Taiwan Autos Report 2008

The downturn in Taiwan's automotive industry, which began in 2006 with a 31% drop in new vehicle sales, continued in 2007 and is expected to do the same in 2008. BMI has revised its five-year forecast, now expanded to 2012, to reflect a further decline in both sales and production in 2008, although we expect the results of the presidential elections to result in sufficient economic stability to generate a recovery from 2009 onwards. After a 5% drop in sales in 2008, BMI would expect average annual sales growth in the region of 4% for the remainder of the forecast period.

The change in the structure of the Taiwanese autos market in 2005 has also continued, shifting away from sports utility vehicles (SUVs) and commercial vehicles towards cheaper hatchbacks. Indeed, output in the passenger car segment grew by 0.65% in 2007, compared with a contraction in the commercial vehicle market of 23%. However, sales for both segments fell due to the severity of the overall market downturn, although car sales fell by just 2.4%, while commercial vehicles were down by over 28% in 2007. BMI expects commercial vehicle sales to return to positive growth from 2009, although a return to 60,000 units or more will not be achieved by 2012.

With another year of market contraction forecast for Taiwan's automotive industry, the market has slipped to joint 11th in BMI's Business Environment Ranking for the industry in the Asia Pacific region. The level of vehicle ownership remains reasonably high, reducing the scope for market penetration, while the fall in production drags on Taiwan's score for CBU output potential. However, the inauguration of a new government and president should boost both business and consumer sentiment, and the country's WTO membership increases the stability of the regulatory environment.

Kuozui, Toyota's representative in Taiwan, continues to dominate the market with more than double the sales of its nearest rival in 2007. Kuozui sold 99,346 units in 2007, compared with 48,842 units for Mitsubishi representative CMC in second. One of the best performances, however, came from Taiwan Honda, which posted growth of 29.5% against all market trends. Although Taiwan Honda retained its position in the market, the performance has moved the company within reach of Nissan affiliate Yulon. This could provide one of the most hard-fought battles for market share in the year to come.