The purr of sleek foreign cars could soon be a lot more audible on the streets of Taiwan now that the nation has joined the WTO.
With prices of imported models set to fall gradually to more affordable levels, auto industry experts say membership in the global trading body could be a boon for sales of foreign cars on the island in the coming years.
"With the reduction of duties, imported cars will become more competitive and therefore I foresee that the share of the imported car market will go up," said Volker Harms, president of DaimlerChrysler Taiwan Ltd.
Prior to WTO entry in January, the government slapped heavy import duties and taxes on foreign cars, but those rates are set to be gradually slashed.
Import tariffs on cars will be gradually lowered to 17.5 percent in 2010 from 30 percent before WTO entry. Meanwhile, for cars with 3,601cc and above engines, a commodity tax of 60 percent will be cut to 35 percent within the first five years of the nation's membership in the body.
Auto sales have been sluggish in recent years amid a downturn in the economy, with a total of 347,433 cars sold last year, down sharply from 420,467 units in 2000, according to industry statistics. But many in the industry are optimistic that sales will recover.
"I reckon the market will go up again medium-term to about 450,000 units. And we will be looking at a market share of about 3 percent of that [for Mercedes-Benz cars]," said Harms, which was set up as a joint venture between the DaimlerChrysler AG and Taiwan's Capital Motors Inc, at the start of the year. Capital Motors is the former distributor of Mercedes-Benz cars in Taiwan.
Not that Taiwan doesn't already have its fair share of cars. The Environmental Protection Administration reported in 2000 that 5.36 million autos were registered nationwide which, with a population of 23 million people and a size equivalent to that of the Netherlands, is among the most densely "car-populated" parts of the world.
* Some industry players expect new car sales to hit 450,000 units annually, up from 347,433 last year.
* DaimlerChrysler expects to sell around 3,000 to 4,000 of its compact Smart cars in Taiwan within the next five years.
* Mercedes-Benz, which sold 9,244 units in Taiwan last year and is a favorite of the "laobans," should also be helped by tariff reductions.
But for many Taiwanese, ownership of a car, especially an imported one, is all about "face" and social status.
"In the Italian market, people don't really care about so-called reliability or durability -- they buy performance. In France they buy a design or style," said Jack Lin, general manager at Beldare Motors Ltd (標達汽車), a unit of the Swire Group and the distributor of Volkswagen cars in Taiwan. "But in Taiwan, the main concern is brand image."
Some 9,244 Mercedes-Benz models were sold in Taiwan last year, for example, making the nation the second most important market in Asia after Japan for the luxury car. But with a price tag of NT$1.7 million (US$48,600) for its C200 Kompressor model after import duties, it's beyond the means of most Taiwanese.
It's also roughly double the 28,300 euros (US$24,600) consumers in Germany pay for the same model with standard features.
The prestige attached to cars in Taiwan also extends to the interior where consumers look for the latest in high-tech equipment and comfort, something foreign players in the market are quick to cater to.
"The Taiwan customer is very demanding in certain areas. They want all the gimmicks, either VCD, navigation system, massage seats, everything," said Jeffrey Shen (