Kwang Yang Motor Company Ltd.

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Kwang Yang Motor Company Ltd.

35 Wan Hsing Street
Sanmin District
Kaohsiung,
Taiwan
Telephone: (886) 07 382 2526
Fax: (886) 07 384 0112
Web site: http://www.kymco.com

Private Company
Incorporated: 1963
Employees: 3,650
Sales: $3.7 billion (2002 est.)
NAIC: 336991 Motorcycle, Bicycle, and Parts Manufacturing

Kwang Yang Motor Company Ltd. (Kymco) is one of the world's leading manufacturers of powered two-wheel vehicles (PTWs) and other motorized vehicles. The company produces a range of scooters, mobility scooters, all-terrain vehicles (ATVs) and, especially since the 2000s, both light and heavy motorcycles. Kymco markets its vehicles worldwide under the Kymco brand, and also produces PTWs and ATVs as an original equipment manufacturer for third-party brands. The leading manufacturer of PTWs in Taiwan, where nearly one out of every two people own a scooter, Kymco has successfully expanded its exports to some 75 countries worldwide. In support of its international operations, the company has developed a network of manufacturing facilities in Taiwan and in mainland China. The company also operates production joint ventures in mainland China, Vietnam, the Philippines, and Indonesia. Kymco was founded in the 1960s as a producer of components for Honda Motors of Japan, before developing its own fully independent operations in the 1990s. Honda remains a significant shareholder in the privately held company.

FROM BICYCLES TO MOTORBIKES BEGINNING IN 1963

Kwang Yang Motor Company, or Kymco, was established in 1963 as a joint venture with Honda Motor Co. of Japan to produce bicycles, motorcycles, and components. Both bicycles and motorcycles were product categories targeted by the Taiwanese government as part of its effort to transform Taiwan into one of the region's industrial powerhouses. Honda had entered the Taiwanese market in the early 1960s, launching its first production operations there in 1961. Kymco was officially inaugurated in June 1964, and by 1967 had constructed its own headquarters. Construction also began on the company's first manufacturing plant, which was completed in 1970.

By the mid-1970s, Kymco had expanded its production from components to complete vehicles. This led Kymco to begin building its second plant, completed in 1977. The company quickly became Taiwan's leading producer of scooters and light motorcycles. By 1978, the company had been granted status as one of the country's Grade A Motorcycle Manufacturers. By the end of that year, Kymco's total motorbike production had topped 500,000.

Taiwan's rising economic strength led more and more people to abandon bicycles for scooters and motorbikes. The growing demand enabled Kymco to step up production, and by 1983, the company's total production had passed the one million mark. In order to meet the steadily building demand, Kymco began a major new expansion program for its second plant in Taiwan, which was completed in 1989. By then, the company had produced its two millionth cycle since launching production in the early 1970s.

An oil crisis in Taiwan in 1987 prompted the Taiwanese government to enact new legislation banning imports of heavy class motorcycles of 150cc and larger. The ban helped boost Kymco's own position in the domestic market, although it limited Kymco's own ability to branch out into the heavy classes of PTWs. The import ban nonetheless encouraged Kymco, which had continued to rely on Honda's technology, to begin developing its own in-house design and engineering capacity. As part of the effort, Kymco began building its own research and development center, with the first phase opened in 1989. By 1991, Kymco also had installed its own integrated motorcycle test field, the first of its kind in Taiwan.

INTERNATIONAL BRAND BY THE END OF THE 20TH CENTURY

In a reflection of Taiwan's own emergence as a global technological and industrial center, Kymco now prepared itself to become a fully independent, and international, player on the international PTW market. While Honda remained a significant shareholder in the company, Kymco launched its own branded line of motorcycles, components, and accessories under the Kymco name. Kymco's production not only targeted the Taiwanese market, where the company claimed as much as one-third of the total PTW market, but also the international market, including Southeast Asia and Latin America, both important markets for scooters and light class motorcycles, and Europe and the North American markets as well.

In support of its effort to develop into an internationally competitive group, Kymco initiated an ambitious manufacturing expansion program through the 1990s. In 1993, the company opened its third Taiwanese production facility, in Lu Chu. In that year as well, Kymco shifted part of its production to the Chinese mainland, taking over control of a production plant in Hunan, which was then named Hunan Kwang Nan Motor Co. Ltd. The company also developed a second joint venture in Hunan that year, Hunan Kinlon Kwang Yang Motor Co., Ltd.

Kymco continued to step up production, topping four million total units in 1994. In that year, the company expanded its production capacity in Taiwan, completing the second phase of construction of the Lu Chu plant. The company also boosted its presence in the fast-developing mainland Chinese market, adding a new joint venture subsidiary, Changzhou Kwang Yang Motor Co. Kymco's entry into the mainland also enabled it to shift production of some of its components from Taiwan to lower-cost China. This strategy became particularly important for the company ahead of Taiwan's entry into the World Trade Organization, and the opening of the Taiwanese market to a whole new level of import competition. Completed in March 1995, the Changzhou unit launched production of scooters and light motorcycles, with a total production capacity of 10,000 per year—compared to the production capacity of Kymco's Taiwan plants of 300,000 per year. By then, Kymco had become technically independent of Honda Motor.

COMPANY PERSPECTIVES

It is our goal to bring KYMCO into the international community. We have performed intensive R&D to live up to the needs of our customers. No effort has been spared to reach new highs, developing and manufacturing innovative products, and adding customer satisfaction. We wish to provide the optimal choice of transportation for everyone.

