Auto industy braces for drop in short-term sales

Tuesday's earthquake forced Yulon Motor Co Ltd (裕隆汽車) to revise its forecast for Taiwan's car sales in 1999 downward from 420,000 units to 400,000 units due to weak buying sentiment.

"Based on the experience of Japan, where car sales dropped by more than 50 percent after the country was struck by an earthquake in 1995, we believe that the market here is expected to repeat this phenomenon and see a sales decline of more than 50 percent from now to Oct. 21, " said Steve Tsay (蔡文榮), vice president with Yulon.

He added that Yulon's sales alone are expected to fall by 2,000 to 3,000 units between now and Oct. 21. Given this shrinkage in sales, the company has been forced to trim its overall forecast for domestic sales this year.

According to Yulon's own damage assessment, losses resulting from the earthquake come to about NT$5 million in inventory damage and NT$4 million in wasted personnel expenditure, said Tsay. He added that the company resumed normal operations on Thursday and found only one sale outlet had been ruined in the earthquake.

"We have really been very lucky throughout this disaster," said Tsay. "We had electricity back on Tuesday night, thus enabling us to run equipment tests on Wednesday and resume normal production on Thursday," he said.

However, not all car manufactures have been quite so lucky. Other companies, such as Kuozui Motors Ltd (國瑞汽車), Ford Lio Ho Motor Co Ltd (福特六和), China Motor Corp (中華汽車) and San Yang Industrial Co Ltd (三陽工業) still had operations suspended on Thursday, marking the third consecutive such day of suspension, due to a lack of electricity. As yet, though, no serious casualties have been reported.

Su Ching-yang (蘇慶陽), president of China Motors, said the company will make up the reduced output caused by the suspension by working extended hours once its electricity supply resumes.

An executive at Kuozui Motors said its production plan would be seriously affected if the electricity supply isn't back next week. "If the power shortage continues, it will delay the delivery of some of our orders," he said.

He also urged the government to keep manufacturers informed of the situation with regard to electricity supply, and in particular the times when there will be power. In this way, companies can arrange production lines accordingly.

So far, none of these five companies have had the problem of delays in deliveries from their material and component suppliers. "All of our 129 material and component suppliers are intact," said Tsay. "The only problem is that the electricity comes on and off, and that will affect deliveries in the following weeks. We will watch the situation carefully," he said.

Yulon has donated a total of NT$20 million to the rescue teams and victims; it is also providing a no-interest rescue loan to any of its employees or employees' family who have been hurt in the earthquake. The loan, available to each person, can be as much as NT$300,000. Further, the company has also opened a dormitory for employees who lost their homes during the earthquake.