Thu, Jan 12, 2006 - Page 13 News List

Freebies boost sales for auto dealers

Last year looked like being a bad one for the local car industry but free gifts made it a good one. The trend looks set to continue this year

By Gavin Phipps  /  STAFF REPORTER

At the beginning of last year the local automobile industry predicted a year of doom and gloom. Forecasts for sales of locally produced and imported cars were expected to peak at around 490,000 units. Some even predicted that the year would turn out to be the worst since 2001, when the number of vehicle registrations hit rock bottom at 347,000 units.

Even before the Lunar New Year, industry insiders were getting ready to blame the rising price of crude oil and steel on the downshift. By August it looked as if these predictions were proved correct when the nation's auto market hit an all-time mid-year low.

"The forecast was not good," said Hotai Motor Company's (和泰汽車) Steven Yang (楊湘泉) "Ghost Month, when people tend to spend less didn't help and we were [still] seeing rising steel and crude oil prices. More and more people were thinking twice before buying a new car."

Although August is traditionally a slow month for the car market, in 2005 local venders saw sales plummet to an average of between 25 percent and 45 percent below those of previous years. Mitsubishi sales fell by 50 percent from 10,493 units to 4,097 units and Ford sales fell from 5,870 units to 3,231 units.

Even the nation's largest auto manufacturer, Hotai Motor Company, which assembles and distributes Toyota and Lexus models, didn't escape unscathed. It reported sales of a mere 5,339 units, or a drop of over 75 percent compared with July's sales, which stood at 19,558 units.

With local manufacturers resigned to defeat by mid-2005 the companies took action and went all out to boost sales in the last quarter. By November sales of Toyota had risen to just over 11,000 and Mitsubishi had eked its way back with sales returning to the region of 5,000 units.

"Everyone was very nervous in October and sales had [plummeted] across the board. It was an alert signal for us, so we introduced special promotions and gave [Toyota] dealers the go-ahead to drop prices by 4 percent to 5 percent and in certain cases even greater amounts," Yang said.

Toyota certainly wasn't alone in its choice to cut prices and give free gifts to new car buyers. Hyundai and Nissan both set out to woo possible buyers by offering incentives such as free flat-screen TVs and scooters. It might sound odd that the offer of a free TV would be pursued when someone was thinking of buying an expensive car, but the schemes worked far better then anyone would have expected.

By years end local car manufacturers had managed to surpass their expected sales figures. When the sales figures were released earlier this month Hotai had beaten the odds and managed an all-time high by selling 150,324 units out of a national combined total of 514,626 units, which was -- to everyone's surprise -- a rise of 6.3 percent from the 2004 figures.

In second place came Mitsubishi, which knocked China Motors (中華汽車) out of second place, with a total of 88,800 units sold, thanks largely to the cut in price of its top selling 1.6l Lancer, the retail value of which dropped as low as NT$450,000.

China Motors and Yulon Nissan were the biggest domestic losers of 2005 with total sales coming in at 86,661 and 65,292 respectively. Ford Lio ho (福特六和) came a respectable fourth with sales numbering 55,283. According to Ford dealer Chou Fei-wen (周斐文), the continued popularity of its NT$600,000 Ford Focus and the slightly pricier NT$750,000 Ford Escape helped the company to survive what could have been a disastrous year.

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