Luxury sedans would seem a risky bet in a time of global economic strife, but Taiwan's Yulon Motor believes it has found the right formula: Its car is cheap and it is destined for China.

Yulon's Luxgen model boasts global positioning, night vision and blind-spot cameras -- and at 800,000 Taiwan dollars (25,000 US dollars), the company hopes it will appeal to tech-savvy but only moderately wealthy Chinese consumers.

"Many of the functions will be found only on luxury sedans worth up to five times as much," K.C. Hu, president of Yulon Group subsidiary Luxgen Motor Co., told AFP in an interview.

Yulon put the finishing touches to the Luxgen -- coined from the words "luxury" and "genius" -- last year, when the car market worldwide was deep in the doldrums.

"Looking back, we'll find that we couldn't have picked a better time than last year to recruit the talent and buy the equipment we need," said Hu.

"If we had postponed the launch of the brand, it would have cost a whole lot more money."

Yulon was founded in 1953 as Taiwan's government pursued ambitions to create a home-grown auto industry. That goal was scaled down over the decades and now Yulon is best known for producing Nissan cars in Taiwan on licence.

The Luxgen project, started more than four years ago, has cost Yulon about 15 billion Taiwan dollars, but it says the gamble is already paying off.

The first Luxgen -- a 2.2-litre minivan for family use -- was unveiled in Taiwan in September and since then Yulon has received orders from more than 3,000 local motorists.

In a market where monthly sales of people-carriers are a meagre 300 units, the response has been encouraging.

Buyers say they like its high-tech system, developed jointly with Taipei-based HTC Corp., one of the island's leading smartphone suppliers.

But Taiwan, with its population of 23 million, offers limited opportunities, which is why Luxgen is looking to the billion-plus Chinese market.

Cross-strait trade has rocketed since Taiwan relaxed a decades-old ban on civilian contacts with mainland China in 1987.

And with sales topping 13 million units last year, China has replaced the United States as the world's biggest auto market.

"It's unlikely the Luxgen would turn a profit if its sales were confined to Taiwan," said Kevin Tsui, an analyst with SinoPac Securities. "The local market is too small to support the development of a local brand."

The Luxgen series for the mainland market may be produced at a plant in the eastern Chinese province of Zhejiang, a joint venture with Dongfeng Automobile Co. that is awaiting the green light from China's government.

"The odds of success are 50 percent," Tsui said. "However, if it (Yulon) did not do it this way, it would have no chance of surviving in today's extremely competitive market."

Yulon has already invested in a joint venture with a Chinese automaker and Daimler to make Mercedes vans in the southeastern province of Fujian.

Meanwhile, Yulon's smaller local rival, Sanyang Industry, controls 25 percent of Xiamen King Long, a Chinese bus maker.

But Taiwan's carmakers, unlike their German, US, Japanese and South Korean rivals, have failed to build a major role in the Chinese market due to their lack of proprietary technology.

This marks Yulon's most ambitious foray since 1986, when it launched another model based on its own technology, a series of cars called "Feiling".

But the Feiling project failed because it could not match the cutting-edge auto technology of the day.

"Yulon learnt a lot from the painful lesson. The success of Luxgen, at least initially, has built on that experience," said Toreo Lin, editor-in-chief of Taipei-based Auto Graphic magazine.