Quality Supplier Screening and Evaluation Mechanism 

HLC fully implements 100% local procurement across Taiwan's main island and outlying islands. By shortening supply chain transportation distances, we effectively reduce our carbon footprint, thereby lowering carbon emissions during operations. At the same time, prioritizing local suppliers not only strengthens local economic development but also promotes the sustainable operation of regional industrial chains, thus achieving the dual benefits of environmental friendliness and economic growth. 

Supplier Management Practices 

HLC has established "Supplier Management Procedures" and "Procurement Management Procedures" as the basis for all units to follow when selecting, evaluating, supervising suppliers, and conducting procurement transactions. 

For new suppliers, the requesting unit fills out the "Supplier Evaluation Form" to assess aspects of affiliates’ verification, reasonableness of quotation, product performance, delivery time, acceptance and return/exchange methods, and reasonableness of after-sales service and repair/maintenance costs. Based on the evaluation results, suppliers are included in the qualified supplier list. Currently, environmental or social criteria are not yet adopted to screen new suppliers. However, the Company plans to formulate a "Supplier Code of Conduct and Social Responsibility Commitment" in 2025, to work with suppliers to ensure that they fulfill their social responsibilities in respect of human rights at work, environmental sustainability, and anti-corruption and ethical corporate management. 

For existing suppliers, the General Affairs Department initiates annual supplier assessment operations in the second half of each year as per the "Supplier Management Procedures". Each unit can rate suppliers with whom they transacted during the year in ten key dimensions: supply quality, delivery or schedule adherence, service attitude, technical capability, overall ability to provide solutions, product friendliness or ease of use, supplier operational status, efficiency of repair or problem resolution, cost-effectiveness, and overall service quality. Suppliers scoring 80 points or above are considered qualified and can continue to do business with the Company. Those scoring between 70 and 79 points are categorized as conditional suppliers, with the decision to list them as "vendors under observation" or "no longer collaborate with" determined by the requesting department. Suppliers scoring 69 points or below are deemed unqualified, resulting in the termination of business relations and disqualification. This system allows us to control suppliers’ service quality and performance in terms of cooperation. 

For the Customer Service Department’s suppliers, the Company has an additional "Outsourced Vendor Management Guidelines," which explicitly stipulate quarterly vendor evaluations. For different types of outsourced suppliers, there are different evaluation items in three major dimensions: "professionalism," "customer service," and "work attitude." Calculated out of a perfect score of 10, a score greater than 6.5 allows for contract renewal; scores between 6 and 6.5 categorize them as vendors under observation, for whom the Company will send personnel to provide support and guidance. If, after review, the results do not meet standards, the Company will not renew or will immediately terminate the contract. If a vendor scores below 6 points, their contract will be terminated. 

The General Affairs Office compiles the results of supplier evaluations from all units and makes recommendations for "approved for continued collaboration," "under observation," or "not approved for collaboration". Vendors with poor cooperation or unstable supply quality are under observation or on an elimination list. The observation period is a maximum of one year, during which the evaluation unit directly requests the supplier to make improvements. A re-evaluation is conducted at the end of the observation period, and the supplier's improvement status serves as the basis for continued collaboration, thereby reducing the Company's operational risks.

Green Procurement  

HLC actively implements green procurement by prioritizing products and services in line with environmental standards, including energy-efficient equipment, low-carbon materials, and eco-certified goods, to ensure that the supply chain aligns with sustainable development principles. By adopting measures, such as introducing low-emission (plug-in) HEVs and EVs, selecting high-efficiency equipment, and purchasing FSC-certified paper, we not only reduce environmental impact but also moitivate suppliers to collectively pursue green transformation. Starting in 2024, HLC initiated a comprehensive energy-efficient equipment replacement program, to replace regularly operating air conditioning and lighting equipment first and gradually expand to broader areas, thus contributing to environmental sustainability. The total green procurement for the year amounted to NT$20.17 million. In the future, the Company will continue to take more proactive actions to deepen its green procurement policy, strengthen supply chain management, and achieve a win-win for environmental responsibility and corporate operations. 

Alliance Member Management

The full realization of an alliance brand's value depends on its members' quality management and ability to meet customers’ needs through their products and services. Since HLC successively established the HOT Car Alliance in 2010 and the HOT Repair/Maintenance Alliance in 2013. By the end of 2024, the total number of HOT Alliance’s members had reached 623 across Taiwan. Of these, the HOT Car Alliance has 423 used car dealer members, and the HOT Repair/Maintenance Alliance has 200 repair shop members. The objective is to create a professional and high-quality used car transaction and repair/maintenance environment. 

Member Review and Evaluation Mechanism 

To ensure the quality management of franchise members, car dealers or repair shops must pass the Company's internal review mechanism before officially joining the HOT Alliance. In addition to ethical corporate management as a basic requirement, they must achieve an annual installment transaction volume of over NT$8 million and be confirmed that they have no negative reputation records in HLC 's proactive audit. The HOT Repair/Maintenance Alliance’s franchisees must also possess at least two vehicle lifts and two or more professional repair technicians, pass internal operational and technical standard reviews, and maintain a good reputation. 

After joining, HLC establishes an alliance member evaluation mechanism to conduct regular evaluations semi-annually and finalize evaluation scores at the end of each year. The evaluation is divided into three major dimensions: "performance," "management," and "service". As for "brand maintenance" of the “management” dimension, sales personnel conduct inter-regional cross-evaluations every six months. They assess whether the in-store and external environment, signage presentation, product/tool displays, and promotional material placement comply with the alliance’s regulations. Regarding policy adherence, the evaluation focuses on understanding whether franchisees are implementing the headquarters' policies (for example, their cooperation with warranty activation). 

Members who fail to meet the evaluation standards will be offered guidance and opportunities for improvement to help them enhance their operations and service quality. If members fail to comply with improvement measures, the alliance reserves the right to terminate the contract proactively to ensure overall brand image and service quality, thus maintaining the alliance's professionalism and market reputation. In 2024, there were no members who failed to meet evaluation standards and also failed to cooperate with improvements, indicating that all the alliance’s members continue to meet established requirements, consistently provide high-quality services, and jointly maintain the alliance's brand value and market competitiveness. 

Incentive Mechanism 

To encourage franchisees to comply with the alliance’s regulations and recognize outstanding members’ efforts and contributions, we have established a comprehensive alliance member incentive mechanism. Award-winning members will be honored on stage at the annual convention. They will also receive the highest bonus points and purchasing funds, along with additional honorary prizes specific to their award category, as a token of our appreciation. 

Alliance’s Member Education and Training 

To continuously enhance all alliance members’ operational and business-related skills and capabilities, the Company regularly offers relevant education and training courses.