Kia Looks for Assembly Contractors of Passenger Cars, Commercial Vehicles in Taiwan

Taipei, Aug. 10, 2006 (CENS)--Kia Motors Corp. of South Korea is actively trying to find assembly contractors of both passenger-cars and commercial-vehicles in Taiwan through its local passenger-car exclusive-distributor Yuntung Motors Ltd. (a member of the Taikoo Motors Group) and commercial-vehicle agent Yung Fong Group.

Some local automakers are enthusiastic to win Kia's assembly contracts in Taiwan, including Chin Chung Motor Co. of the Sanyang Group, Formosa Automobile Corp. (the local maker of some Daewoo cars and local agent of Skoda passenger cars), and Yulon Motor Co. (the local assembler of Nissan and GM cars).

Some executives at Yuntung pointed out recently that the Taikoo Group does not rule out the possibility to commission a local assembler for a Japanese brand to supply the Kia models made in Taiwan. Most industry insiders feel that Taikoo officials have implied to cooperate with Yulon, which has transformed into a specialized auto-assembly contractor for different brands.

Formosa Automobile, which faces do-or-die as its production contract for some Daewoo cars expires by the end of the year, is aggressively trying to win the assembly contracts. In addition to the opportunities with Kia, industry insiders pointed out, Formosa Automobile executives have been earnestly calling on different international carmakers, trying to win some local-assembly work to avoid withdrawing from the auto-production business.

Chin Chung, the former local assembler of Volkswagen T4 commercial/recreational vans, has terminated its work for the German carmaker and transformed into a specialized assembly contractor for the Sanyang Group, plus the company now supplies locally-assembled Hyundai cars and some military trucks to the government, through a government bid project.

Since Hyundai and Kia are both Korean makes with a high ratio of shared parts, industry sources say that Chin Chung has some relative advantages in winning the Kia contract due to cost-savings from joint development of key parts.

Some industry sources say that Chin Chung has become tepid in its interest to win the Kia contract after having acquired the governmental contract to produce locally more than 4,000 military trucks; while other insiders say, however, that the Hyundai Group might not to let the Sanyang (Chinfong) Group handle all its automobile businesses in Taiwan.

Still, other insiders say that the Hyundai Group would first achieve consensus among its own people as the Hyundai and Kia operations for passenger cars and commercial vehicles are handled by different divisions.

Another consideration for the South Korean automobile conglomerate, industry sources say, is to keep Hyundai's sales advantage and competitiveness in Taiwan from being easily compromised by Kia.