Automakers pessimistic about 2006

Automakers are bracing themselves for a bleak year in terms of new automobile sales as a result of escalating fuel costs and weaker spending power.

"The overall market has indeed been sluggish so far," said Steven Yang (楊湘泉), a spokesperson for Hotai Motor Co (和泰汽車), the nation's largest automaker which distributes vehicles made under the Toyota brand.

The slump was evident from last month's sales figures, as most vendors saw a huge drop in what is traditionally a peak month for car sales.

According to statistics compiled by the Ministry of Transportation and Communications, a total of 59,012 units were sold last month, representing a 22-percent decrease compared to the same period last year.

According to Yang, although employees might have extra money to spend after pocketing their Lunar New Year bonuses, they are becoming more price-conscious.

"Buyers are determined to buy a new car at exactly the right time in order to enjoy the best possible savings," he added.

Increased price-consciousness is a result of escalating fuel costs and a rising consumer price index, as well as lower salary increases for many employees, according to Yang.

As a result, Hotai Motor -- which had hoped to sell 150,000 vehicles in the nation this year -- has trimmed its target by 5,000 units.

The company, along with the nation's fourth largest vendor, Ford Lio Ho Motor Co (福特六和), both expect that total car sales will not be able to achieve the same growth recorded last year.

Auto sales last year surpassed 500,000 units for the first time in 10 years. The official total was 514,626 units, up 6.3 percent from 484,286 units in 2004, according to ministry data.

And these automakers are not alone in painting a gloomy outlook for the year.

US investment-research firm Merrill Lynch predicted last week that local auto sales will drop to 490,411 units this year, further slowing to 480,156 next year.

"Market demand will slide as a portion of the new car market has been substituted by second-hand vehicles. The market is also constrained by limited roadway, population growth, as well as industrial migration to China," the report said.

Amid the somber sentiment, smaller automakers such as Formosa Automobile Corp (台朔汽車) are banking on new models to help them expand their market share.

"The new Skoda models have been well received by consumers and we are hoping to sell 3,500 units this year. We have already received 300 orders so far," Formosa Automobile executive vice president Seiko Chen (陳勝光) told a media gathering yesterday.

Last December, the company announced a deal with Skoda Auto AG -- an affiliate of German auto giant VW Group along with Volkswagen AG and Audi AG -- to bring in 12 models under the Octavia, Superb and Fabia labels.

Formosa Automobile plans to assemble the Fabia brand locally from early next year, in a move to bring down production costs and cement its partnership with the Czech maker, he added.