The cost reducing decision is the first major action taken by Yulon Group’s new five member top management team. The new strategy might seem surprising, if we consider that automotive sales have recovered in the second half of 2009, with the whole year reports expected to show a 30% growth, up to 300,000 units.
However, company executives motivate their financial plan by saying that they don’t expect a growth in the country’s 2010 auto market, as predictions show that the sales figure will only reach 250,000 -260,000 units, due to the fact that the government will put an end to the current national scrappage scheme.
Yulon officials also showed that the main share of the group’s earnings for 2009 resulted from non-core businesses and that the minuscule car sales in the first six months might even bring a negative general financial result for the group, at the end of the year.
On the other hand, Yulon has decided to invest in the release of its sub-brand Luxgen, with the aim of developing a good corporate image set for the short-term.
Together with continental carmaker Geely, the group will produce small electric vehicles. Yulon will also manufacture Nissan Bluebird cars for its other mainland partner, Dongfeng Motors. The Dongfeng-Yulon joint-venture in Hanghzou will produce family sedans, SUVs and probably the Luxgen7 MPV.