Shares of Hotai Motor Co (和泰汽車), the leading car distributor in Taiwan, soared close to the 7 percent daily limit yesterday after the Cabinet announced that it would subsidize the replacement of old taxis and buses.
Shares of the company, which distributes Toyota and Lexus vehicles, rose 6.87 percent to NT$303.5 yesterday, outperforming the TAIEX, which was down 0.21 percent.
The government’s subsidies will be used to replace taxis that have been used for more than five years, although the government will only pay for the replacement of 4,000 cars in total.
Meanwhile, car buyers will receive NT$115,000 (US$3,835) for purchasing a hybrid car and NT$40,000 for purchasing a gasoline car, the Cabinet said.
As for the replacement of buses that have been used for more than 10 years, the government will subsidize buyers with between NT$120,000 and NT$2.33 million.
The subsidy plan will benefit Hotai, as the company enjoys the largest market share in the local taxi market, Hotai deputy spokesman Yu Shiao-chung (喻曉忠) said by telephone.
The company also sells Hino buses in Taiwan and was the first in Taiwan to sell a locally manufactured hybrid car, the Camry Hybrid, Yu said.
Last year, Hotai sold about 6,600 taxis, accounting for 89 percent of the local market, trailed by Yulon Nissan Motor Co (裕隆日產), which had a market share of 7.8 percent last year. Hotai did not offer sales numbers for its buses.
Yulon Nissan said the stimulus plan will help increase the sales of its taxis, but it was still too early to estimate the increase in sales.
Shares of Yulon Nissan rose 3.03 percent yesterday to NT$272 on the local bourse.
Fubon Securities Investment Services Co (富邦投顧) analyst Sean Ryan Hsiao (蕭文良) said Hotai is likely to benefit the most from the subsidies on taxis because of its market share, but the extent will not be significant.
“The government is only going to subsidize the replacement of 4,000 taxis and the number is small compared with the total sales of 123,740 units that Hotai posted last year,” Hsiao said yesterday.
Furthermore, Hsiao estimated that local companies are unlikely to benefit much from subsidies on buses, because most buses in Taiwan are imported.
Even with the stimulus plan, Hsiao forecast that the car market this year would still shrink by 3.5 to 4 percent, to between 340,000 and 350,000 units from 366,000 units a year ago, because of current economic conditions.