SYM Acquires 11.1% Stake in Indian PTW Maker Kinetic

Taipei, Jan. 13, 2006 (CENS)--Taiwan's powered two-wheeler (PTW) maker Sanyang Industry Co., Ltd. (SYM) recently acquired an 11.1% stake in Kinetic Motor Co., Ltd. Of India for about US$3.07 million, making it the first Taiwanese PTW brand to gain a foothold in the big Indian market, which has an annual sales volume of about six million units.

SYM promised that it would provide Kinetic with product models and technical transfers, and said that it would help Kinetic develop new products suitable for the Indian market. Kinetic is scheduled to introduce the first scooter model co-developed with SYM for local production by 2007; the new model will carry Kinetic logos.

SYM vice president Jiang Jin-yung said that his company did not exclude the possibility of increasing its shareholding in Kinetic in the future, but would continue to let Kinetic control operations.

According to Jiang, Kinetic Group was established in 1974 and now owns two PTW-manufacturing arms, including the flagship company Kinetic Motor, as well as Kinetic Engineer. Kinetic Engineer currently produces mainly geared motorcycles, while Kinetic Motor turns out gearless scooters (in 1984, Kinetic Motor became the first in India to introduce gearless scooter products). Both of the two firms are listed in India' s capital markets.

In 1998, Kinetic cooperated with the world's largest PTW brand, Honda of Japan. Honda, however, changed allegiances and tied up with another Indian partner to set up the Hero Honda joint venture. Kinetic's major rival, Bajaj, has cooperated with Kawasaki to set up a joint venture, further threatening Kinetic's market position.

Kinetic also has cooperated with other foreign partners, including Jet of Italy and Hyosung Motors of South Korea, procuring their parts and components, as well as model designs for local production.

With the tie-up with SYM, Jiang said, Kinetic would stop its cooperation ties with Hyosung and other foreign partners, and solely turn to SYM for parts procurement.

India is currently the world's No. 2 PTW market, trailing only mainland China, with an annual sales volume of about six million units. The large and rising market has attracted the attention of Taiwan' s PTW companies, which are seeking possible business development chances on the subcontinent.

According to industry sources, traditional geared motorcycle models now account for about 80% of the total sales in India's PTW market, while scooters take only about 15%. Taiwan PTW makers, which specialize more in the development and manufacturing of scooters, have not found much success in exporting models to India in the past few years.

SYM officials, however, point out that even a 15% share of the scooter market in India could represent an annual demand as high as 900, 000 units, which outstrips the total annual PTW sales volume in Taiwan.

In addition to the new project in India, a SYM official pointed out that SYM's application for setting up a PTW assembly plant in Indonesia is expected to receive permission soon from the local government. If everything goes smoothly, they added, the Indonesian facility would soon become SYM's second beachhead in Southeast Asia, following the big success of Sym' s Vietnam Manufacturing and Export Processing Co. Ltd. (VMEP) in Vietnam, currently the No. 2 PTW seller there.

Currently, SYM runs three major PTW production bases around the world, including one in Taiwan, one in mainland China, and one in Vietnam. In Taiwan, SYM also locally assembles Hyundai passenger cars, and plans to soon push locally assembled International trucks.