Yulon, ARCB to Set up Used-car Sales Venture in Beijing

Taipei, Dec. 7, 2005 (CENS)--Taiwan's Yulon Group, the largest automobile manufacturing conglomerate on the island, recently announced plans to set up a used-car sales venture in mainland China in cooperation with Beijing Auto Repair Co. (ARCB).

Yulon and ARCB are scheduled to sign the venture agreement by the end of this month. The cooperation project will be the first to pursue the used-car business on both sides of the Taiwan Straits, according to Su Ching-yang, chairman of Sinjang Corp., Yulon's Taiwan used-car sales arm.

Sinjang has been actively building a used-car transaction mechanism in Taiwan. The same mechanism will also be employed in mainland China, allowing a platform for used-car transactions on the both sides of the Taiwan Straits.

ARCB chairman Chang Tung visited Taiwan in May this year and called on Kenneth Yen, Yulon Group's vice chairman and CEO. Chang expressed his high interest in Sinjang's used-car transaction mechanism and his willingness to cooperate with a Taiwanese partner. Yen visited Beijing for more detailed cooperation talks with ARCB in July to finalize the initial cooperation terms.

According to Yulon, the two parties will set up a 50-50 used-car sales venture with an initial capitalization of US$4 million. Yulon's 50% stake will be held by Sinjang, with 15%; Fortune Motors Co., Ltd., a major Yulon agent, with 25%; and another subsidiary, with 10%.

ARCB chairman Chang will take the helm as chairman of the new venture, while Su will be vice chairman. The venture's president will be appointed by Fortune Motors.

According to Yulon, the new venture will have two major tasks, including selling used cars and setting up body repair centers in mainland China. ARCB has provided a large tract of land for the venture's first operations base.

Su claimed that ARCB has won an agreement from mainland China's central government to replace 4,000 used Audi passenger cars. ARCB is also working on an agreement to replace another 4,000 used cars now owned by the Beijing Municipal Government in the near future. More importantly, Su stressed, in order to prepare for the Olympic Games in 2008, the Chinese central government has promulgated an order that only cars less than three years old would be allowed to drive on roads within the inner area surrounded by the 3rd Ring Road, while only cars less than five years old would be allowed within the 5th Ring Road.

The new regulations are expected to necessitate the replacement of more than one million old cars in Beijing and to generate lucrative busienss opportunities for used-car vendors.

Lee Rong-hwa, president of Taiwan's Fortune Motors, said that ARCB is currently the largest new-car dealer in Beijing, selling an average of about 30,000 new passenger cars from 16 different brands per year. For the future cooperation project, Lee added, Fortune Motors plans to transplant the production-line processes it uses in body repair centers in Tiawan to mainland China.