KYMCO, SYM Mainland Subsidiaries to Produce Low-price Export PTWs

Taipei, April 10, 2006 (CENS)--Two major powered two-wheeler (PTW) manufacturers in Taiwan, the Kwang Yang Motor Co., Ltd. (KYMCO) and Sanyang Industry Co., Ltd. (SYM), have moved their production of PTWs with engine displacements below 150cc to plants in mainland China to take advantage of lower manufacturing costs there.

Both KYMCO and SYM's mainland China facilities have become production bases for models exported to Latin America, the Middle East, Africa, and South Korea, while their plants in Taiwan are responsible for production of higher-end PTWs, PTWs with engines larger than 250cc, and all terrain vehicle (ATV) models.

SYM president Hwang Kuang-wu recently warned that PTW makers in mainland China together exported more seven million PTWs in 2005, and that their products were quite price-competitive. He urged local companies to upgrade their product quality and design, as well as to develop more competitive models, to escape the fierce price competition with rivals across the Taiwan Strait.

Unless customers request that PTWs be manufactured in Taiwan, Huang pointed out, SYM plans to allow its plants in mainland China (the Xiashing Motorcycle Co., Ltd.) or Vietnam (Vietnam Manufacturing and Export Processing Co. Ltd., or VMEP) to produce scooters and light commercial motorcycle with engines less than 150cc to achieve higher cost competitiveness.

According to Huang, SYM has begun exporting lower-priced PTW products from Xiashing to customers in Latin America and the Middle East, and the company plans to allow its mainland China subsidiary to produce about 1, 500 PTWs ordered by a South Korea customer.

In addition to sales to the Association of Southeast Asian Nations (ASEAN) region, Huang added, VMEP has also begun exporting low-priced scooters and light motorcycles to the European market, with an initial annual volume of about 30, 000 units. The president stressed that the major purpose of the ongoing resource integration between SYM's plants in Taiwan, mainland China, and Vietnam is to further expand his company's export business.

A senior official of KYMCO, the No. 1 PTW maker in Taiwan, pointed out that the prices of mainland China-made PTW models are 20% to 30% lower than the prices of Taiwan-made counterparts in the same classes. This is why, a few years ago, KYMCO mapped out a tactic to escape price-cutting competition with mainland China rivals by more actively developing sales of 250cc, 300cc, and 500cc large-displacement scooters, motorcycles, and ATVs in the European market.

For low-priced scooter and motorcycle models for exports to Latin America, Africa, and the Middle East, KYMCO has commissioned its two subsidiaries in mainland China, the Changzhou Kwang Yang Motorcycle Co. (in Jiangsu province) and Hunan Kinlon Kwang Yang Motor Co. (in Hunan Province), to produce a total monthly volume of about 3, 000 to 4, 000 units.