New President Steers Hota's Powertrain Division in New Directions

As part of a group restructuring and a move into a large new integrated plant in the Central Taiwan Science Park (CTSP), the Amstrong Industry Corp., maker of all-terrain vehicles (ATVs) to sell under its own AMS brand and the brands of international buyers, has been transformed into the powertrain division of the Hota Industrial Manufacturing Co., one of the handful of first-tier auto-parts suppliers in Taiwan.

Wu Juan-hung, an industry veteran with more than 30 years of experience working for various local auto and motorcycle manufacturers, was recently named president of the powertrain division. Even before he took over, he had a concrete blueprint for the division's future development.

Wu says that his division will continue to develop and manufacture high-end ATV products, because the market for such products remains strong and is especially suited to companies, like his own, that have competitive advantage in the small-batch, large-variety mode of production. Also, he goes on, he will try to diversify the division's product line to satisfy other niche markets using Hota's development and manufacturing strengths.

The division's current catalog offers several ATV models including youth ATVs with self-developed engines displacing 70cc, 90cc, and 110cc; 250cc sport/utility ATVs with either Piaggio engines or self-developed powertain systems); and 500cc ATVs with self-developed powertrains. The firm also makes ATVs for Italy's Piaggio.

"We're facing a rapidly changing global motorcycle market in which 42 million to 46 million units are sold every year," the president emphasizes. "We're now seeing several good and bad signs for our industry, including such positive signs as soaring fuel process that are driving up the demand for motorcycles, and improving living standards that stimulate willingness to buy in developing countries. Among the negative factors we face are ballooning steel prices and concerns about air pollution."

"As a Taiwan company, we're facing a demanding situation because there is no more room for Taiwanese suppliers in the small-displacement (under 250cc, say) segment. Big-displacement ATVs require heavy investment in product development, especially for powertrain systems, and companies that try to break in will feel extremely high pressure from established global brands and a big challenge from an inefficient economy of scale."

Investment in Competitiveness

Taiwan nevertheless has a respectable share of the over-250cc ATV market, thanks to strenuous efforts by leading local manufacturers such as Kwang Yang Motor (KYMCO brand), Sanyang Industry Co. (SYM), and Taiwan Golden Bee (TGB). Wu cautions that to maintain competitiveness in the big-bore market, which has long been controlled by a group of established international competitors, Taiwanese makers will have to invest more and more resources in R&D.

Taiwanese motorcycle and ATV makers, Wu observes, have opportunities for development of the upper-end big-bore market. "My personal opinion," he explains, "is that in the future powersports market small-displacement products will be replaced by electric or other renewable-energy systems. But there will still be a niche in the upper-end big-bore market, in which horsepower and sound rather than clean and quiet operation are the priority considerations."

In addition to their small-batch, large-variety mode of production, Taiwanese manufacturers are known around the world for their strong innovation, high quality, and competitive prices. And, Wu points out, "Hota's powertrain division will have even greater opportunities in the future, because we will be able to utilize all of the resources of the Hota Group-a world-class supplier of precision gears, transmission boxes and parts, and other precision auto parts that has plants in both mainland China and Taiwan."

In the future, he continues, his division will "continue to move forward with our ATV business, develop big-bore engines, and diversify our product lines to fill other niche markets."

His top priority as new president of the division is to diversify his product line so as to avoid the risk of putting all of his eggs in the same basket. "Product diversification has two major meanings for us," he says. "The first is that new products will keep our production lines, R&D team, and workforce moving. The second is that it will make use of the Hota Group's integrated strength to identify new niche markets."

While the group has strong technological capabilities, abundant R&D resources, and world-class manufacturing facilities, Wu notes, it lacks know-how in newly targeted businesses. To make up for that deficiency, the president says, "we will try to tie up with international partners with established advantage in different powersports markets. This will enable us to procure the know-how and key technologies in new fields that we need, and our partners will obtain high-quality and highly efficient manufacturing, more competitive costs, and more R&D resources."