New TTVMA Chairman Urges Integration of Automotive, ICT Industries

Liu Yi-cheng, president of Yulon Nissan Motor Co. was recently elected as the 21st chairman of the Taiwan Transportation Vehicle Manufacturers' Association (TTVMA).

The new chairman urged Taiwan's government to lift the existing ban on "Three Direct Links" with mainland China as soon as possible so local vehicle manufacturers can gain more efficient access to that market. Liu also suggested that auto-parts makers cooperate with Taiwan's information technology (IT) industry to capitalize on a market trend that has seen the rise of intelligent electronic systems used in automobiles.

In an interview with a reporter of the Chinese-language Economic Daily News (EDN), a sister publication of this magazine, Liu responded to the following questions.

Q: How can TTVMA and the government help spur the development of the local automotive industry after Taiwan has become a member of the World Trade Organization (WTO) and opened its domestic market?

A: The government should not stop subsidizing the R&D work of local automakers, who are shouldering increased cost burdens due to the cancellation of tax deductions for the development of automotive engine systems, chassis systems, and bodies for their locally produced car models. At the very least, the government should come up with a substitute plan to boost local carmakers' weakening competitiveness.

Government subsidies not only benefit local automakers, but also contribute to the sustainable development of the island's automotive industry. I suggest that the government continue offering tax-deduction incentives for automakers that conduct development work here and locally procure more than 50% of the parts for their products.

In addition, the government should quickly lift the ban on the "Three Direct Links" with mainland China to help local carmakers tap the huge mainland China market.

Q: Taiwan's automotive industry is facing a great deal of pressure in the international arena. What should local automakers do to confront this challenge?

A: We all know that now is the proper time for local auto-parts makers to more actively develop sales to big international automakers in Europe and the U.S.

With the experience accumulated in the past three to four decades, Taiwan's auto-parts makers now have some world-class quality advantages, but they still have to confront the challenge of price competition with low-cost rivals in mainland China. This is why, to control costs, many Taiwan auto and auto-parts manufacturers are actively turning to Asia for parts outsourcing.

I also suggest that local auto-parts makers utilize the established advantages of Taiwan's information and communication technology (ICT) sectors. The latest market trends and government policy goals center on intelligent transportation systems that include electronic toll collection, automatic vehicle location, computer-aided dispatching systems, fleet management systems, and advanced vehicle safety.

To meet these trends, the local automotive industry should work as hard as possible to utilize Taiwan's available resources in the manufacturing, academic, and research sectors to develop a series of automotive electronics systems and related equipment. This will help to upgrade the technical level and added value of Taiwan-made or -developed automobiles. We should be using electronic technology in the areas of powertrains, chasses, body control, safety, security, and driving information.

The final challenge is to further strengthen the global competitiveness of vehicles and auto parts developed and made on the island by offering the diverse ICT services required by today's drivers.

Q: What should local automobile and auto-parts makers do to counter the increasingly tight regulations on vehicle emissions and safety required by the Kyoto Protocol and other related laws in many nations?

A: To meet those challenges, which also include the high price of oil, local automakers should accelerate their R&D work to develop autos with more fuel economy and lower emissions. To do this, local makers need to build lighter, more reliable, safer, and higher-value-added cars and parts.

In addition to developing gasoline-electric hybrid engines, another possible environmentally friendly direction for local automakers is making engines that use "green" energy sources such as electricity, natural gas, alcohol, and bio-diesel.

But I want to remind Taiwan's government that the incentives provided to developers of clean vehicles should be offered in the fields that can benefit the greatest majority of local automakers. For example, subsidies should not be granted to buyers of hybrid-engine cars, but to local automakers or research institutes that are working to develop such solutions.