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Auto sales forecast sees recovery in 2007

After hitting a bump on the road last year, the local automotive market is expected to recover slightly this year, industry watchers said yesterday.

"The auto market will see an improvement from last year, but the upside will not be huge," said Sam Wu (吳鴻昇), an analyst at Yuanta Core Pacific Capital Management (元大京華投顧).

Wu said that the negative factors which dragged car sales to the bottom last year would no longer be in effect this year.

For instance, there will only be one Ghost Month, instead of the two we had last year, which affected sales of big-ticket items, he said.

Consumer confidence

The impact of the credit and cash card debts, which plagued the nation last year, would also gradually fade this year, allowing consumer confidence and spending to rise, Wu said.

Figures released by the Ministry of Transportation and Communications yesterday showed that local car sales plunged 29 percent to 366,311 units last year.

Ford Lio Ho Motor Co (福特六和), the nation's fourth-biggest automaker, was the hardest hit, posting a 45 percent decline to 30,212 units during the period.

Sales of Yulon Nissan Motor Co (裕隆日產), the third-largest maker, declined 39 percent to 40,117 units.

The top two makers -- Hotai Motor Co (和泰汽車) and China Motor Corp (中華汽車) -- reported declines of 28 percent and 35 percent, to 107,462 units and 55,894 units, respectively, the data showed.

Soft pick-up

Wu said that the market this year should pick up 6.5 percent and exceed 390,000 units, a figure echoed by other car makers.

Steven Yang (楊湘泉), spokesman for Hotai Motor, said that the company has set a sales target of 120,000 units this year and expects to raise its market share slightly to more than 30 percent from 29 percent last year.

Smaller rivals Yulon Nissan is aiming for a 15 percent increase in auto sales, while China Motor is targeting a 10 percent rise in vehicle sales.

Given a limited domestic market, automakers are expected to speed up their pace in deployment across the Strait, as well as in exporting cars to overseas markets,Wu said.

Tough competition

"It is a must for automakers to move into China's rapidly growing market. But there are just too many brands and too many new car launches there, which will eat into local makers' profitability," he said.

Ventures of Taiwanese firms in China would only see better profitability after the industry undergoes consolidation, the analyst said.

Meanwhile, China Motor announced on Monday that Chinese authorities had approved the establishment of its second joint venture across the strait, known as DaimlerChrysler Vans (China) Ltd (DCVC).

With a planned investment of 200 million euros (US$260 million), DCVC will focus on supplying Vito/Viano luxury multi-purpose vehicles and Sprinter commercial trucks.
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