cens logo

Volkswagen Inaugurates Fully-owned Taiwanese Subsidiary and Postpones Production in Taiwan

Mar 27, 2015 | By Quincy Liang

Su Weiming (left), executive vice president of Volkswagen, and Volkswagen's Greater China and Southeast Asian operations, and Bernd Hoffmann (right), president of Volkswagen Taiwan, announce the inauguration of the wholly-owned Taiwanese subsidiary. (photo from UDN)Su Weiming (left), executive vice president of Volkswagen, and Volkswagen's Greater China and Southeast Asian operations, and Bernd Hoffmann (right), president of Volkswagen Taiwan, announce the inauguration of the wholly-owned Taiwanese subsidiary. (photo from UDN)

Volkswagen Group of Germany, selling 10.14 million vehicles in 2014 to follow Toyota's 10.23 million to rank second globally according to statista.com, recently held a press conference in Taiwan to announce the inauguration of its wholly-owned subsidiary, Volkswagen Taiwan, to be the 28th overseas sales subsidiary directly controlled by the German headquarters.

Su Weiming, executive vice president of Volkswagen and Volkswagen's Greater China and Southeast Asian operations, and Bernd Hoffmann, president of Volkswagen Taiwan, jointly announced that Volkswagen will step up introducing more new models to the island to further strengthen the brand's competitiveness in the local imported-car market. In 2015, Volkswagen plans to renew half of its existing product lineup on the island.

Su explicitly said direct operation by the German headquarters does not mean price reduction despite the record-low euro against greenback, because Volkswagen has been pursuing stable product quality and pricing strategy, implying that the German carmaker will not dilute quality to counter politically-correct price discounts due to currency fluctuations and other profit-sapping factors as rising material costs. Pricing of various models will depend on their competitiveness with counterparts on the market, he explained.

Volkswagen Group has in its portfolio 12 vehicle brands, including Skoda, Audi, Seat, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania, Man and VW Commercial Vehicles, as well as its eponymous brand, and its Golf sales, according to Automotive News Europe's article of March 7, 2014, rose 28 percent to be the best selling car in Europe then. Volkswagen passenger cars have always been recognized for great value for money, build quality, no-nonsense styling, excellent interior room, and peppy performance.

Eyeing Expanding Import Market
With an eye on Taiwan's expanding imported-car market, which has jumped to account for about 34 percent of overall new-car sales on the island in 2014, Volkswagen last year decided to set up the wholly-owned Taiwanese subsidiary to take over the marketing and sales of Volkswagens, Volkswagen commercial vehicle, Audi and Skoda. The new subsidiary kicked off operations, in fact, from January 2015.

To show Volkswagen's determination to build bigger presence in Taiwan, the group held the "Volkswagen Night" at the plaza of the National Chiang Kai-shek Memorial Hall to showcase more than 20 late Volkswagen models. (photo from UDN) To show Volkswagen's determination to build bigger presence in Taiwan, the group held the "Volkswagen Night" at the plaza of the National Chiang Kai-shek Memorial Hall to showcase more than 20 late Volkswagen models. (photo from UDN)

To show Volkswagen's determination to further build presence in the Taiwanese market and celebrate its new business model, the group held the "Volkswagen Night", at the plaza of the National Chiang Kai-shek Memorial Hall for two nights to showcase more than 20 of the latest Volkswagen models, including the Touareg, Sportsvan, Passat etc. that will be launched in 2015. In Taiwan Volkswagen aims to shape the brand instantly recognizable for innovation and likability by local consumers.

Volkswagen has a wide-ranging product lineup of more than 60 models and plans to introduce more products suitable to Taiwanese tastes, which will likely help further upgrade brand competitiveness.

Hoffman, the first Volkswagen Taiwan president, said the subsidiary in its first year aims to sell more new Volkswagens than last year's 13,500 units. Including the targeted 6,000 Audis and 2,400 Skodas, Volkswagen Group's sales volume in Taiwan is expected to reach some 22,400 units in 2015.

