Taiwan's Formosa Automobile to Locally Assemble DAF Trucks

Taipei, Oct. 28, 2005 (CENS)--A delegation led by ranking officials from PACCAR Group of the U.S. recently signed an agreement with Taiwan's Formosa Automobile Corp. (FAC). Under the agreement, FAC will begin assembling DAF heavy-duty truck cabins and trucks, making FAC PACCAR's first production base in Asia.

FAC is the auto-production subsidiary of Formosa Plastic Group (FPG), the largest petro-chemical conglomerate in Taiwan.

PACCAR designs and manufactures light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF brands.

DAF, established in 1928, was originally a Netherlands-based truck maker. The company was acquired by PACCAR in 1996. Currently, DAF is the No. 3 truck brand in Germany and owns a 12.8% share of the European market, trailing Mercedes-Benz and Man. Last year, DAF sold 45, 387 trucks worldwide, accounting for about 36% of PACCAR's total sales volume.

After establishing the cooperation tie with PACCAR, FAC claims that Taiwan assembled DAF trucks will become the most price-competitive truck brand in Europe, with prices about 10% lower than its competitors.

FAC vice president Chen Sheng-kuang pointed out that FAC would invest about NT$50 million (US$1.5 million) to set up a truck assembly line at FAC's plant in Tatu in central Taiwan. The line is planned to have a monthly output of more 50 trucks and cabins, which will be assembled from semi-knock down (SKD) parts from DAF.

Industry sources said that FAC plans to begin local assembly of 35- and 43-ton trucks in Taiwan by the end of the year, with mass production scheduled to start in the first quarter next year.

Chen said that FAC also plans to cooperate with PACCAR to introduce a bus brand for local assembly. FAC and PACCAR plan to sign the bus cooperation agreement in middle of next year.

FPG currently operates about 1,000 trucks for transporting freight in Taiwan and mainland China. Under the terms of the agreement with PACCAR, FPG will consider DAF trucks first for future purchases for its fleet. The two sides may also develop a truck-transportation business on both sides of the Taiwan Straits using DAF trucks.

Most industry insiders believe that the large number of trucks in FPG's fleet enticed PACCAR into signing the agreement with FAC, despite the latter's lack of experience in building trucks.

With the agreement, DAF trucks are expected to replace Volvo and Scania as the biggest selling European truck brand in Taiwan. European trucks currently own a relatively minor share of Taiwan's truck market due to their more expansive prices, though they have proven more durable. Currently, the No. 1 heavy-duty truck brand in Taiwan is Fuso of Japan.