Yulon Motor, Yulon-Nissan Motor officially operating independently

Taipei, Nov. 5, 2003 (CENS)--Taiwan's Yulon Motor Co., in partnership with Nissan Motor of Japan, was recently officially split into two independent companies to focus on different business operations.

For more active cooperation with Nissan, Yulon has been divided into two separate companies. The original operation is still named as Yulon Motor and will continue as a multi-focus auto manufacturer; the other is dubbed Yulon Nissan Motor Co. (YNM), a joint venture that will concentrate on the Nissan-brand business in Taiwan and the rest of Asia.

The management teams at both firms vowed to maintain the high profitability of Yulon's original operation, and claimed that the Yulon Group would have an annual auto production capacity of about 300,000 units in Taiwan and mainland China next year.

Yulon Group said that YNM, currently capitalized at NT$3 billion (US$88.24 million at US$1: NT$34), is scheduled to become listed on the Taiwan Stock Exchange in November next year. As YNM handles over half of Yulon Group's reinvestment business in mainland China, many institutional investors predicted that the new company would score annual earnings of over NT$5 billion (US$147.06 million) or NT$16 (US$0.47) in earnings per share in the future. The investors also predicted YNM's share price to exceed NT$100 (US$2.94) in the future to lead listed firms in traditional industries.

Soon after Yulon Group won approval Oct. 30 from the Ministry of Economic Affairs (MOEA) to carry out the separation project, it immediately completed a shareholding exchange with Nissan. Nissan used its original 25% stake in Yulon Motor to swap for a 40% stake in YNM (with Yulon owning the rest) and Yulon Motor's original capitalization was decreased from NT$18.3 billion to NT$13.7 billion (US$538.24 million to US$402.94 million).

Liu Yi-cheng and Chen Kuo-rong, new president of YNM and Yulon Motor, respectively, led their management teams to take part in the separation ceremony and made statements on their companies' visions in the future.

According to Liu, Nissan has achieved a high profit margin of over 11% under the direction of president and CEO Carlos Ghosn. After YNM becomes a global strategic partner with Nissan, Liu said that he believes Nissan would help YNM constantly upgrade its profitability.

Liu said that YNM's auto-production affiliate in mainland China, the Aeolus Motor Crop. (a 40-60 venture between Yulon and Dong Feng Automobile Group there to make Yulon-redesigned Nissan models), expects to produce and sell about 60,000 passenger cars this year. Liu said after the first stage of an aggressive capacity expansion project is completed in April next year, Aeolus' annual production volume will be boosted to 200,000 cars at least. That means, Liu added, Aeolus's capacity would first outstrip Yulon's in Taiwan for the first time next year.

Liu said that the sales volume of Nissan-brand cars is expected to stay at a high level of 68,000 units as seen this year and Yulon Group's cross-strait auto sales volume is expected to challenge the goal of 300,000 units next year.

According to Liu, Nissan plans to introduce six passenger car models for production in mainland China by 2006, which would fill Aeolus's maximum capacity and greatly upgrade YNM's profits from the reinvested affiliate.

Yulon Motor's Chen said his company's profit-earning ability would not be affected by the separation project. He said Yulon forecast to score net profit of NT$8 billion (US$235.29 million) this year. Some investors, however, predicted the firm's earnings to hit a higher level of NT$9 billion (US$264.71 million) this year.

Yulon Motor recently also announced an auto mobile information platform cooperation project with IBM Taiwan. The two companies would jointly work to become a pioneer and leader in providing value-chain information services to car drivers in the Greater China.

Yulon Motor said that it developed the TOBE mobile information platform system services in mid-2002 to provide drivers with traffic, restaurant, recreational and entertainment information. In a bid to develop the closed TOBE system into a more open one, Yulon sought cooperation ties with IBM Taiwan, which, however, decided to expand the contract case to a comprehensive cooperation project to jointly develop the potential business.