Taiwan's auto maker China Motor Corp., in partnership with Mitsubishi Motors of Japan, recently announced that its mainland China subsidiary South East Motor Corp. (a auto production venture with Fujian Motor Group in Fujian Province, China), has won the permission from China's central government to locally produce the Verycaa mini commercial/recreational mini-van model developed by the Taiwan parent company. South East is an auto-production venture established in cooperation with Fujian Motor Group in Fujian Province.

China Motor statesclaims that the Veryca go-aheadproduction permission has major implications forto South East's operations, and that including the new model will be a "secret weapon" that willto help South East to achieve itsa annual production- volume goal of 150,000 units next year. It will also , and fill athe vacancy in of South East's product line-up that will help it in its goal to in the segment to become a comprehensive-range auto supplier maker outside ofexcept heavy-duty trucks and buses.

Taiwan's China Motor has been actively developing its auto-production business in China in recent years. In addition to the South East venture-- (established in 1995 and today currently one of the top -10 auto producersmaker in China--), the Taiwan company recently also reached an agreement with DaimlerChrysler AG and Fujian Motor Group to set up the DaimlerChrysler Vans (China) Co. (DCVC) in Fuzhou, Fujian Province to produce Mercedes-Benz commercial vans and trucks. At South East, China Motor has continuously introduced itsthe Freeca and Delica commerical vehicles, Lioncel (Lancer in Taiwan) compact sedan, and Soveran (the Savrin) multi-purpose sedan models for the production in China.



Tchina Motor says that the Veryca is expected to hitbe made available on the to be pushed into mainland China market in late this year, with an anticipated monthly sales volume of about 3,000 units by South East.

South East launchedstarted production of the Soveran multi-purpose sedan in the second quarter this year, and is moving to date has sold 3,000 to 4,0000 units of the model per month. ItThe mainland auto maker sold 83,000 autos in toto last year, and the figure is expected to reach 120,000 units this year.

Taccording to China Motor's product-line deployment in China, the Veryca will be China Motor's entry in is expected to tap both the light passenger/recreational van and light commercial- vehicle segments. Last year, total sales volume in the two segments in mainland China reached 1.14 million units.

The firmChina Motor says that with achievement of that South East's annual sales goal of 150,000 autos is the latter's fexpected to further consolidate the mainland subsidiary's foothold in the huge but extremely competitive market will be consolidated,; increase the exports of Taiwan-made auto parts for several car models produced in China; will be substantially increased, and greatly cut costs for of the car models simultaneously produced on the both sides of the Taiwan Strait will be markedly reduced, leading to much enhanced which means higher competitiveness.

Assuring Access to New ModelsWay to Assure Product Lines

On another front, China Motor Corp. recently sates that its injection of also claimed that its capital-injection project into Mitsubishi Motors Corp. of Japan adds would to further assurancese it cans obtain rights to desired getting of the targeted car and commercial- vehicle models from the Japanese technical partner for the production at South East.

It China Motor recently promised to inject 10 billion yYen into Mitsubishi, helping the latter with its 's corporate overhaul plans and in returnget receiving a minor stake in itsthe long-term Japanese partner.

China Motor president Su Ching-yang points out that his company is in talks with Mitsubishi over such issues as the use of issues of hanging Mitsubishi's three-diamond logo on the car models produced and marketed by South East in China.

One of South East's mainland rivals, the Beijing Jeep Corp., has recently continuously introduced two Mitsubishi-designed sport- utility vehicle (SUV) models for production in China recently, including the Challenger and Outlander, and iswas reportedly planning to acquire production rights to strive for more Mitsubishi automobile models for production in the future. China Motor's For the possible threat to South East, Su says, however, that Beijing Jeep and Mitsubishi signed the SUV-production authorization agreement in over two years ago and that he expects no further cooperation agreements to be inked.

There should be no longer other Mitsubishi model to be produced by the Chinese auto maker in the same cooperation mode.

Su explains that China Motor's promise to inject 10 billion yYen into Mitsubishi, he states, was to assure South East would be Mitsubishi's sole cooperation partner in mainland China in the future, assuring it unfettered access to models and let the mainland subsidiary get needed car models continuously and smoothly from the Japanese firmtechnical partner.



According to China Motor, South East's Soveran is priced at 250,000 renminbi, and the Veryca will be priced at 250,000 and 60,000 rRenminbi (RMB), receptively. Some industry observers feel doubt these prices arewould be too high to make the modelsbe competitive in the fierce price-cutting mainland auto-sales environmentcompetitions in the mainland automobile market, in which the price for a general compact passenger car has fallen to under 50,000 RMB.

South East, in fact, has already adjusted down the prices for its Freeca, Delica, and Lioncel models to under -100,000 RMB in a bid to confront what President Suthe deems "unreasonable price-cutting competition.s" described by Su, He believes who deems that the automobile-production industry in China is headed for a would soon enter a reshuffle period of consolidation in which to weed out smaller and weaker players will be weeded out, stating .

Su claims that South East will face the serious challenges by upgrading its local-content rates, cutting costs, and continuously os introducing newer andmore competitive products from Taiwan and Japan.