Yulon to Invest NT$8 B. to Double Annual Capacity to 240,000 Cars by 2018

Yulon Motor Co., the local assembler of Nissans and maker of Yulon Group's own LUXGENs, recently announced that it will kick off its global business deployment plan: continue expanding capacity over the next five years, more vigorously develop the LUXGEN brand worldwide, and develop alliances with international partners.

Yao Chen-hsiang, Yulon's new president, announced that the carmaker plans to invest NT$8 billion (US$266.7 million) to double automobile production capacity by 2018, the first in 20 years and the largest since Yulon was established 60 years ago, with such move based on foreseeable sales growth of LUXGENs overseas.

With 200-hectares ready behind its factory in Sanyi, central Taiwan, Yulon's annual production capacity at the plant over the next five years will double from 120,000 units to 240,000. The utilization rate at the factory is about 60%, about 80% of the output are models developed by Japanese partner Nissan, with 20% being LUXGENs.

Yulon Group operates auto plants in Taiwan, China, Russia and the Philippines. The Taiwan facility was expanded to 120,000 cars in annual capacity in 1991 from 60,000 units.

Yao pointed out that production of Nissans has been smooth. In conjunction with Yulon Group's plan to launch at least one new LUXGEN model yearly, it is estimated that the Sanyi facility's capacity will be filled in three years.

Taiwan has a modest new automobile market with annual new-car sales volume hovering at less than 400,000 units, Yao said, so the business growth of Yulon Group and its LUXGEN line rely mainly on exports. China has high potential for LUXGENs, and if the line is enlisted in trade agreement between Taiwan and China for duty exemption, Yulon's Taiwanese factory is expected to handle higher-end LUXGEN production for sale in China.

Yao also stressed that Yulon's factory in Taiwan also handles upgrading overseas production base in terms of technical level and management efficiency.

Yulon's production base in China is operated by Chinese subsidiary Dongfeng Yulon Motor Co., Ltd., a joint venture between Yulon and Chinese automaker Dongfeng. The facility kicked off mass production of LUXGENs in late 2011, and has continuously pushed several locally assembled models including LUXGEN7 SUV, LUXGEN7 MPV, and LUXGEN5 Sedan. Initial annual capacity at the Chinese factory is about 120,000 units, which will be expanded to 240,000 units soon, and as many as 500,000 units in targeted annual capacity by 2018, according to Yulon's previous announcement.

Yulon Group recently also kicked off production of LUXGENs by its Russian partner Derways Automobile Co.'s factory in Cherkessk, Russia with initial annual capacity of 100,000 units, with the Taiwanese group headquarters offering technical support.