Yulon Group Tries Again to Build Own-brand Vehicle

Consistently reported in the media and perceived as a local automotive brand committed long-term to developing homegrown cars, the Yulon Group, whose birth was likely spawned by the Japanese Datsun label in the 1960s, tried and failed some 20 years ago, is now fully ready to take on such a monumental challenge under a new climate.

Besides focusing on building own labeled cars, Yulon Group has been diversifying-morphing into a sizable conglomerate comprising various businesses, including local assembly of Nissans, Mitsubishis, GMs, and Chryslers; and textile as well as high-tech interests.

The burden to realize the above dream is on the shoulders of the second-generation corporate captain, Kenneth Yen, CEO of the group, who is obliged to carry on where his parents (founders and pioneers in early days of the group), have left off, as well as build the Yulon Group into a not only a sustainable concern, but also one even bigger and stronger.

Times have changed significantly. Yulon floundered with the Feeling 101, its first attempt to build its own car, mainly due to, ironically, inability to stand up fully on its won-with foreign technical partners unwilling to offer needed help, weak confidence in local consumers, and modest domestic market. Now, Yulon has accumulated considerable, redesign, development, and manufacturing experience and know-how from operating its automobile-manufacturing business. And the small domestic market not as much of an issue-with the huge, booming mainland Chinese automotive market holding ample promise.

In a recent personal interview by the local Chinese-language economic daily newspaper Economic Daily News (EDN), Yen said that now is the best time to start developing its own-brand car, stressing that he already regrets it for not having done so in the past few years. "Investing over NT$10 billion (US$327.9 million at US$1: NT$30.5) in such a project is absolutely not a gamble but a well-calculated plan," Yen said firmly. "I have set the cutoff and backup points, so our plan simply won't jeopardize the fundamentals of the Yulon Group."

Will Behind the Mission

CEO Yen credits his father Yen Tjing-ling's commitment to building own car engine for driving him towards the mission to develop a Yulon-branded car. The less-than-successful Feeling 101 homegrown passenger-car project in 1987 was not a total failure, as a sizable team of young, talented engineers cultivated from such experience now make up the main group management.

"China's automobile market has been growing rapidly and is catching up in size to that in the United States," Yen pointed out. "And Yulon has tapped such growth across the Taiwan Strait-having reinvested in several joint ventures, including the South East (Fujian) Motor Co., Ltd. (SEM); Guangzhou Aeolus Automobile Co. etc., from which the group has gained more experience and know-how."

There still exists room for development in a market with both independent brands (developed by local automakers) and joint-venture car brands (developed by local and foreign automakers), Yen said, but "Yulon is trying to carve a niche between such brands that bears high growth potential," the CEO explained.

"The car segment in China has evolved, where a car has to be more than merely four wheels plus an engine," Yen stated, "any prospective carmaker has to adopt a quality-oriented strategy. Ours is to cull the R&D expertise achieved in Taiwan's technology industry to build smarter cars, which I think would be feasible in China."

Reiterating the importance of such strategy, he said that any car launched is doomed for failure without being backed by definitive, effective strategies. "Yulon's failure 20 years ago with the Feeling 101 has taught us precious lessons to show the group where to go and what to do in the future," the youthful CEO said. "Building a Yulon-branded car is my mission, failing which will leave me in shame."

Window of Opportunity

Judging from the economic development in China, the CEO said, the window of opportunity is opening now to build own-branded cars, with such window to close for newcomers in the future.

"Every major automobile conglomerate in China is groping to find the best way to build own-brand cars based on individual advantages," Yen pointed out. "Yulon's strategy revolves around differentiation and segmentation, trying to integrate Taiwan's technology achievements into building cars. The group is at a key crossroad with the right time, location and personnel."

The CEO said that Yulon has all the necessary ingredients to build its own-brand car, having cultivated business, automotive manufacturing know-how and its senior managers under the right setting. "To merely continue assembling cars or engage in simple development works for foreign technical partners would leave Yulon short of its key mission. It would be regretful not to explore the enormous China market by tapping the available resources in our portfolio."

"Second" Homegrown Vehicle

In Taiwan, Yen said, Yulon's "second" homegrown car labeled LUXGEN, would be launched the end of this year or early 2009, while in China by the end of 2009; while the most urgent work to be done remains, according to Yen, quality-related.

To make cars for the targeted Chinese market, Yulon plans to set up a plant in Hangzhou of Zhejiang Province. Yen pointed out that the key to make marketable cars is to set up quality-stringent supply chains. Building the auto plant in Hangzhou enables Yulon, expectedly, to access needed auto parts from high-quality suppliers clustered in Shanghai and neighboring areas. In addition, he added, Zhejiang has a big, affluent population that would be a sizable local market.

Yen repeated that offering quality, different cars is the way to stand out in the competitive China market with so many international players.

Luxury 7-Seat MPV

Yen confirmed that the first LUXGEN-branded vehicle is a seven-seat luxury multi-purpose vehicle (MPV) with a 2,200cc turbocharged engine (developed by Advance Power Investment Co., Ltd., or CECTEK, of Yulon Group). This new MPV will be equipped with many advanced automotive-electronics and equipment developed by Yulon affiliates or other auto-parts makers in Taiwan.

LUXGEN, according to Yen, is a cross between the words luxury and genius that ideally reflects the MPV's product position. To promote the own-brand, Yulon Group has set up the LUXGEN Life Concept Hall in showrooms to introduce it to the public.

Yulon said that virtually all the needed tests and pre-production work are done for the first LUXGEN MPV, whose chassis has been upgraded by Yulon from the last-generation Renault Espace. The new MPV will have many optional advanced electronic equipment, such as 360-degree vehicle-body viewing system, night-vision system, lane departure warning system (LDWS), anti-collision system etc. The LUXGEN MPV competes against popular rivals as the GM GL8, Honda Odyssey, Ford S-Max, Toyota Previa etc.

Yulon Group's Scope of Business
	Affiliates
Automobile	Taiwan: Yulon Motor Co. (Nissan), China Motor Corp. (Mitsubishi), Yulon Nissan Motor Co., Yulon GM Motor Co., Chrysler Taiwan, Fortune Motors, Yuchia Motor Co., Ltd., Yuhsin Motor Co., Ltd., Yushin Motor Co., Ltd.
	Mainland China: Guangzhou Aeolus Motor Co., South East (Fujian) Motor Co., Ltd.
	The Philippines: Nissan Motor Philippines Inc. (NMPI)
Textile	Taiwan: Taiyuen Textile Co., Ltd., Diamond Hosiery & Thread Co., Ltd., Carinival Industrial Corp.
	Mainland China: Dezhou Yuanji Textile Co., Ltd., Zhong Shan Yuanling Garments Co., Ltd., Wuxi HuJiah Garments Co., Ltd.
	South Africa: Tai Yuen Textile (SA) Pty.
	Vietnam: Li-Yuen Garment Co., Ltd.
High-tech	Taiwan: Altek Corp., Taiwan Mask Corp., Myson Century Inc., Chingis Technology Corp.
	Mainland China: Altek (Kunshan) Co., Ltd.