China Motor to Assemble Chrysler Minivans in Taiwan

Taiwan's China Motor Corp. (CMC), the island's second-biggest automaker (turning out vehicles in cooperation with Mitsubishi of Japan), recently signed a memorandum on cooperation with the Chrysler Group of the United States to manufacture Town & Country minivans in Taiwan starting next year.

The two partners plan to set up a new joint-venture company in Taiwan (with Chrysler acting through its local subsidiary, DaimlerChrysler Taiwan) to handle the distribution and sale of Chrysler and Jeep vehicles on the local market. The new company, to be dubbed "Chrysler Group Taiwan Sales Ltd.," will be capitalized at over NT$1 billion (US$32.5 million at NT$30.8:US$1), with DaimlerChrysler Taiwan holding 51% and CMC 49%.

The cooperation project was first confirmed during a press conference at the North American International Auto Show in Detroit in early January, when Chrysler Group president and CEO Dieter Zetsche commented, "Chrysler minivans continue to set new benchmarks in the segment that we created and that we lead worldwide, and the strength of our minivans has helped the Chrysler brand achieve growth outside North America. Establishing a manufacturing presence in Taiwan is part of our growth strategy for Asia, and we believe there is tremendous potential for the brands of the Chrysler Group to move forward."

"This is another significant step toward realizing DaimlerChrysler's strategy for this region (Asia)," added Dr. Rudiger Grube, the member of DaimlerChrysler's board of management responsible for corporate development and China operations, at the memorandum signing ceremony. "Producing Chrysler minivans in Taiwan will complement our passenger car and commercial vehicle production in the region, and it further demonstrates our long-term commitment there."

"DaimlerChrysler's licensing of CMC to produce Chrysler minivans in Taiwan symbolizes the expansion of cooperation between CMC and DaimlerChrysler," added Kenneth Yen, CMC vice chairman, "and it is also proof of the capability of the automotive and parts industry in Taiwan."

Production of the 3,300cc-long-axle Town & Country in Taiwan is expected to begin in April next year. The annual production goal is 5,000 units.

Chrysler was once a leading import auto brand in Taiwan, with more than 20,000 units selling annually in the 1990s thanks largely to hot sales of the Neon sedan. In more recent years, however, sales have slumped.

Close and Growing Ties

William Russo, the Chrysler International Group's vice president in charge of Far East sales, said during the ceremony that cooperation between his company and CMC could be expanded in the future. Ties between the two are already close; last year, in fact, CMC participated as a stakeholder in the establishment of DaimlerChrysler Vans (China) Ltd., which will produce commercial vans.

CMC president Huang Wen-cheng stresses that cooperation with Chrysler will help his company achieve better economies of scale, and thereby cut costs. It will also give the Taiwan company access to Chrysler's quality control and production techniques, and thereby strengthen its competitiveness.

Informed sources note that most international cooperation projects among automakers, especially those that involve locally produced parts and components, take one to two years of two-way observation and negotiation to complete. The DaimlerChrysler-CMC project, however, was finalized in only three months.

The sources say that this rapid success was spurred by the attractiveness of the Yulon Group, which includes Yulon Motor Co. (a manufacturer of Nissan models and developer of redesigned models for production by Aeolus Motor Corp. in China, which is invested by Yulon) as well as CMC (a producer of Mitsubishi models and supplier of redesigned models to South East Motor Corp. in mainland China, in which the Taiwan company is an investor).

Yulon recently tied up with General Motors of the U.S. in a project for the production in Taiwan of cars bearing the Buick brand.

DaimlerChrysler was also attracted by the Yulon Group's long-term ties with Mitsubishi, in which the German-American conglomerate holds a major stake. DaimlerChrysler wants to make use of Yulon's advantages in the joint development of the booming Asian market.