Taiwanese automotive giant Yulon Motor Corp. spending P1 billion this year for the acquisition of a 30-percent interest and financial restructuring of Nissan Motor Philippines Inc. (NMPI).
Meeting with the press for the first time since they took over NMPI, Yulon chief executive officer Kenneth Yen said the company's Philippine operations would be expanded to include automotive parts manufacturing to supply the South East Asian market.
According to Yen, strategic planning is underway to make Nissan Philippines an exporter of automotive parts by 2000. He expressed optimism that South East Asia has the biggest potential for growth in the automotive industry.
"This region is the place to be. We believe that growth will be rapid and speedy," Yen said, when asked why Yulon chose to invest in the Philippines, he said "I like the Philippines better than any place in the region."
Per Nissan estimates, regional demand for automobiles will reach five million units by 2005. This is an indication of a huge potential for expansion for all automotive firms including Yulon which currently produces 500,000 automotive units.
Yulon's decision to team up with Nissan Philippines will place both companies in a strong position to get a firm foothold of the market in South East Asia.
According to Nissan Philippines executive vice president Jack Wu, Yulon is paying P500 million for the acquisition of a 30-percent interest in Nissan and another P400 million for the financial and corporate restructuring of the company.
After Yulon's acquisition, Nissan will be six percent owned by Nissan Motor Co. and four percent by Marubeni Corp. of Japan. The remaining 60 percent will continue to be in the hands of local investors. Yulon will have management control.
Wu said Nissan's operations will eventually expand to include assembly of commercial vehicles, automotive parts manufacturing and high technology-based intelligent transportation system (ITS).
The bulk of Yulon's future investment, however, will be on a research and development (R&D) facility it is planning to put up. Wu said the company does not have a fix on the total project cost at this time.
Wu said Nissan had applied for full incentives with the Board of Investments (BOI) and registered its R&D project as a pioneering venture.
To qualify as a pioneer venture under the investment Priorities Plan, however, the BOI earlier said Yulon had to invest at least $300 million.
Yulon has submitted an unofficial proposal seeking incentives but the BOI said it was returned because the total investments declared was less than the $300 million hurdle set by the IPP for pioneer projects.
Yulon is a multi-brand automotive manufacturer in Taiwan and its biggest brand is Nissan. It is the sole manufacturer and distributor of Nissan vehicles in Taiwan.