Committed worldwide, we aspire to increase customer satisfaction and contribute to the satisfaction and contribute to the society through constant innovation in the tacking of challenges. It is our hope that our dedication can provide consumers access to the choice of optimal vehicles, so they can share with us the results attained from our endeavors. The making of a respectable global brand The "KYMCO" name represents our firm dedication and responsibility to customers. To ensure KYMCO's perpetuity, we wish to make KYMCO a world-class name brand, setting an exemplary model in the building of brand names in the world.

Changzhou was the site of the group's next expansion, with the creation of Changzhou Kwang Hsing Precise Machine Co., Ltd. in 1995. The unit launched production of motorcycle components, including engines, engine components, engine assemblies, and other parts in 1997. In that year as well, the company's second Hunan unit launched its own production of motorcycle components.

GLOBAL POWERSPORTS LEADER IN THE NEW CENTURY

By 1996, Kymco's total production had passed four million units. In that year, Kymco began to broaden its regional interests, where the fast-growing economies in the Southeast Asian region provided a massive demand for scooters and light motorcycles. The company turned to Indonesia in 1996, forming a joint venture with that country's Lippo group. That subsidiary, PT Kymco Lippo Motor Co., began producing a range of Kymco models and components before the end of the decade.

The company added a new production plant in Tibet in 1998, called Tibet Summit Kwang Yang Power Machinery Co. Ltd. In that year as well, the group's total production topped six million units. In the meantime, Kymco had begun construction of a new research and development unit, completed in 1999. The new unit became part of the group's bid to expand its product range to become a true "powersports" manufacturer, under a new strategy launched in 2001. This effort included the development of new scooter and motorcycle models with larger displacements, as well as a branching out into the four-wheel ATV category.

KEY DATES

1963:: Kwang Yang Motor Company Ltd. Is established to produce bikes and components in a joint venture with Honda motorcycles in Taiwan.
1964:: Kymco opens its first production plant.
1977:: A second manufacturing plant is opened.
1978:: Kymco is designated as a Grade A Motorcycle Manufacturer by the Taiwanese government; the company's 500,000th motorcycle is produced.
1983:: Total motorcycle production tops the one million mark.
1987:: The Taiwanese government enacts a ban on heavy class (150 cc and higher) motorcycles.
1988:: Kymco passes the two million mark for total motorcycle production.
1989:: The company completes expansion of its second manufacturing plant and begins production of a research and development center in order to develop an independent manufacturing process.
1992:: The company creates the Kymco brand and begins targeting international market.
1993:: The company opens its third Taiwan plant in Lu Shu; the Hunan Kwang Nan Motor Co. Ltd. in mainland China is acquired; joint venture Hunan Kinlon Kwang Yang Motor Co., Ltd. is established.
1995:: A joint venture in China, Changzhou Kwang Yang Motor Co., launches production; Kymco becomes technically independent of Honda.
1996:: A production joint venture is established in Indonesia.
1999:: A second research and development facility is opened in Taiwan.
2000:: The company launches its first 250cc models for the export market.
2001:: The company adopts a new diversified vehicle strategy, developing ATV and mobility scooters.
2002:: The first ATV model for the export market is launched.
2005:: The company forms a production joint venture in Vietnam.
2006:: The company launches its first 500cc ATV model.

By 2000, Kymco had developed a new 250cc scooter, the B&W, which it launched on the export market that year. By the end of that year, Kymco had added a second 250cc vehicle, a motorcycle featuring a V-type engine called the Venox, which also joined the group's range of export models. These larger PTWs enabled Kymco to position for a rapid deployment in the domestic market, as the Taiwanese government lifted the ban on heavy bikes in July 2002. In addition to rolling out the Venox in Taiwan, the company added two more 250cc bikes, the Ego and the Grand Dink heavy scooter. The latter had achieved a degree of success in the international market, notably in Europe, and was capable of being scaled up to displacements as high as 700cc.

Kymco added its first ATV model in early 2002, with the launch of the MXer 150. The company also continued to develop its line of heavy bikes, debuting a 500cc scooter, the Xciting, in 2003. In that year, the company added another new product category, mobility scooters, that is, electric vehicles for people of reduced mobility, launching its first electric-powered scooter, called the Energy.

Kymco's ATV offering also was expanded in 2003, with the launch of a new 250cc model. The larger displacement was specifically designed to target the group's entry into the North American market. The 250 cc model also helped drive Kymco's rapidly growing status in Europe. By mid-2004, the company was able to claim the lead in the European ATV market.

Kymco continued seeking out new international expansion opportunities into the mid-2000s. India became an important target market for the company, where the growing economic status of its roughly one billion citizens promised a potentially huge market for Kymco's vehicles. The company began actively seeking out a local partner to aid its entry into the Indian subcontinent.

At the same time, Kymco established a foothold in the Middle East, forming a technical partnership with Iran's Hongkings Co. The company also entered Vietnam, launching a joint venture, Hoalam Kymco Motor Corporation, in Ho Chi Minh City, in 2005. By then, the company had completed construction of a new production plant in Taiwan, specifically for the development and production of the group's mobility scooters and ATV segments. The latter category remained the group's spearhead into the important North American market. By 2006, the company had successfully launched a full range of ATVs in the United States and Canada, ranging from an entry-level 50cc model, to its latest and largest, a 500cc ATV. After 40 years in business, Kymco had established itself among the world's leading "power-sports" vehicles producers.

PRINCIPAL SUBSIDIARIES

Changzhou Guangri Precision Machinery Co., Ltd. (China); Changzhou Kwang Hsing Precise Machine Co., Ltd. (China); Changzhou Kwang Yang Motor Co., Ltd. (China); Hoalam Kymco Motor Corporation (Vietnam; 50%); Hunan Kinlon Kwang Yang Motor Co., Ltd. (China; 50%); PT. Kymco Lippo Motor Indonesia (Philippines; 50%).