Taiwan's motorbike giant KYMCO to tap Indian market by year-end

Taipei, April 27, 2005 (CENS)--Kwang Yang Motor Co., Ltd. (KYMCO), the No. 1 powered two-wheeler (PTW) maker in Taiwan, has decided to cooperate with a partner in India to tap the world's second-largest PTW market by the end of the year.

KYMCO said that it would first ship PTW parts and components produced in Taiwan and mainland China to India, which will then be assembled into complete PTWs there.

KYMCO chairman Ke Hung-ming and president Wang Shuen-ching made the statement at a recent shareholders' meeting. They said that the annual PTW demand of the Indian market is expected to reach 5.6 million units this year, making it the world's second-largest PTW market trailing mainland China.

KYMCO will send a group of representatives late this month to India to negotiate with four to five PTW makers there, including Eicher and Majesty Auto, etc.

KYMCO officials claimed that their company will soon finalize its strategy for penetrating the Indian market, including setting up a wholly-owned plant, joint ventures, or undertaking technical cooperation ties with partners there.

As plant construction will take least one year to complete, KYMCO plans to first ship parts for local assembly in India by the end of the year. The company has redesigned a cargo motorcycle model and a engine based on its previous KTR model for tapping the new market.

KYMCO's senior officials said that the Indian PTW market has witnessed a double-digit annual growth in recent years, and that the Indian government has imposed no ban on the establishment of PTW plants or joint ventures in the nation by foreigners.

So far, Japan's Yamaha, Honda and Suzuki have set up joint ventures in India. Currently, Hero Honda is the largest PTW joint venture in India while local Babaj Auto is the No. 1 PTW seller in the market with annual sales volume of two million to 2.5 million units. Industry sources said that KYMCO's deployment in India also paves the way for its penetration of the neighboring markets of the Middle East and South Asia.

KYMCO's major rival in Taiwan, Sanyang Industry Co., Ltd. (SYM), is also actively evaluating the feasibility of developing sales of PTWs in India. According to SYM officials, the firm contacted an Indian PTW maker, Kinetic, when visiting India as a member of a trade delegation organized by the Taiwan External Trade Development Council (TAITRA) last year. But both parties can hardly reach agreements on cooperation details, SYM may move to find other possible partners there.

Due to the price hikes of steel and plastic materials, Ke said at the shareholders' meeting, KYMCO expects to have pretax earnings slightly drop to NT$2 billion (US$63.29 million at US$1: NT$31.6) this year from last year's NT$2.18 billion..

Last year, KYMCO delivered a total of 491,844 PTWs, all terrain vehicles (ATVs), and electric scooters, up 16.61% from 2003 and including 259,604 units sold in the domestic market (for a 33.6% share) and 232,240 units exported.

KYMCO aims to supply 35% of the domestic market demand of 715,000 units this year. The company sold 59,306 PTWs in Taiwan in the first quarter, gaining a 34.5% share of the domestic market, and is expected to maintain its No. 1-seller position for the sixth consecutive year.

Currently, shipments of PTWs and ATVs to Europe account for 80% of KYMCO's exports.