KYMCO Aims to Sell 700,000 PTWs Worldwide in 2014

Kwang Yang Motor Co., Ltd. (KYMCO brand) recently announced ambitions to extend its top position in Taiwan's PTW market for the 15th consecutive year in 2014. The company is aiming to boost global shipments, including sales to overseas markets, such as China, Colombia, the Philippines, and Vietnam, to 700,000 units over the year.

J.B. Ke, KYMCO's executive vice president, forecasts that Taiwan's domestic PTW market will hit a six-year high volume of more than 700,000 units in 2014. KYMCO hopes to retain its 40% share of the market, or about 280,000 units. In 2013, the company commanded 40.7% of the local market, representing 272,000 units.

Market Strategy

With Taiwan's PTW market becoming increasingly M-shaped, i.e. polarizing into two ends, Ke says that KYMCO has mapped out two strategies to tap the middle- to high-end market. The company plans to make anti-lock brake systems standard on new models. It is also aggressively developing high-level electronic safety equipment, such as the Motocam image-processing technology, remote vehicle positioning etc. for some 150cc and higher-end VJR110 scooter models.

In the entry-level market, KYMCO will add the GP125 scooter priced at only NT$49,800 (US$1,660) in Taiwan, on par with with sticker price of its current V2 model. Through a more comprehensive pricing strategy, KYMCO aims to win more than 50% of the 125cc scooter segment in 2014.

Ke is optimistic about growth in the yellow-plate (with engine displacements from 250cc to 550cc) PTW segment in Taiwan. He notes that the government's decision to allow yellow-plate PTWs on expressways has fueled demand for the high mobility, fuel-efficient scooters. Ke says, KYMCO has a 60% market share of the emerging sector.

In 2014, Ke adds, KYMCO will launch a special sales network to sell PTW models with engine displacements ranging from 250cc to 700cc to boost sales of these larger models.

Overseas Markets

In 2013, KYMCO sold 315,000 PTWs in overseas markets, including models made by the company's overseas factories and exported directly from Taiwan. Ke says that in 2014 his company expects to sell 200,000 new PTWs through its Chinese subsidiary Changzhou Kwang Yang Motor Co., Ltd., up 11% from the previous year. In Vietnam, KYMCO's new 57,600-square-meter factory in Binh Duong Province is scheduled to kick off mass production in June. The company expects annual sales in the nation to grow by 50% to about 30,000 units.

Emerging markets have been a focal point for KYMCO's business growth in recent years. In 2014, the company hopes to increase sales in Colombia by 20% to over 60,000 units. KYMCO Philippines aims to boost PTW sales by over 20% to 30,000 units this year.

Contract Production

In the contract manufacturing sector, KYMCO expects revenue to top NT$3 billion (US$100 million) in 2014 helped by a sustained influx of big-ticket orders from BMW, Kawasaki, Arctic Cat and other major international vehicle makers.

Thanks to its strong manufacturing capability and cost-control ability, KYMCO has been supplying the engines for BMW Motorrad's G450X and G650S enduro bikes for a couple of years. The Taiwanese company is also responsible for the development and production of the new J300 scooter for Kawasaki on an original design manufacturing (ODMs) basis. The J300 300cc maxi scooter was launched in late 2013. Industry sources say that Kawasaki Japan originally estimated the annual sales volume of the J300 scooter at about 5,000 units in the first three years after demonstration, but the scooter has been selling at a monthly pace of 500 units. Strong demand for the new model will further contribute to KYMCO's revenue in 2014.

KYMCO and Kawasaki have set up a joint venture in China to make universal engines. Industry sources say that the successful debut of the Kawasaki J300 is expected to help KYMCO win more ODM orders from the Japanese partner.

BMWWith its expertise in smaller engines and trustworthy quality level, KYMCO also won an order from German luxury-car maker BMW's to supply 650cc gasoline engines for the new BMW i3 extended range electric vehicle (EREV).

KYMCO's product competitiveness and quality has turned the heads of other global majors. In 2009, BMW Motorrad began contracting the Taiwanese partner to produce the engines for its GS450X off-road bikes and later began placing orders for a 650cc scooter engines. BMW Motorrad has based engineers and managers at KYMCO's factory in Kaohsiung, southern Taiwan, to assure technical and quality level.

The i3 electric citycar is part of BMW's "Project i" and is planned as the new brand, BMW i. The BMW i3 entered mass production in 2013 and has sold well in several markets. The EREV is BMW's first mass-produced zero-emission vehicle with an electric powertrain. The German automaker also expects to be the first company to market a volume production vehicle with carbon-fiber reinforced plastic to reduce energy consumption.

Industry sources comment that the BMW-KYMCO cooperation on EV products is a sign of the increasingly close partnership between the two players. The i3 project positions KYMCO to potentially supply more parts to BMW, further raising its technical level and corporate image.

The BMW group is expected to purchase 50,000 to 60,000 engines from KYMCO in 2014.

Arctic Cat, one of the top-three snowmobile and all terrain vehicle (ATV) brands in the United States, also hopes to take advantage KYMCO's strong capabilities. The American company has contracted KYMCO to custom-develop and make a snowmobile model based on KYMCO's Myroad 700cc high-end scooter. The Arctic Cat 700cc snowmobile will be sold in the U.S.