New car sales in Taiwan continued to plummet in the first two months of 2007, as high consumer debt continued to dampen domestic demand for large durable goods.

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Sales volumes fell by 21% in the January-February period to 62,759 units compared with a year earlier.


This latest drop comes on the heels of a 29% fall in sales in 2006 to 366,311 units, according to data released by the Ministry of Transportation and Communications.


Growth in domestic consumption fell sharply last year to 1.36%. The island’s overall GDP growth last year, of 4.25%, was supported mainly by a buoyant export sector, according to the privately run Taiwan Institute of Economic Research (TIER).


Ford Lio Ho was the hardest hit among the major automotive suppliers last year, with sales falling by 45% to 30,212 units; followed by Yulon Nissan with a 39% drop in sales to 40,117 units; China Motor Corporation (Mitsubishi), -35% to 55,894 units; and Hotai Motor (Toyota), -28% to 107,462 units.

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TIER expects the consumer credit problems to ease gradually this year and is forecasting growth in domestic consumption to rise to 2.8%. Domestic carmakers remain cautious about the short term prospects for the market however, with Hotai Motor perhaps the most optimistic – by forecasting the market to expand by up to 10% to 395,000 units in 2007.


Other manufacturers are a bit more cautious, with most forecasting little or no growth this year. The slow start to the year certainly supports a more cautious outlook and the slowing export environment has added to the uncertainty.


Faced with rising overcapacity, domestic manufacturers increasingly are turning to exports to improve their performance.


Ford Lio Ho has begun exporting cars and SUVs to Japan, Australia and New Zealand, a first in these markets for any Taiwanese automaker. Yulon Nissan also has stepped up its export drive, targeting exports of up to 5,000 vehicles per year to non-Asian markets.


Tony Pugliese