Hotai dismisses concerns over end of its tax breaks

Hotai Motor Co (和泰汽車), the nation's largest automobile vendor and distributor of Toyota and Lexus cars, is not planning to mark up prices, despite rising costs caused by the expiration of a tax break and soaring prices for raw materials.

"We have no plans to raise our selling prices this year ... considering the keen competition among auto vendors, especially as we have no new models to roll out this year," Hotai Motor's president Daniel Chang (張重彥) said at a press event yesterday.

Hotai Motor and Kuozui Motors Ltd (國瑞汽車), which assemble Toyota cars, will jointly absorb the increased costs after a 3 percent tax exemption expired at the end of last year, Chang said.

The government had offered tax exemptions ranging from 3 percent to 9 percent to automakers that used chassis, bodies and engines designed or developed locally in their cars, as part of a strategy to encourage local carmakers to stay and develop their business in Taiwan.

After Taiwan joined the WTO in 2002, it was given a three-year grace period to revoke these tax breaks, including the termination of commodity-tax breaks for domestic automakers at the end of last year.

Hotai Motor expects pre-tax income of over NT$3 billion (US$96 million) this year, down from NT$4.1 billion last year, while boosting sales to NT$100 billion from NT$76.2 billion.

The company's vice president Justin Su (蘇純興) said he predicts the nation's auto market to grow to about 490,000 units from around 484,000 units last year and hopes to sell 140,000 vehicles this year, up from 133,727 units last year, for a market share of more than 30 percent.

As of Feb. 20, Hotai Motor had sold 24,897 vehicles this year, followed by China Motors Corp's (中華汽車) 15,439 units, Yulon Nissan Motor Co's (裕隆日產) 13,957 units, Ford Lio Ho Motor Co's (福特六和) 11,600 units and Mazda Taiwan's 7,049 units, according to government statistics.