Yulon Motor Co., the Taiwan partner of Japan's Nissan Motor Co., recently demonstrated its newest Sentra M1 sedan model, which will be produced in Taiwan, the Philippines, and possibly mainland China in the future.

Yulon plowed about NT$300 million (US$8.65 million at US$1:NT$34.7) into the development of the new Sentra M1, which was redesigned in Taiwan by the Yulon Asia Technical Center (YATC). The new model represents the latest effort by Yulon to transform the Sentra--a once standard-type sedan model--into one of Taiwan's hottest-selling luxury cars with state-of-the-art features and high-tech interior equipment. The YATC-redesigned model has been the best-selling sedan on the island several years running, and is now making waves in other Southeast Asian countries, where it is made by other Nissan affiliates.


Luxury Sells


Yulon attributes much of the success of the YATC-designed Sentra to the luxurious feel of the model--a key consideration among car buyers in most Asian nations. Yulon has borrowed design elements from the Teana sedan recently unveiled by Nissan and added more high-end interior equipment, including a head-up display (HUD) speedometer, door-panel-embedded sunshades, and permanent-temperature air-conditioning system. In addition, all of the 1,600cc, 1,800cc and 2,000 Sentra M1 models have an optional TOBE in-car entertainment/information multimedia system.

The new Sentra M1 models will be priced from NT$519,000 (US$15,000) for the 1,600cc model to NT$689,000 (US$19,900) for the 2,000cc version. Yulon aims to sell over 2,500 Sentra M1s in Taiwan per month, mostly 1,800cc models, helping it maintain its No. 1 position in the small/medium car segment.

Not content to just be No. 1 in Taiwan, Yulon president Liu Yi-cheng plans to expand his company's overseas presence by making the Sentra M1 a global car model. Nissan Motor Philippines Inc. (NMPI), in which Yulon has a 75% stake, will soon start production of the new Sentra and many Nissan affiliates in Southeast Asia, including in Thailand, are evaluating whether to adopt the YATC-redesigned model for local production.



Chen Kuo-rong, Yulon executive vice president, confirms that his company has already shipped molds and dies for the Sentra 180 model, the predecessor to the M1, to Aeolus Motor Corp. of mainland China, a 60:40 car-production venture between Dongfeng Automobile, the third-largest auto-manufacturing conglomerate in the mainland, and Yulon. Aeolus currently produces car models developed by Nissan and redesigned by YATC.

Han Chen-ping, Yulon vice president, says that Aeolus is scheduled to begin mass production of the Sentra 180 in June. The vice president adds that the Sentra 180 will help Aeolus reach its goal of producing 60,000 cars this year. He also notes that the mainland Chinese automaker is expected to become a major player in the quickly expanding market there, with production of about 200,000 cars expected in 2005.


Well Positioned


Among all of the automakers in Taiwan, the Yulon Group, to which Yulong Motor belongs, is perhaps positioned best to globalize operations through both direct and indirect cooperation ties with overseas partners, says a senior industry analyst. In addition, the group's rapid advances in car interior and exterior design capability has made the conglomerate an important player in the Asia regional market.

The group is home to two major auto-production concerns--Yulon Motor, the group's flagship company, and China Motor Corp., which has a partnership with Mitsubishi Motors Corp. of Japan. Yulon Motor was the No. 4 car seller in Taiwan last year but ranked No. 1 in the first quarter this year due to strong demand for its new car models. China Motor was the No. 2 auto seller last year.

Yulon Group's successful moves toward globalization in the past few years owes much to the support from China Motor's Japanese partner Mitsubishi, says the aforementioned industry analyst. Mitsubishi has transferred some of its key engine-related technology to its long-term Taiwan partner and has gradually helped the company build its own automobile design and manufacturing capability.

In the late 1990s, China Motor began exporting its CMC-brand mini commercial vehicles to several overseas markets with the tacit approval of Mitsubishi. In recent years, China Motor's CARTEC (China Motor Asia Research & Technology Center) has played a vital role in developing both the exterior and interior design of left-drive car models for Mitsubishi and exported many auto parts to the Southeast Asian plants of the Japanese automaker for local production of CARTEC-designed cars and commercial vehicles. The best-known example of this mode of cooperation is the Freeca "world car" commercial vehicle, which is now produced at many Mitsubishi plants throughout Southeast Asia as well as at the facilities of South East Motor Corp., a joint venture between China Motor and the mainland's Fujian provincial government.



More recently, China Motor began exporting Space Gear commercial vans under the Mitsubishi brand to the Philippines, opening a new era of cooperation between the two companies. China Motor has also shared car design resources with Mitsubishi to develop new car models, including the Global Lancer sedan, which is scheduled to be produced in several nations, including mainland China.

In addition to its strong car design capability, China Motor is playing an increasingly important role in helping Mitsubishi and the DaimlerChrysler Group, which currently owns a 40% controlling stake in Mitsubishi, develop their auto production businesses in the mainland Chinese market. According to the said source, China Motor, the Fujian Provincial Government and DaimlerChrysler are scheduled to set up a joint venture to locally produce Mercedes-Benz commercial vehicles in mainland China soon, and will first contract South East to handle production.

If its cooperation ties with Mitsubishi continue to develop, the source says, China Motor could become the most important partner of the Japanese automaker and DaimlerChrysler in tapping the greater China market, thanks to its established resources and sales channels there. China Motor is also expected to benefit from increased access to technical resources for making automobile engines, chassis and other advanced systems.


Gateway to China


While Yulon Motor has not received as much engine technology from Nissan as China Motor has from Mitsubishi, the company still has been rapidly strengthening its cooperation tie with the Japanese partner.

Currently, Yulon's YATC has become one of the most important overseas car model design centers outside Nissan's headquarter in Japan. The Taiwan automaker has developed several popular models for local production in Nissan's overseas markets, including Southeast Asia and even North America.

With the permission of Nissan, Yulon acquired a 75% stake in NMPI as its first step into the international market about three years ago. Last year, the Taiwan automaker began supplying YATC-redesigned car models for production at Aeolus.

Yulon's importance to Nissan, in fact, is not only limited in its know-how in developing car models that fit regional consumer tastes. More importantly, it is becoming a key partner for Nissan in expanding into the mainland Chinese market, where the Yulon Group has extensive business experience, close ties with the government, and staff who share the culture and language of the mainland people.

According to a senior industry analyst, Yulon's R&D capability has become stronger as its ties with Nissan have grown closer. The partnership has also improved the prospects of the Taiwan company in expanding into the international automobile market by linking with Nissan's parent group Renault of France.

Last year, Yulon began selling imported Renault cars in Taiwan, and in future the Taiwan automaker hopes to also benefit from Renault's globally famous cost-cutting measures and strong engine technology, the source says.

Another bright area for the Yulon Group is in the export of original equipment (OE) and aftermarket auto parts for car models developed in Taiwan by China Motor and Yulon Motor. Such sales make a significant contribution to the group's bottom line, with profit margins threefold that of complete car exports.