Tighter lending policies as a result of rising bad debt in credit and cash cards have impacted on the nation's automobile markets for both new and second-hand cars, vendors said yesterday.
"The stiffer [standards for] approving car loans has made the used-car market bleed," Barry Hung (
An affiliate to Yulon Group (裕隆集團), Sinjang is the nation's largest used-car auctioneer, selling vehicles to around 800 dealers nationwide.
Consumer spending has been dealt a blow recently as financial institutions have started to tighten policies for loans and credit and cash cards in a bid to stop bad debt from snowballing further.
As most buyers purchase second-hand vehicles using bank loans, the lower approval rates have caused some buyers -- even those who have good credit history -- to defer their purchases, Hung said.
According to a rough estimate gathered from its dealers, used-car sales for the first three months plunged 50 percent from the same period a year ago, he said.
"Unless lenders relax the rules, we will see the deteriorating situation drag on for the whole year, prompting second-hand car sales to fall below the 600,000 units sold last year," he said.
The business for new vehicles has also been faring badly.
According to statistics compiled by the Ministry of Transportation and Communications, sales of new cars dipped by nearly 25 percent in the first quarter.
Vendors only managed to sell 113,003 units in the three-month period through March.
"Auto firms traditionally will see brisk business in first quarter as purchases flood in before the Lunar New Year or after employees pocket their bonuses," said an auto firm executive who asked not to be named.
But this year, consumers tightened their purse strings even before the expected slowdown this month and next, he added.
"While we remain positive on car replacement demand, we are lowering our Taiwan [new] automobile sales forecast by 2 percent to 507,000 units, mainly due to tighter bank credit policies," Macquarie Research Equities said in a report released last Tuesday.
Macquarie downgraded Hotai Motor Co (
"We believe Hotai is facing more serious challenges in the passenger and sports and utility/recreational vehicle segments from models launched by peers," Macquarie said in the report.
In the second quarter, Hotai's Toyota Altis sedans will face a challenge from new Honda Civic passenger cars, while the Honda CR-V and Mazda M5 are gaining market share from Toyota Wish minivans, the report said.
In the luxury segment, Lexus may see slower growth, given the narrowing price gap with BMW and Mercedes Benz, Macquarie said, setting a 12-month price target of NT$79.00 for Hotai.
Hotai shares advanced 1.08 percent to NT$65.3 yesterday.