Taipei Times: Did the COVID-19 pandemic reduce scooter sales in Taiwan and curtail Kwang Yang Motor Co’s (光陽工業) shipments?
Ko Chun-ping (柯俊斌): In Taiwan, the pandemic has barely affected the company’s scooter sales, thanks to the government’s better control of the pandemic. It is true that consumers at first had a wait-and-see attitude toward scooter purchases in February and March when local infections started to emerge, but the government’s quick response to rein in the spread of the virus helped calm the public’s nerves. Our sales [by unit] bounced back afterward, bringing total sales up 2 percent year-on-year in the first half of this year. Likewise, overall scooter sales in Taiwan grew 2 percent annually to 403,199 units in the first six months of the year. For the full year, we expect that scooter sales in Taiwan might be similar to last year’s number of about 900,000 units, or pick up a little bit.
TT: As progress fighting the spread of COVID-19 is uneven around the world, how has the disease affected sales of KYMCO scooters overseas?
Photo: Lisa Wang, Taipei Times
Ko: The pandemic has had a bigger impact on our sales overseas, and we have seen a year-on-year decline of 20 to 30 percent thus far. By country, the spread of the virus is still very severe in Africa and Latin America, where Brazil, Argentina and Colombia are our major markets. Because of the lockdown measures imposed by governments there, customers have temporarily paused orders as consumers are restricted from going out to shop. Besides, based on feedback from our customers, there are still some inventories that need to be digested before new orders can be placed.
Orders from European markets have recovered lately as some countries are reopening their economies gradually, as infections are under control. Currently, Spain, France and Italy are our top markets in Europe, and we are seeing orders from European markets rebound and approach normal levels. In particular, orders this month have surpassed those we received during the same month last year. Looking ahead, we are positive about the outlook for European markets as scooter distributors and shops need to buy environmentally friendly scooters in preparation for the implementation of new Euopean emission rules that are to take effect in January next year. Therefore, we expect our employees to have to start working overtime in the second half of the year, which has been the norm for us for years.
TT: How did adjustments in tax incentives and subsidies from the government change the landscape of the domestic scooter market this year?
Photo courtesy of Kwang Yang Motor Co
Ko: Electric scooter makers are heavily reliant on the central and local governments’ subsidies to sell their products due to their high price tags. Last year, strong subsidies boosted sales of electric scooters significantly from Gogoro Inc (睿能創意) and members of the Powered by Gogoro Network, such as Yamaha Motor Taiwan Co (台灣山葉). That brought electric scooter makers’ local market share to a combined 18.7 percent.
However, electric scooter sales took a nosedive in January and only accounted for about 4.5 percent of total scooter sales in Taiwan, as the central and local governments for the first time included fuel-powered scooters in the tax incentive program that subsidizes purchases of new scooters to retire old ones. Total subsidies can be up to NT$13,300 per vehicle, including tax refunds, for purchases of scooters equipped with an anti-lock braking system, or a combined braking system, as well as a rebate of 17 percent in commodity tax.
Our efforts to promote tax equity starting last year are also affecting electric scooter sales. About eight counties, or half of the nation’s local governments, supported our appeal and granted tax refunds and subsidies for purchases of fuel-powered and electric scooters, which began this year. As a result, electric scooter makers no longer enjoy preferential status.
With the new tax incentives in place for the remainder of the year, electric scooter sales could drop a bit more. Besides, Gogoro recalled some scooters due to technical problems, which has also raised the public’s concern over the electric model’s safety. Meanwhile, rapid sales growth also resulted in an insufficient supply of fully charged batteries. In my view, all these factors are likely to lead to falling electric scooters sales this year.
TT: The Ministry of Finance has proposed extending the tax refund program for five years to accelerate the phasing out of older and less environmentally friendly scooters, as the existing program is to expire at the end of this year. Do you think the ministry’s proposal is a boon for scooter makers?
