Formosa Automobile consigns Lotus of U.K. to develop two car models

Dec 24, 2003 Ι Industry In-Focus Ι Auto Parts and Accessories Ι By Quincy, CENS
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Taipei, Dec. 24, 2003 (CENS)--Taiwan's Formosa Automobile Corp., which locally produces Daewoo car models, recently announced that it would invest NT$2 billion (US$58.65 million at US$1: NT$34.1) to commission U.K.-based sport car maker Lotus to develop two new car models.

Formosa Automobile said that it would begin mass production of the first car model developed by Lotus in the fourth quarter 2004 and plans to produce and market the model in mainland China in the future.

Formosa Automobile, an automobile production subsidiary of the Formosa Plastics Group, terminated its cooperation ties with GM Daewoo Auto & Technology Co. last year and has been actively seeking new cooperation partners to help develop its automobile production business. Formosa Automobile, in fact, kept a very loose relationship with Daewoo before, procuring only the car design blueprints and relevant chassises as well as production jigs and fixtures from the Korean partner for producing cars sold in Taiwan only.

Formosa Automobile reportedly tried to establish technical cooperation ties with Fiat of Italy, Isuzu of Japan and even Matra of France (which owns some patent rights of some car models made by Renault). The Taiwanese company, however, refused to confirm any of the reports.

Formosa Automobile vice president Lee Tsung-chang said that his company has reached a cooperation agreement with Lotus and would cosign it to develop two car models, including a 1,600/1,80cc sedan and a four-wheel drive (4WD) sport utility vehicle (SUV). The vice president claimed that Formosa Automobile is reluctant to be controlled and limited by foreign technical partners in the auto production business, and has tried to control car production technologies on its own for further development in the future.

According to their cooperation agreement, Lee pointed out, Lotus would help design the two new car models and find the proper suppliers of chassises, engines, transmission systems and other key parts and components. After the car model development project is completed, Lee stressed, all of the relevant data and car-design patent rights would belong to Formosa Automobile, which will then outsource the parts for final assembly.

Lee said that the first unveiled new car model would be the 1,600cc/1,800cc sedan, which would be dubbed Formosa 3 in Taiwan. The Taiwanese auto maker would soon begin procurement of relevant chassis and engine parts for mass production and is scheduled to begin vending the new model in the beginning of the fourth quarter next year.

Formosa Automobile, however, has not determined the size of the engine displacement for the scheduled SUV model, but Lee said the engine displacement would be between 2,000cc and 3,000cc. Formosa Automobile plans to mass-produce the SUV model in mid-2006.

If everything goes smoothly in Formosa Automobile's plan to set up a car plant in mainland China, Lee said, his company would introduce both the two scheduled car model for local production and sales in mainland China in the future. The vice president admitted that the domestic automobile market is too small for independent auto brand to achieve scale of economy.

Lee stressed that his company's foremost goal is to achieve sales of 10,000 cars per year. For the set goal, Formosa Automobile would push two refined models, including a 2,500cc flagship version of the Magnus medium sedan and a entry-level new version of the Matiz mini car. Lee said that the new Matiz entry-level model would be equipped with a 1,000cc engine (formerly 1,200cc) and priced at under NT$250,000 (US$7,332) so as to appeal to youngster and first-buy consumer groups.
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