Over the past few days, those who have dedicated themselves to the nation’s automobile industry have lamented the passing of Yulon Group chief executive officer Kenneth Yen (嚴凱泰), who died on Monday last week at the age of 54. Yen had reportedly been battling esophageal cancer over the past two years. His untimely death has prompted many to pay tribute to this entrepreneur, philanthropist and die-hard basketball fan, as well as appreciate his efforts in developing the domestic auto industry.
Under Vivian Shun-wen Wu (吳舜文), Yen’s mother and former group chairwoman, the company in 1986 launched its first car designed and developed in-house — the Feeling 101 (飛羚101) — but the car was not well received by consumers.
After taking the baton from his mother in 1990, Yen sought to continue her legacy by launching the Luxgen brand in 2009, targeting the high-end market.
During almost three decades at the helm of Yulon, Yen experienced good years, but also numerous misfortunes. Although the automaker makes its own vehicles, it also has a licensing agreement with Japan’s Nissan Motor Co and mostly produces models for them. Yulon entered the Chinese market with joint ventures in the early 2000s, but its sales in China make up only a fraction of that market.
Yen’s mother expressed the desire for him to develop the national auto industry and it seems he dedicated his life, right up to his last breath, to establishing Luxgen.
However, his early death is likely to affect the direction that Yulon — creator of the only indigenous auto brand — follows and what measures the group can take to address Luxgen’s failure to turn a profit and the group’s sliding car sales over the past few years.
Yulon and other domestic automakers face difficult challenges, as the economic uncertainty surrounding the US-China trade tensions keeps some consumers from purchasing luxury goods, and a weak euro, richer product lineups, better features and more favorable cost-performance ratios give foreign car brands a market advantage.
Last month, Yulon warned that sales of locally made cars could fall to about 210,000 units this year, continuing an annual decline of 3 percent over the past six to seven years. This slump could reduce the market share of domestic automakers to as low as 50 percent, compared with the glory days of 2005 when they had an 87 percent market share.
Sales of imported cars reached 177,651 units in the first 11 months of this year, with the overall market share edging up to 45.2 percent, from 45 percent in the first 10 months, data compiled by the Directorate-General of Highways showed.
This is a serious warning to domestic automakers. Imported cars have become increasingly popular since Taiwan joined the WTO in 2002 and gradually lowered import tariffs to the current rate of 17.5 percent. However, local automakers still face high duties on imported auto parts, so domestic cars have only a minimal cost advantage over similar imported models. The growing preference for foreign brands further diminishes any advantage domestic models can claim.
It is uncertain what the future holds for Yulon under Lilian Chen (嚴陳莉蓮), Yen’s wife and new group CEO, and what it might mean for the domestic auto industry, which was once an important driver of the economy.
One thing is sure: The government and automakers must do more, or a national industry will crumble under the weight of global competition and fade into the past.
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