In addition to new-car sales, Hoffmann stressed, the subsidiary also places equal emphasis on after-sales service, and that Volkswagen will continue to offer four-year, unlimited-mileage new-car warranty to Taiwanese buyers; free whole-vehicle inspection; and free maintenance services up till  15,000 kilometers. And starting April Volkswagen will launch the "Express Service," enabling owners to bring cars in for rapid repair and maintenance services without reservation.

Local Production Temporarily Halted
Politics has sidelined Volkswagen's plans to set up an auto assembly plant in Taiwan, with Su saying that currently Taiwanese government's policy works against assembled-car production, without clarifying the specifics, hence causing the German headquarters to decide to postpone such plans.

However, Su said, plans to set up the assembly plant in Taiwan have not been totally scuttled, which may be revived as soon as the Taiwanese government adjusts its industrial policy, and progress is seen in the negotiations of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China.

New Volkswagen models available in Taiwan. (photo from UDN)New Volkswagen models available in Taiwan. (photo from UDN)

According to Volkswagen's initial plans, the German automaker aimed to set up an auto-assembly factory, or contract a local contractor to assemble cars, most likely due to cost concerns with logistics being a core factor. Delivering cars out the factory to a local market only a few hours away by semi-trailer is cheaper than shipping them by sea from farflung plants in Europe, S.E. Asia etc. Su said that Volkswagen's German headquarters began evaluating such plans one and half or two years ago, but was discouraged by the Taiwanese government's existing industrial policies that are against local production of cars, which is also seen only in the Philippines in Southeast Asia.

In 2014 new-car sales in Taiwan rose 12 percent that of the previous year, and the imported-car segment enjoyed a 22 percent increase, far higher than the overall market. As a result, Su said, the share of imported cars in Taiwan soared to a record high in recent years of 34 percent. The executive vice president said that if Taiwan does not change its industrial policy, imported cars will soon win a market share exceeding 40 percent in the near future.

Industry sources say Su's comments reminded carmakers and retailers in Taiwan to take reality check, that local automakers' survival is being increasingly challenged by imports. Su, however, never dared to be blunt to say that such situation would not be an issue if only Taiwanese carmakers could design and develop truly popular or iconic cars to rival globally-renowned brands. So far only Yulon Motor of Taiwan has built very modest success in Taiwan and China with its fully-homegrown Luxgens. As reference, Japan, after being nuked in 1945, built basically from scratch its industrial base amid poverty to be now the maker of enviable brands as Toyota, Honda, Nissan and Subaru. Taiwan, in contrast, has built a sizable information technology manufacturing sector since WWII, but is not really on the radar in global carmaking, auto design, research and development.

According to Taiwanese automakers, all neighboring countries in Southeast Asia including China have their own policies to protect local automotive industry. Taiwan, however, since it joined the World Trade Organization (WTO) as a member in 2002, duties on imported cars have been lowered to only 17.5 percent, which, local automakers say, is tantamount to a totally open market to foreign auto vendors. To add salt to injury, the Taiwan government has revoked tax incentives to encourage higher local-content rate, further undermining local automakers' advantages.

Shrinking Production
With changing car ownership attitude among Taiwanese youths, improved public transport, worsening ease of parking in Taiwan as well as rising car quality, the car market in Taiwan continues to shrink rapidly, leading to many local automakers to suffer insufficient economy of scale, so have stopped or plan to stop local production of many models, especially mid-sized sedans. Hence business reality led to imports  immediately taking over the market share left vacant by locally-assembled models. Such scenario creates a vicious cycle, industry sources say, because lower sales volume of locally assembled cars lead to higher production cost (higher cost of auto parts) to narrow import-vs-locally-assembled price gaps. 

Also notable is that Taiwan's duties on imported auto parts have not been reduced along with prices of imports assembled locally, and hence some locally-assembled models with lower self-content rates retail for more than imports of the same category.  Some local car assemblers say it would make sense to sell imports than keeping assembly factories open.

Many local automakers have pleaded with the government to pay more attention to the welfare of the local automotive industry, whose well-being impacts hundreds of thousands of employees along the supply chain.


