New car sales hit 20-year low in 2007: report

Approximately 326,000 new cars were sold in Taiwan in 2007, representing a 20-year low, the United Evening News reported yesterday.

The figure was a significant drop from 2005, when 514,000 new vehicles were sold. Sales volume fell by some 190,000 over the past two years, the paper reported.

With two major elections coming up and people's spending power greatly reduced, car dealers are worried that sales will continue to be sluggish in the first half.

Nearly all car manufacturers in Taiwan, except Hotai Corp., have expressed pessimism for the year, saying Taiwan's total sales volume for 2008 would be a little more successful than in 2007, reaching 330,000. Hotai, on the other hand, estimated the figure at 360,000.

Many carmakers have closed production lines and retail locations to respond to a bear market, with the paper citing China Motor Corp. will reduce retail or service locations by 20 to 140 for January, and to 120 by the end of the year, an act that could save the carmaker some NT$30 million in costs.

Adding to carmakers' concerns is the fact that a price increase has become all but inevitable, with many dealers urging those interested in buying to buy now, lest it be too late.

In fact, Hotai, distributor of Toyota models in Taiwan, has already raised the price of the entry model of Altis to NT$588,000 from NT$529,000 in the past. The hike sent shockwaves throughout the automobile industry, and gave other manufacturers an excuse to raise prices as well.

The price increase is expected amid a sharp rise in costs. According to the paper, carmakers now have to absorb new costs such as an old vehicle processing fee, an environmental development fee, fees for conducting government-required collision tests, a general price hike in raw materials such as steel and plastics, and losses from fluctuating exchange rates.

The downturn, however, did not stop drivers from window-shopping. The paper cited during the first four days of the Taipei International Car Show, some 154,000 people visited, with 35,000 and 38,000 people visiting on Dec. 31 and Jan. 1, respectively, despite the cold weather.

Organizers are expecting total visitors to exceed 300,000 by the show's closing date of Jan. 9, the paper said.