Last month, Taiwan witnessed the final salvo in a barrage of car advertising spurred by a NT$30,000 (US$944) commodity tax cut, void as of 31 December, on purchases of new vehicles with engines less than 2.0 litres.
The year-long government initiative, which started on 19 January 2009, pulled Taiwan’s car industry out of a 22-year low. By the end of the year, dealers sold 294,423 passenger cars, a 28.3 per cent increase on the total for 2008. December alone saw nearly 50,000 sales.
“People were buying to take advantage of the government rebate before it expired,” says Tina Teng, executive director media research, Nielsen Taiwan. “And dealers were offering discounts and incentives.”
Hoping to prolong the shopping spree, auto industry executives lobbied for an extension of the programme, but to no avail. “Some carmakers have vowed to continue the ‘government’ rebate on their own and have placed signs in their showroom offering NT$30,000 off the sticker price,” says Matthew Chang, director, research department, TNS Taiwan.
But there is little optimism for 2010. Sales are expected to slide back to 2008 levels. A decade of demographic change has made Taiwan one of Asia’s softest car markets. Last year, it claimed the world’s lowest birth rate - 0.8 births per hundred compared to 1.4 for Japan - so families are becoming smaller and older. Even more challenging is the fact that 1.3 million mostly entrepreneurial and managerial Taiwanese have relocated with their families to China due to its better economic outlook.
“These are the people who would be buying cars in the mid-price range, say, NT$500,000 and upwards towards $2 million,” says Chang. “This is the big problem for car makers here.”
This white-collar exodus to the mainland has polarised the car market. For a handful of brands like Ferrari and Maserati, sales have never been better. High-end mainstays BMW and Mercedes Benz both enjoyed growth last year, even though neither is known for vehicles with engines under 2.0 litres.
Imports are for exclusive buyers. From 5,680,099 registered passenger cars, the government counted 147,579 Mercedes, 121,485 BMWs, 4,631 Jaguars, 3,971 Porsche and hundreds of European exotica.
But the big numbers come from local assembly partners. Kuorui, a joint venture formed in 1984 by Toyota, Hino and local investors, has 1,335,705 models - including Camry, Corolla Altis, Wish, VIOS and Yaris - plying Taiwan’s roads. Yulon, which has worked with Nissan since 1957, can lay claim to 885,370 vehicles such as the Sentra, March, Verita and Cefiro models.
Three-quarters of passenger cars sold last year - 216,680 units - carried the brands of Japan’s top four carmakers - Toyota, Mitsubishi, Nissan and Honda. In fifth place is Ford Lio-ho, which also assembles Mazdas.
“Japanese brands have had a 74 per cent market share since 2002,” says Marvin Zhu, senior market analyst, JD Power Asia Pacific. “Japanese cars have several advantages. Taiwan’s environment is similar to Japan’s in terms of terrain, population, and urbanisation. Their cars are small and fuel-efficient, and the dealers offer good service. ”
But do carmakers expect their cars to sell themselves? With a 12-month window for the NT$30,000 tax deduction, one would have expected a year-long marketing blitz. And that didn’t happen.
Instead, carmakers held back on advertising, saving budgets for the fourth quarter. Auto adspend had already been dropping since 2004 and 2005, two unusually good years for carmakers due to temporary loosening of lending standards.
During the boom, sales touched the 500,000 ceiling. Then as banks tightened credit, car sales collapsed, as did advertising budgets.
Even with NT$436.3 million spent in the fourth quarter, 2009 adspend for cars and SUVs totalled only NT$1.2 billion, according to Nielsen Taiwan, only slightly more than half the 2006 figure.
Nearly half of the year’s adspend - NT$5.6 billion - was lavished on cable TV. For a few short weeks in December, Taiwan’s television broadcasts recalled happier days when car ads ruled the airwaves.
Got a view?
Email [email protected]
This article was originally published in the 28 January 2010 issue of Media.
The year-long government initiative, which started on 19 January 2009, pulled Taiwan’s car industry out of a 22-year low. By the end of the year, dealers sold 294,423 passenger cars, a 28.3 per cent increase on the total for 2008. December alone saw nearly 50,000 sales.
“People were buying to take advantage of the government rebate before it expired,” says Tina Teng, executive director media research, Nielsen Taiwan. “And dealers were offering discounts and incentives.”
Hoping to prolong the shopping spree, auto industry executives lobbied for an extension of the programme, but to no avail. “Some carmakers have vowed to continue the ‘government’ rebate on their own and have placed signs in their showroom offering NT$30,000 off the sticker price,” says Matthew Chang, director, research department, TNS Taiwan.
But there is little optimism for 2010. Sales are expected to slide back to 2008 levels. A decade of demographic change has made Taiwan one of Asia’s softest car markets. Last year, it claimed the world’s lowest birth rate - 0.8 births per hundred compared to 1.4 for Japan - so families are becoming smaller and older. Even more challenging is the fact that 1.3 million mostly entrepreneurial and managerial Taiwanese have relocated with their families to China due to its better economic outlook.
“These are the people who would be buying cars in the mid-price range, say, NT$500,000 and upwards towards $2 million,” says Chang. “This is the big problem for car makers here.”
This white-collar exodus to the mainland has polarised the car market. For a handful of brands like Ferrari and Maserati, sales have never been better. High-end mainstays BMW and Mercedes Benz both enjoyed growth last year, even though neither is known for vehicles with engines under 2.0 litres.
Imports are for exclusive buyers. From 5,680,099 registered passenger cars, the government counted 147,579 Mercedes, 121,485 BMWs, 4,631 Jaguars, 3,971 Porsche and hundreds of European exotica.
But the big numbers come from local assembly partners. Kuorui, a joint venture formed in 1984 by Toyota, Hino and local investors, has 1,335,705 models - including Camry, Corolla Altis, Wish, VIOS and Yaris - plying Taiwan’s roads. Yulon, which has worked with Nissan since 1957, can lay claim to 885,370 vehicles such as the Sentra, March, Verita and Cefiro models.
Three-quarters of passenger cars sold last year - 216,680 units - carried the brands of Japan’s top four carmakers - Toyota, Mitsubishi, Nissan and Honda. In fifth place is Ford Lio-ho, which also assembles Mazdas.
“Japanese brands have had a 74 per cent market share since 2002,” says Marvin Zhu, senior market analyst, JD Power Asia Pacific. “Japanese cars have several advantages. Taiwan’s environment is similar to Japan’s in terms of terrain, population, and urbanisation. Their cars are small and fuel-efficient, and the dealers offer good service. ”
But do carmakers expect their cars to sell themselves? With a 12-month window for the NT$30,000 tax deduction, one would have expected a year-long marketing blitz. And that didn’t happen.
Instead, carmakers held back on advertising, saving budgets for the fourth quarter. Auto adspend had already been dropping since 2004 and 2005, two unusually good years for carmakers due to temporary loosening of lending standards.
During the boom, sales touched the 500,000 ceiling. Then as banks tightened credit, car sales collapsed, as did advertising budgets.
Even with NT$436.3 million spent in the fourth quarter, 2009 adspend for cars and SUVs totalled only NT$1.2 billion, according to Nielsen Taiwan, only slightly more than half the 2006 figure.
Nearly half of the year’s adspend - NT$5.6 billion - was lavished on cable TV. For a few short weeks in December, Taiwan’s television broadcasts recalled happier days when car ads ruled the airwaves.
Got a view?
Email [email protected]
This article was originally published in the 28 January 2010 issue of Media.
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