Industry In-Focus

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry </h2>

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry

Oct 20, 2020

Foxconn is looking to explore cooperation with European tier 1 auto parts suppliers in developing 3D auto-use curved glass covers. The electronics manufacturer is also reportedly engaging in talks with European auto firms to make curved, one-piece system consoles and dashboards. In a bid to diversify its product line, Foxconn's plans to enter the lucrative auto parts industry began with provid...


China's Strong Auto Market to Buoy Taiwan's Related Industries</h2>

China's Strong Auto Market to Buoy Taiwan's Related Industries

Oct 19, 2020

Taiwan's auto parts market has seen positive impacts as the Chinese automotive market continues to grow in its sixth consecutive month. Hotai Motors and Yulon Nissan Motor are the two significant firms enjoying the leverage. The island's related industries are benefiting from the strong performance of China's automotive market. Industry members say as long as competitive Taiwanese firms mainta...


Foundry Supply in a Pickle Amid Surging Demand Due to Pandemic and Restrictions</h2>

Foundry Supply in a Pickle Amid Surging Demand Due to Pandemic and Restrictions

Oct 19, 2020

Industry experts expect to see challenging times ahead for production in the foundry sector, forecasting that the current situation will not let up in the short-term and warns of unbalanced supply-demand next year. During the pre-pandemic era, IC design firms say clients usually made urgent orders to avoid having to manage inventory. Yet, considering limited foundry production volume, clients ...



Industry Reports

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry </h2>

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry

Oct 20, 2020

Foxconn is looking to explore cooperation with European tier 1 auto parts suppliers in developing 3D auto-use curved glass covers. The electronics manufacturer is also reportedly engaging in talks with European auto firms to make curved, one-piece system consoles and dashboards. In a bid to diversify its product line, Foxconn's plans to enter the lucrative auto parts industry began with provid...


(File cabinets, photo courtesy of Chyn Fuh Enterprise Co., Ltd.)

Taiwan's Furniture Industry Amid the COVID-19 Pandemic

Oct 16, 2020

The COVID-19 pandemic has deeply affected global and Taiwan's political and economic landscapes. Unlike some industries, the furniture sector did not escape unscathed, facing a squeeze from management and costs. While Taiwan continues to implement a stable, successful outbreak response, the industry has also misjudged the economic downturn duration. The furniture industry has yet to fully recover...


2020 Energy Vision Summit for Green Energy to Kick off in Nov.</h2>

2020 Energy Vision Summit for Green Energy to Kick off in Nov.

Oct 14, 2020

The Taiwanese government has pledged to lead the effort in further developing the sustainable green economy, which is among the sectors highlighted in the Tsai administration's "5+2 Innovative Industries Initiative." Economic Daily News is hosting the "2020 Energy Vision Summit - Green Energy 2.0" on November 11. As one of the government's core policies, improving the island's energy self-suff...



Supplier News

(Electric Vehicle-Photo courtesy of CENS)

Microtest: Precise, Reliable, and Always Improving

Oct 16, 2020

Eyes Stake in 5G Industry with Impedance Analyzer 6632 With greater demand for electronics and manufacturers' need for more precise and diverse applications than before, testing equipment that ensures the reliability, safety, and quality of parts are in hot demand. Founded in 1993, Microtest Corp. is a professional maker and developer of high precision and automatic testing and measurement ins...


(Photo courtesy of Ho Shuan Enterprise Co., Ltd.)

Ho Shuan is Your Choice for Educational Furniture and More

Oct 16, 2020

Insisting that its customers are always a top priority, Ho Shuan Enterprise Co., Ltd.'s R&D team provides the best educational furniture and peripherals, computer tables, and desks to meet all customer requirements. Established in 1986, Ho Shuan has experienced recent sluggish local market performance, but eventually rebounded and came back better than ever. Despite difficulties, the firm neve...

HO SHUAN ENTERPRISE CO., LTD.


