After a strong first quarter, growth in Taiwan’s new vehicle market slowed sharply in April and May, with cross-straits political tension rising and as economic activity in the country continued to slow. Data released by the Taiwan Transportation Vehicle Manufactures Association (TTVMA) shows domestic sales, excluding imports, rose by 9.5% year-on-year in January-May to 216,213 units, compared with year-on-year growth of 14.9% in the first quarter of the year. In May the domestic market growth rate fell to 2.3%, with sales amounting to 39,173 units compared with 38,149 a year earlier.
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Vehicle sales in the first five months of 2005, including imports, also increased by 9.5% – to 230,543 units, according to sources within the industry.
Taiwan Institute of Economic Institute in its monthly survey also revealed that the Taiwan manufacturers’ confidence dropped to its lowest levels since mid-2001, amid a strong build up in producer inventories and rising pressure on prices and margins. Year-on-year GDP growth data for the second quarter is expected to come in even lower than the already depressed 2.5% growth recorded in the first quarter. Export demand has also continued to deteriorate throughout the second quarter.
Economists at private banks have slashed full-year GDP growth forecasts on average by a full percentage point, with new forecasts ranging between 3.0-4.0% compared with 4.0-5.0% earlier in the year. Among the most pessimistic is UBS Securities, which is now forecasting GDP growth of around 3.0% for the full year. In 2004, the economy expanded by 5.9% amid robust domestic and export demand.
Most vehicle manufacturers have so far been reluctant to revise the forecasts they made earlier in the year, but most are becoming increasingly cautious about this year’s sales prospects. The consensus back in January was for little volume change this year compared with 2004’s total market volume, including imports, of 474,318 units.
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By GlobalDataStephen Yang, spokesman for Hotai Motor – Toyota’ distributor, this month said he still expects “5-6% volume growth in the total market this year, to around 495,000 units”. However, he added “this is based on Government GDP growth projections of 4.0-4.5%, which were made at the beginning of the year”.
Kuozui Motor, Toyota’s assembly joint venture, made significant progress in the first five months with sales growth of 24.6%. The introduction of the 2.0L Wish compact MPV last September has given Toyota a massive lift in the Taiwanese market, with sales of the model amounting to 15,313 units in the first five months of the year. Corolla sales amounted to 15,173 units and Vios sales were 13,271 units. Toyota is investing in capacity expansion at its two Kuozui Motor joint venture plants in Taiwan and will be monitoring the recent slowdown in economic growth very closely.
Ford Lio Ho, which makes Ford and Mazda cars, experienced the strongest growth among all vehicle companies in the first five months of 2005. Its 47.3% volume growth was helped primarily by the recent launch of the Focus and its Mazda derivative – with combined sales of 22,952 units. The Ford Escape and Mazda Tribute SUV also sold well, with combined sales of 8,851 units.
Yulon group, with its joint ventures with Nissan Motor and Mitsubishi Motors of Japan, reported falling volumes and an even sharper drop in market share. The drop in Nissan sales was particularly heavy, despite a strong performance from the Teana range, which replaced the Cefiro last year. The company is expected to launch the new Sentra model this year, which should help lift the company’s performance.
Tony Pugliese
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