Following Taiwan's membership in the WTO, consumers were expecting prices of imported cars to gradually decline. But a local auto industry leader yesterday said that cutting import tariffs on cars won't create much room for prices to be greatly reduced.
"I don't think the market share of imported cars [in Taiwan], which is 18 percent now, will climb to above 25 percent within the next five years," said Jeffrey Shen (
Shen said that there will be little room for prices of imported cars to be slashed since a "1 percent to 1.5 percent reduction on import tariffs on average per year will only push dealers to lower prices -- on average -- by a few thousand NT dollars per year."
Import tariffs on cars will be gradually lowered to 17.5 percent in 2010 from the current 30 percent before Taiwan's WTO entry. Therefore, Shen said that local consumers are unlikely to rush to buy foreign cars simply because of "a difference of a few thousand NT dollars."
He added, however, that a commodity tax cut will likely boost sales of imported luxury cars with engines over 3,600cc priced above NT$2 million.
For such cars, the 60 percent sales tax will be reduced to 35 percent within the next five years.
"A 25 percent tax reduction means a price cut of at least NT$500,000 on a luxury vehicle. But only a small portion of consumers can afford to buy cars priced above NT$2 million," Shen said.
Local auto sales have been sluggish in recent years, with a total of 347,433 cars sold last year, down sharply from 420,467 units in 2000.
Some industry experts have expressed optimism that sales will recover in the third quarter if the domestic economy rebounds, but Shen thinks consumers will remain cautious, saying that "the company's studies found that sales will be about 350,000 units this year."
Nevertheless, "demand for recreation vehicles is expanding, taking 25 percent share of the market in Janaury," he said
Ford has developed six different RV models including sport-utility vehicles and multi-purposes vehicles, Shen said.
Commenting on local consumer purchasing patterns, Shen said that no brand loyalty can been found since "Taiwanese buyers are always looking for something new in the market place."
Ford, which already has two factories in China, plans to invest another NT$30 billion to 40 billion there, Shen said. He believes that annual auto demand across the Taiwan Strait will reach 7 million to 8 million cars within the next 10 years.
Ford will maintain its research and design center in Taiwan, he said. "Taiwan still has the upper hand in auto design and marketing," he said.
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