(S16-M01 Short Swivel-Handle Cabinet, photo courtesy of Chyn Fuh Enterprise)

Chyn Fuh: A Quality OA Metal Furniture Maker

Oct 16, 2020

Chyn Fuh Enterprise, founded in 1993, entered the market with the sole aim of offering other OA metal furniture options for customers. Since its inception, Chyn Fuh has focused on designing and producing OA metal furniture, providing various office use products, including file cabinets, storage cabinets, office desks, and different assistive metal products. Chyn Fuh partook in many government ...

CHYN FUH ENTERPRISE CO., LTD.



Insiders' Views

Caption: Pictured from front row, third right, Changhua County Government Economic Affairs Department Director Liu Yu-ping, County Magistrate Wang Huei-mei, Secretary Chen Bo-tsun pose in front of the exhibition booth. (Photo provided by CHCIA)

Changhua County Government Shores up Biz-Matching to Global Buyers

Nov 18, 2019

■Yang Feng-Chun In a bid to assist manufacturers in Changhua County to expand their market reach overseas against severe competition in the globalized market, Changhua County Government has been an active player in pushing for a makeover and innovation of its local small and medium-sized enterprises. This is done in hopes of establishing stronger connection with international markets. An ex...


Paul Master offers high-quality chassis and engines parts for passenger cars, trucks, and industrial trucks. (Photo courtesy of Paul Master)

Paul Master Builds Reputation with Auto Chassis and Engine Parts

Nov 18, 2019

Founded in 1980, Paul Master Auto Parts Co. is headquartered in Taiwan, a professional manufacturer of chassis and engines parts for passenger cars, trucks, and industrial trucks including forklifts. General Manager Terry Liang said the company has its own professional design department, which provides customized products and specifications for global buyers, including automobile steering and...

PAUL MASTER AUTO PARTS CO.


Nan Hoang Traffic Instrument Co., Ltd.</h2><p class='subtitle'>Taiwan First brakes Technology Co., Ltd. </p>

Nan Hoang Traffic Instrument Co., Ltd.

Taiwan First brakes Technology Co., Ltd.

Sep 04, 2019

Nan Hoang Traffic Instrument Co., Ltd is one of the major manufacturers of automobile friction materials in Taiwan and globally. Chairman Austin Cheng has implemented the double-arrow strategy this year - own brand of “YangPo” is adopted to focus on global channels while the “NHC brand focuses on improving market shares in global markets, such as Europe, America, Asia, Australia, and the Middle E...



Exhibition Highlights

Gearing up for Post-COVID Recovery, THS Coming Soon in October</h2>

Gearing up for Post-COVID Recovery, THS Coming Soon in October

Oct 07, 2020

As the only hardware and hand tools trade show taking place this year globally, the three-day Taiwan Hardware Show (THS) will soon kick off on 13th October at the Taichung International Exhibition Center. Positive industry outlook for the post COVID-19 era has led to over 370 companies signing up as exhibitors, in a bid to gear up for a long-awaited economic recovery and plan the next strategic m...


Stable Development and Popular Fastener Show in China</h2>

Stable Development and Popular Fastener Show in China

Sep 11, 2020

Driven by market prospects, domestic and international exhibitors actively prepare International Fastener Show China in Shanghai on November 3-5, 2020. Suffering from global epidemic and quarantine nearly half year, exhibitions are hot and popular in mainland China. Thousands of visitors join and visit the exhibitions with inquiries, and are eager to know new technology. Domestic and inter...


2020 Medical Taiwan to Host In-Person and Virtual Events</h2>

2020 Medical Taiwan to Host In-Person and Virtual Events

Sep 10, 2020

2020 Medical Taiwan is slated to kick off on Oct. 15 to Oct 17 at Nangang Exhibition Hall 2. Aside from events at the show, show organizer Taiwan External Trade Development Council (TAITRA) is also hosting the “Medical Taiwan Virtual” online edition at the same time due to travel restrictions impacted by the COVID-19 pandemic. The virtual edition will present 200 exhibitors and over 700 medic...