2001 looks tough for car makers

The China Post staff

With no turnaround insight for Taiwan¡¦s economy in the near future, the island¡¦s car manufacturers are expecting 2001 to be yet another year of lean profits and slow sales. As Taiwan¡¦s economy has duffered slower growth over the past few years, the car business has suffered as well. According to John Parker, president of Ford Lio Ho Motor Company Ltd., ¡§Taiwan¡¦s auto industry has experienced nothing but declines for the past six to seven years.¡¨ He said that until the domestic economy recovers the car industry will remain troubled. Dealers and manufacturers around the country were disappointed by slow Lunar New Year sales causing layoffs at both dealerships and corporate offices. Chrysler-Taiwan axed 11 senior management positions. Taiwan¡¦s automotive market has long been among the most competitive anywhere and this is only expected to increase as the country opens itself up to increased foreign imports under WTO regulations further squeezing local manufacturers.

According to James Zemke, president of Chrysler-Taiwan, he does not expect many new entrants into Taiwan¡¦s car market as most are already here, but he is worried about the effect of increased imports of used cars from overseas which will be possible under WTO rules. ¡§Taiwan¡¦s car market is extremely competitive and the local manufacturers are all already over supplied¡¨, he said.

Recent sales reports clearly illustrate the problems. Parker said that sales in December 2000 and January 2001 were down 20 percent for the industry from the same period last year and that sales in January 2001 alone were down roughly a quarter from those of one year previous. While Parker did not say if Ford Lio Ho was planning layoffs in the near future, he did admit that ¡§we are adjusting production plans¡¨ to deal with current market conditions.

Despite the high level of competition in Taiwan¡¦s automotive sector Formosa Plastics Group announced in December the launching of a car, the Formosa No. 1 Magnus, with Daewoo of South Korea to compete with family sedans such as Toyota¡¦s Camry and Honda¡¦s Accord.

Whether or not there will be sufficient demand to support the numerous manufacturers is far from certain however. Parker expressed doubt that the island can continue to support the 12 distinct manufacturers it currently does.