Taiwan-Developed Engine To Power Chinese Autos

Senior officials of Taiwan's China Engine Co. have confirmed that they will be producing a locally developed 1,200cc eight-valve auto engine at a joint-venture plant in Fuzhou, just across the Taiwan Strait.

The officials say that the joint venture has been established with three major shareholders: China Engine and China Motor Corp. of Taiwan along with the mainland's Fujian Automobile Industry Group Co., a company owned by the Fujian provincial government.

China Motor and China Engine are both affiliates of the Yulon Group, the largest auto conglomerate in Taiwan.

The mainland venture, dubbed Fuzhou China Engine and capitalized at US$7.5 million, is scheduled to turn out 15,000 to 20,000 engines in its first year of production. The engines will go to South East Motor Corp., a joint venture between Fujian Automobile and China Motor which produces commercial vehicles in Fujian Province. Pressure to keep costs and prices down is coming from a candidate engine supplier, Dongan Engine Co., which is a joint venture between Mitsubishi Motors of Japan and Harbin Hafei Auto Manufacturing Co. of the mainland.

The China Engine officials say that they are also in intensive talks with Shanghai General Motors about supplying engines for use in the Sail (the local version of the European "Corsa") mini cars produced there. Shanghai GM has reportedly installed the engine in some Sail vehicles for testing.

China Engine has received permission from Taiwan's government to invest in the mainland, but is keeping a low profile about the project because it is 20% government-owned.

The executives report that Fuzhou China Engine recently leased a plant and is in the process of installing production equipment. Mass production is scheduled to begin soon, using parts from suppliers in both Taiwan and the mainland.

In Taiwan, China Engine is developing a 1,300cc 16-valve engine together with the Mechanical Industry Research Laboratories (MIRL), a unit of the Industrial Technology Research Institute (ITRI). After pouring about NT$400 million (US$11.5 million at NT$34.9:US$1) into the project, China Engine says that it is about ready for mass production of the new engine in Taiwan--and possibly, in the future, in the mainland as well.

The 1,300cc engine is designed specifically for mini commercial vehicles such as the Veryca made by China Motor in Taiwan, which is soon to be produced in the mainland by South East.

China Engine also has plans to manufacture a new engine designed for passenger cars It may go into the Sentra sedan, which is scheduled to go into production in the middle of this year at a plant in Guangdong Province operated by Aeolus Motor Corp. Aeolus is a joint venture between Taiwan's Yulon and the mainland's Dong Feng Automobile Group, the third-largest auto conglomerate in China.

Industry sources report that China Engine started cooperating with MIRL in a government-sponsored effort to develop a homegrown auto engine about two years ago. The two partners have developed a modularized platform for engines with displacements ranging from 1,600cc to 2,000cc, but there are as yet no plans to use the engine in commercial production.

China Engine officials say that a good opportunity to use the engine is coming up, however, as South East is expected to win permission soon for the production of their redesigned Mitsubishi Lancer and Virage models. Production is expected to begin almost immediately thereafter.