Booming Car Market in China to Drive ROI for Taiwanese Companies

Taipei, April 1, 2010 (CENS)--The downturn-defying new car market in China is expected to benefit automakers and auto-parts suppliers in Taiwan with reinvestment or business operations there.

Statistics compiled by the China Association of Automobile Manufacturers (CAAM) show that over 1.21 million new cars were sold in China in February, up 46% year-on-year (YoY), despite a long holiday in the month. In the first two months this year, some 2.88 million vehicles were sold, an 84% YoY increase.

Some 16 million new cars are expected to be sold in China this year, up 23% from about 13.6 million in 2009.

Yulon Nissan Motor Co., the local agent of Nissans and shareholder in Dongfeng Motor of China (the No. 3 automaker in China), said that Dongfeng sold about 100,000 new cars in the first two months, up about 100% YoY. In only two months, Yulon Nissan is expected to generate return on investment totaling US$15.7 million from its stake in Dongfeng.

Dongfeng aims to sell 600,000 new cars in China this year, or more likely 700,000 vehicles, which will equal some US$94 million in return on investment for Yulon Nissan.

China Motor Corp. (CMC), a subsidiary of the Yulon Group and assembler of Mitsubishis in Taiwan, said its reinvested Chinese automaker South East (Fujian) Motor Co., Ltd. (SEM) sold about 25,000 new cars in the first two months, a record high for the period, and is expected to generate for CMC net profits of about US$1.57 million. Some institutional investors estimated that SEM will likely sell about 130,000 new cars in China, to generate some US$9.4 million in ROI for CMC this year.

Tong Yang Industrial Co., Ltd., the world's largest maker of aftermarket (AM) plastic body-parts and a major original equipment (OE) body-parts supplier in China with 16 plants there, is expected to profit sizably from its reinvestments in the booming automobile market. Tong yang supplies parts to the top-10 automakers in China.

Kian Shen Metal Works Co., Ltd., a vehicle-frame maker under the Yulon Group, operates three factories in China, also expects to generate considerable ROI from its Chinese subsidiaries this year.