Yulon Granted Green Light to Produce Luxgen Cars in China

Yulon Group, a major automaker in Taiwan, has obtained the green light for producing its own-brand Luxgen cars in China, as China’s National Development and Reform Commission (NDRC) approved the establishment of auto plants by Dongfeng Yulon Motor on July 26, according to Taiwan’s Chinese-language Economic Daily News.

The move, the first time for a Taiwanese automaker to set up own-brand production base overseas, will boost the cross-Strait auto capacity of Yulon to over 150,000 units a year, up from 30,000 now, making the firm rank among top 15 automakers in the greater China region. It will also enable Yulon to shorten the period for recovering its huge investment in the Luxgen brand.

The Dongfeng Yulon auto plants are located in Linjiang Industrial Zone of Xiaoshan of Zhejiang Province’s Hangzhou. In fact, the first-phase auto production line with annual capacity of 120,000 autos has been put in place and is scheduled for inauguration by year end. The capacity will be gradually augmented to 240,000, approaching the annual sales of 280,000 autos in Taiwan.

Dongfeng Yulon is a 50-50 joint venture between Yulon and Dongfeng Motor, China’s fourth largest automaker, which was just incorporated in April this year, with initial capital of 1.55 billion yuan (around NT$7.31 billion). The amount will be gradually increased to 3.4 billion yuan (NT$16 billion).

The joint venture’s auto plants will be dedicated to the production of Luxgen motors, including MPV, SUV, and CEO gasoline models, as well as various electric cars deriving from those models.

Yulon sought the partnership of Dongfeng for the joint venture, following failure to obtain the approval of a joint-venture plan with Zhongyu Group of Zhejiang Province by NDRC. Dongfeng was Yulon’s first choice for the partnership, which, though, failed to materialize at the beginning. (PL)