Taiwan-based China Motor Reports Good News from Chinese Affiliate

Taipei, Dec. 17, 2009 (CENS)--Taiwan-based automaker China Motor Corp. (CMC), which locally assembles Mitsubishis and Chryslers, recently said that its reinvested mainland Chinese affiliate South East (Fujian) Motor Co., Ltd. (SEM) achieved monthly sales of 11,000 vehicles in November.

CMC attributed SEM's rosy performance to excellent sales of the competitively-priced Lancer EX compact sedan in the booming Chinese market. SEM is expected to sell another 12,000 new cars in December, bringing the 2009 sales volume to about 80,000 vehicles, CMC said.

This year SEM began turning profitable in September, but the Chinese affiliate might not post a profit by the year-end due to losses in the first eight months.

SEM's eye-catching sales also forced parts suppliers to work overtime. Some 35 Taiwan-based first-tier parts suppliers went to China to set up factories with SEM in 1997. According to some of these Taiwan-based suppliers, SEM's production volume has been steadily increasing and the automaker plans to produce 7,000 V3 sedans, 4,000 Lancer EX sedans, and other models such as Delica and Zinger commercial vehicles. So, the parts suppliers are forced to turn out urgently needed items on daily three-shift production schedule.

A senior executive at CMC pointed out that SEM launched the 1,500cc V3 sedan priced at less than 60,000 renminbi (RMB, or Chinese yuan) in the fourth quarter of 2008. The V3 qualifies for official commodity-tax-reduction subsidies in China for under-1600cc cars. Since February, monthly demand for V3s has been 5,000 to 6,000 vehicles, but SEM's engine production line could not keep up to rushing orders, until another engine supplier had been found in August.

The CMC executive added that SEM's hot sales are expected to continue for the remainder of this month, achieving an annual total volume of 80,000 to 85,000 vehicles in 2009, with annual shipments in 2010 to reach an expected 100,000 vehicles.

Major auto-parts suppliers directly supply products to SEM with factories in Fuzhou, Fujian Province including Tong Yang Industrial Co., Ltd. (plastic auto body parts), Shihlin Electric & Engineering Corp. (alternators, starter motors, cooling fans, power windows etc.), Right Way Industrial Co., Ltd. (engine pistons, connecting rods, steering system etc.), Ta Yih Industrial Co. (auto lamps), Yuan Feng Industrial Co., Ltd. (aluminum and steel wheel rims), Cheng Shin Rubber Ind. Co. Ltd. (rubber tires).

Institutional investors said that these Taiwan-based parts suppliers in China are expected to benefit from SEM's increasing sales.