Yulon to Raise Capital for Subsidiary Luxgen Motor

Taipei, Dec. 4, 2012 (CENS)--To further develop exports of its LUXGEN line, Yulon Group of Taiwan, the largest carmaker in Taiwan, recently announced a NT$1.2 billion (US$40 million) cash capital increase for subsidiary Luxgen Motor Co., Ltd., to be underwritten by the group flagship company Yulon Motor Co. (with 80% stake in Luxgen Motor) and Tai Yuen Textile Co. Ltd. (20%).

Yulon had already announced to issue NT$6 billion (US$200 million) in unsecured corporate bonds in August 2012 to raise capital to accelerate LUXGEN sales in China.

According to Yulon, the capital raised for Luxgen Motor will be used to develop the brand in Russia, as well as distribution-chains, new product development and branding in Taiwan. In addition to developing new and attractive models, Yulon said, branding and sales network development are even more important for LUXGEN.

To create its LUXGEN brand, Yulon has invested over NT$10 billion (US$333.3 million) into vehicle development in the past few years. Due to the modestly sized automobile market in Taiwan, the group has been targeting selling LUXGENs overseas, so far having exported LUXGENs to Latin America and Southeast Asia, as well as setting up a joint venture, Dongfeng Yulon Motor Co., in China with Chinese automaker Dongfeng to locally assemble and sell cars.

Yulon's new export market is Russia, which just became a World Trade Organization (WTO) member in 2012, where new-car sales have rapidly increased to about three million units per year.