The global auto industry is entering an unusual phase of expansion—one driven less by strategic ambition than by the need to survive. China's automakers have unleashed a surge of exports that, at first glance, looks like an aggressive push into overseas markets. Beneath the surface, however, lies a harsher reality: cutthroat competition at home and a deepening structural overcapacity that is leaving many firms with few viable alternatives.

One of the most talked-about topics in Taiwan's auto market in recent weeks is the widely circulated report that Foxtron Vehicle Technologies—the joint venture between Foxconn and Yulon Motor—is preparing to acquire Luxgen, Yulon's own passenger-car brand. The industry remains divided on the implications, but many observers see the move as one that could ultimately benefit both sides.