's former position as a local car assembler for more than 50 years without being allowed to make major changes to the car models that were developed by foreign automakers but sold in Taiwan. "What does Luxgen mean?" he asks. "It's a combined word of 'luxury' and 'genius.'"

Luxgen will introduce what Hu claims is the world's first intelligent electric vehicle, equipped with a world-leading THINK+ car PC developed by HTC. He said that the THINK+ car PC is also the world's first Win CE-based car computer that integrates multimedia entertainment, telecom, GPS navigation, vehicle safety, driver setting, and system programming functions into one unit. "That's a brand-new value never before seen on a new car, especially a pure electric vehicle."

Hu said that all the automotive-electronic driving-safety systems in Luxgen models are the most advanced available, and that they are even better than those found on most luxury car models. The world-leading "eagle-view" 360-degree surround-view system, for example, uses with four charge coupling device (CCD) cameras that surround the vehicle and provide all the image information a driver needs.

Luxgen's fourth brand value, according to Hu, is comprehensive product projects of the future that will bring together a complete product mixture to meet differing consumer needs. His company, Hu said, will be the first to introduce an MPV model, then a high-end version of the MPV, then an MPV CEO version, then a sport utility vehicle (SUV), and finally a model dubbed the "C-sedan." All of the models will offer both internal combustion engine (ICE) and pure-electric options at the same time.

Luxgen is pouring a lot of effort into the development of its products. The MPV CEO version, for example, will be equipped with an electronic-controlled high-tech partition wall between the driver and the rear-seat passengers. With the push of a button the glass partition will become totally opaque to protect the privacy of the rear-seat passengers; another push, and it will be transparent again. The petition will also act as a sound barrier to prevent the driver from hearing the passengers' conversation.

"Luxgen is a brand that integrates global resources from a long list of the world's leading tier-one auto-parts makers such as Aisin, Magna, Autoliv, Delphi, Mira, and Carreet," Hu said. "This helps make all our products superior in every respect."

"The new nameplate on the international automobile market is sure to become a big name that stresses product quality and safety. All of our models will be tested to the world's most stringent safety standards under the most challenging environments."

Other Values

As a brand-new car brand, Hu said, Luxgen is also aiming to create new service values that will make it stand out from other brands in all respects.

For example, the new brand will set up sales points specially designed to let consumers experience all the high-tech equipment on the cars. The first sales points will be in Taiwan, and the network will then be expanded to mainland China and other export markets.

Luxgen electric vehicles are also expected to create new energy-saving values. According to Hu, the power efficiency of conventional internal combustion engines is only about 16% (from oil well to vehicle wheels), compared with 20% for a hybrid car and 33% for a pure electric vehicle. The efficiency can be upped to a high of 78% if renewable power (such as solar or wind power) is used to recharge the batteries. "That means," Hu said, "that the pure electric vehicle provides the best solution in terms of power efficiency."

In addition, carbon-dioxide emissions from an internal combustion engine are more than 150 km/g, or 130 km/g for a hybrid system, but only 46 km/g for an electric vehicle (like the Tesla Roadster, for instance). The fuel consumed by an internal combustion car costs about NT$2.77 per km, which is about 15 times more than the NT$0.18 per km cost (at trough rates) of recharging an electric car.

"What Luxgen will promote are really good and attractive electric vehicles that can effectively attract consumers and create new energy-saving values thanks to the increasing popularity of such vehicles," Hu said. "Luxgen electric vehicles will absolutely be the leaders of the pack, because they will deliver eye-catching performance-a cruising range of 200 km to 300 km on a full charge, a maximum speed of 145 km per hour, acceleration from 0-100 km per hour in 8.6 seconds, a power output of 150 KW (or 204 horsepower), and a torque of 265 Nm.

"We have a very clear branding strategy for Luxgen products. We plan to kick off from Taiwan, then move into mainland China and the global market. Some potential customers have already contacted us and tested our vehicles, and all of their responses have been quite positive."

Right Time, Right Choice

Answering a question from the audience at the branding forum, Hu said that Yulon has been vigorously engaged in the Luxgen project for four or five years with the aim of developing real homegrown car products.

With Taiwan's domestic automobile market plunging to only about 220,000 units in 2008, Hu noted, "Yulon knew that we had to go the own-brand route, or otherwise we would be forever trapped on this small island using imported technology. Of course, Luxgen is targeting the market not only in Taiwan but the whole world-especially, in the initial stage, mainland China."

Regarding the timing of its first MPV product, Hu explained: "Almost everyone talks about product differentiation and innovation being important in this time of global economic recession, and of course we know that. But most people forget that any product differentiation or innovation made by a young or relative small company can be matched by the big automakers, with all their technical resources, within three months.

"What Luxgen is trying to do is integrate Taiwan's strong IT-industry infrastructure into our vehicles. There are so many world-class IT players in Taiwan, and their IT-related technological strength, as well as their know-how and expertise in related fields, far outstrip that of even the world's largest automakers such as GM and Toyota, so that we can often lead the market by two to three years."

Hu is very confident of the competitiveness of Luxgen products. "In recent years," he noted, "we have all felt that 'Made-in-Taiwan' has developed into a label that denotes high quality, high-level products, and medium-to-high prices-features which are especially recognized by Chinese people. That means we have a clear market positioning which is totally different from our Made-in-China, affordability-oriented rivals."

Hu pointed out that the huge market in China, where about 10 million new cars are expected to be sold each year, is the target of Luxgen vehicles because production volume is always the first priority of automakers.

"New cars sold in China," he went on, "are divided mainly into four levels in terms of quality and price: imported models, models made in China by local/foreign joint ventures, Korean cars, and independent local brands (made without direct technical partnerships with foreign car brands). Luxgen will be positioned between the first and second levels."