Ko: Not really. It is baffling because we had not heard of this ministry proposal until recently. Furthermore, as the tax incentive program has been in place for five years, the effect is softening, as a high percentage of old scooters have been replaced. For instance, only half of KYMCO scooter buyers applied for government subsidies recently, down from 70 percent last year. Besides, it is a complicated process to get government subsidies, as applicants need to fill in at least 15 application forms from five government agencies. To us, the tax refund program is a short-term substitute before the commodity tax is eliminated. The ministry has promised to scrap the tax entirely, but no timetable has been given.
TT: Kwang Yang has been calling on the government to cancel the 17 percent commodity tax on scooters. Why is that?
Ko: From our point of view, scooters are no longer considered luxury goods, but an important mobility option for commuters — especially for lower-income earners. In most cases, commodity taxes are levied only on luxury goods such as cars. Taiwan is one of the few countries in the world that still has the extra levy on scooters, and the tax adds a financial burden on consumers, as the prices of scooters are rising due to increasing costs. The total cost of a new and greener scooter that meets the government’s latest Phase 7 emissions standards is at least two times higher than for one meeting the Phase 1 emissions standards.
To meet growing stringent emissions rules, Kwang Yang invests up to NT$2 billion [US$67.54 million] a year in research and development. Our R&D staff has risen to about 700 people. However, as one of the nation’s manufacturers, we are only asking to make a decent gross margin of 5 percent.
For the ministry, the commodity tax on scooters contributed a net NT$3 billion to the national coffers, which is a very minimal portion of the total tax revenue. The ministry has seen tax revenue surpass its forecast by more than NT$50 billion per year over the past few years. So why does it bother to continue this tax? If the ministry decides not to get rid of the commodity tax, it should at least halve the 17 percent tax rate on fuel-powered scooters to match the 8.5 percent rate on electric scooters, in our opinion.
SUPPLY HICCUPS: Poor manufacturing yields at Apple’s overseas suppliers have caused at least one maker of its new MiniLED displays to pause production, sources said The next-generation display destined to be a highlight of Apple Inc’s upcoming top-tier iPad Pro is facing production issues that could lead to short initial supplies of the new device, people familiar with the matter said. The Cupertino, California-based tech giant plans to showcase a new MiniLED display technology in the 12.9-inch iPad Pro set to be announced as early as the second half of this month. However, the firm’s overseas suppliers are dealing with poor manufacturing yields, the people who asked not to be named discussing sensitive matters said. At least one of the MiniLED makers has had to pause production as
END OF AN ERA: The Boeing 747-400 jumbo jets have served the airline well, but new-generation aircraft are more fuel-efficient, CAL chairman Hsieh Shih-chien said China Airlines Ltd (CAL, 華航) yesterday bid farewell to its last four Boeing 747-400 planes, ending the era of the “Queen of the Skies” at the airline. CAL has since 1975 operated a total of 29 747 series aircraft manufactured by Boeing Co. In 1990, it started receiving delivery of 19 747-400 jumbo jets, with the last one, the B-18215, delivered in 2005, it said. The B-18215 was the last of the passenger model produced by Boeing, making the 16-year-old aircraft the world’s youngest 747-400, CAL chairman Hsieh Shih-chien (謝世謙) told an event to bid farewell to the planes at Taiwan Taoyuan
Several hundred people have already booked their tickets and begun training for a spectacular voyage: a few minutes, or perhaps days, in the weightlessness of space. The mainly wealthy first-time space travelers are preparing to take part in one of several private missions which are preparing to launch. The era of space tourism is on the horizon 60 years after Soviet cosmonaut Yuri Gagarin became the first person in space. Two companies, Virgin Galactic and Blue Origin LLC, are building spacecraft capable of sending private clients on suborbital flights to the edge of space lasting several minutes. Glenn King is the director of
SPECULATION: The integrated house and land transaction income tax has been amended as the real-estate market heats up because of high liquidity and low interest rates Lawmakers across party lines yesterday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act (所得稅法) is to come into effect, with the aim of curbing real-estate speculation. The consensus was reached following interparty negotiations at the legislature’s Finance Committee to determine when revisions to the “integrated house and land transaction income tax” would take effect. The committee on Monday last week passed a number of revisions to the act, but failed to agree on when they would take effect. Under the proposed revisions, the tax would be set at 45 percent
RSS