Vehicle sales down 30 percent in first 11 months of 2006

Local car sales from January to last month plunged 29.3 percent to 335,511 units from the corresponding period last year, according to the latest figures from the Ministry of Transportation and Communications.

Car sales slumped on weak private consumption, and vendors expect sales to remain sluggish for the rest of the year.

"It looks like total sales [for the year] will only reach 360,000 units by the end of this month," Steven Yang (楊湘泉), spokesman of Hotai Motor Co (和泰汽車), the nation's largest automaker, said in a telephone interview yesterday.

That figure constitutes a nearly 30 percent drop from last year's 510,000 units, which was a 10-year record high.

"Constrained income growth and weak private consumption will continue to discourage buying of autos, while a tight credit environment coupled with political concerns will prompt consumers to tighten their belts on non-essentials," Macquarie Re-search Equities analysts Angus Chuang and Scott Weaver said in a report released on Wednesday.

Chuang and Weaver predicted that consumer confidence -- the driving force of auto sales -- would remain low, affected by concerns over stagnant salaries, soft retail sales and political problems.

Based on this, Macquarie lowered its earlier forecast of car sales by 14 percent, predicting there would be 369,000 cars sold next year.

During the first 11 months of this year, Ford Lio Ho Motor Co (福特六和), the nation's fourth-biggest automaker, saw the steepest decline in sales -- down 45 percent to 28,525 units.

Sales of Yulon Nissan Motor Co (裕隆日產), the third-largest automaker, declined 39.5 percent to 37,370 units.

Market leaders Hotai Motor and China Motor Corp (中華汽車) reported declines of 28.3 percent to 96,455 units and 36.2 percent to 52,230 units, respectively.

In view of the discouraging market prospects this year, both Yulon Nissan and Yulon Motor Co (裕隆汽車), which assembles and sells cars for Yulon Nissan, announced a cut in their annual earning forecasts on Wednesday after board meetings.

Yulon Nissan lowered its revenue target by 15.2 percent to NT$30.73 billion (US$950,000) and cut its income forecast by 33.1 percent to NT$1.8 billion.

Yulon Motor lowered its annual revenue forecast to NT$26.8 billion, which is a 41.7 percent cut from its earlier projection. Its income forecast was also slashed to NT$4 billion from NT$5 billion.

Macquarie listed Hotai Motor, China Motor and Yulon Motor as "underperforming" companies -- a step down from their previous listing as "neutral."

Macquarie predicted that weak consumer confidence would continue to erode the profits of auto companies, adding that the high cost of raw materials and a tariff cut on imported cars could also dampen their profits next year.