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  News
Taiwanese ATV makers aim for pole position
staff

 Technically speaking, all-terrain vehicles, or ATVs, may include almost any type of offroad recreational or utility vehicle, including four-wheel motorbikes with conventional saddle-type seats and handlebars, four-wheel karts with one or two bucket seats and roll bars, six- and eight-wheel amphibious vehicles and even tracked vehicles. In popular parlance, however, the term ATV these days refers only to open-engine four-wheel motorbikes, or quads.

According to reports, the global market for ATVs is about 1.3 million, with nearly 65 percent of demand coming from the United States. Predictably enough, some of the best-selling ATV brands are those of famous Japanese motorcycle companies--Honda, Yamaha, Suzuki and Kawasaki. Other popular brands include Polaris, Arctic Cat and Bombardier--the former two belonging to U.S.-based companies, the latter belonging to Quebec-based Bombardier Recreational Products Inc., named after the inventor of the snowmobile and the world's largest producer of aquatic jet skis. ATVs sold under the Honda, Polaris and Yamaha brand names share more than 20 percent of the world market.

        Though ATVs are hardly ever seen in Taiwan, where land is scarce and intensively utilized, there are a number of manufacturers in Taiwan that produce them for export, and their global market share is increasing at a pace that is hard to ignore.

        Starting about five years ago, ATV makers in North America began looking for contract manufacturers in Asia because of mounting production costs and competitive pressure from Japanese manufacturers. Several of them chose Taiwanese companies to do the job in view of the latter's long experience in manufacturing all types of motor vehicles with high quality standards.

        At first, the ATVs outsourced to Taiwanese manufacturers were relatively small, equipped with engines in the 50cc to 250cc range. In 1999, an estimated 80,000 ATVs were exported from Taiwan, about half of them manufactured by Her Chee Industrial Co. Ltd. and Tai Ling Motor Co. Ltd.

        As the profit margin for contract ATV manufacturing was considerably higher than for motorcycles and motorcycle components, many other Taiwanese manufacturers joined in the act. Now there are more than 20 ATV makers, most of them located in central and southern Taiwan.

        This year Taiwan is expected to export a total of well over 200,000 ATVs, with an increasing volume of orders from Europe.

        While nearly all local ATV makers are contract manufacturers, there are a few that sell vehicles under their own brand names and are gradually making a name for themselves internationally. One of them is Dinli Metal Industrial Co. Ltd.

        Established in 1983 as a steel wholesaler, Dinli Metal turned to manufacturing motorcycles and motorcycle engines and parts. In 1996, it began doing ATV research and development and in 1999 discontinued motorcycle production in favor of ATVs, which it sells under the Dinli brand name.

        In order to better serve its ATV customers and dealers, Dinli Metal set up a U.S. subsidiary, Dinli LP, in 2001. Last year, it purchased the ATV-associated intellectual property rights owned by the motorsports division of Utah-based Cannondale Corp. According to Dinli LP's Web site, the company now produces over 100,000 ATVs annually.

        Lu Tai-yang, president of Dinli, said that his company would invest about US$18 million in a new factory in Taiwan for manufacture of 500cc ATVs, which is expected to begin operations in the third quarter of next year, with an annual production of 35,000 units worth about US$150 million.

        "The capability to produce heavy-duty ATVs with powerful engines is a key to competing with major players in the global ATV market," said Lu, who expressed his determination to become No. 1 in the world within a few years.

        JI-EE Industrial Co. Ltd. is another company in Taiwan that manufactures and sells ATVs under its own brand name, E-Ton. Besides ATVs, JI-EE manufactures engine components and assemblies under the E-Ton brand name, supplying some of the world's largest vehicle manufacturers, including Honda, Yamaha, Mazda, Nissan, Mitsubishi, Isuzu, Renault and Cummins. It also makes solar cell products.

        With its own marketing channels and after-sales service network managed by its U.S.-based subsidiary Eton America LLC, the company's E-Ton brand ATVs have become the second-most popular in the United States after Polaris.

        Her Chee Industrial Co. Ltd., founded as a producer of moped bikes in 1978, is currently one of Taiwan's largest makers of ATVs, sold under its Adly brand name. Additionally, it is a contract manufacturer for Bombardier and Arctic Cat.

        "We also received big orders for large-size ATVs from European countries this year, most of them from the United Kingdom, Germany, France, Luxembourg and Switzerland," said Hsieh Hui-long, just-retired general manager of Her Chee. He added that "the European market has become as important as the North American market for us, with projected revenues of US$22 million for this year, almost double that of last year." "Our strategy of market separation has proved effective," said Hsieh, explaining that he believes Her Chee's focus on 300cc ATVs has been a key factor in expanding its market share in Europe.

        Her Chee will start construction on a new three-story facility next month, with a total floor area of about 20,000 square meters. The first floor will be for the assembly of ATVs, the second floor for research and development, and the third floor for offices and a staff dormitory. "Without this new building, we won't be able to keep up with the ever-increasing orders from our North American and European clients," said Chen Ching-chang, president of Her Chee. The new facility is scheduled to start operations in early 2006.

        "We will focus on the development of 500cc and 800cc ATVs in the future," said Chen, adding, "To facilitate that project, our research and development personnel will be increased to 50, about three times as many as we have now." Kwang Yang Motor Co. Ltd., Taiwan's largest motorcycle producer that sells its products under the brand name KYMCO, beat out its Japanese competitors to become the largest ATV supplier to Europe in the first half of this year.

        Chen Fu-an, deputy manager of Kwang Yang, said that his company turned to manufacturing ATVs in the wake of declining domestic demand for motorcycles. "Our target is to become the top ATV and electric scooter maker in the world," he said.

        Kwang Yang has established a strong international marketing network in cooperation with its European agents, Chen said. "Two years ago, we began exporting ATVs with engines ranging from 50cc to 150cc to Europe and the United States. Last year we began producing a 250cc model, pushing our total export volume of ATVs to 28,450, of which 7,530 were equipped with 250cc engines." This year, said Chen, Kwang Yang will export about 62,000 ATVs, about 50 percent more than originally expected thanks to a jump in orders from Europe since June. The company's 250cc model will account for more than a third of that amount. Kwang Yang is also planning to build a new ATV factory in Taiwan, he said.

        Strong competition is expected from China in coming years. Dinli's Lu said that at the 2004 Munich international trade fair for motorcycles and scooters in September, he noticed that ATVs made by four Chinese companies had features obviously borrowed from his company's earlier models. "What's more, some of their prices were almost half of ours," he said.

        To remain competitive, Lu added, Taiwanese ATV makers must further enhance the quality of their products, cut production costs and develop more powerful ATVs with added value to differentiate their products.

        With several new factories under construction in Taiwan and more than one company aiming for the No. 1 position, it appears that collectively, at least, they have an excellent chance of becoming the top ATV producers in the world within a few years.


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Composed: 11/20/2004 | Modified: 11/20/2004
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