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Taiwan Auto: Ford Lowers Forecast for 2007
May 03, 2007

Ford Lio Ho has lowered the forecast of new car sales in Taiwan following sluggish domestic market due to exodus of Taiwanese people to China & problems in Taiwan's financial system.

Jeffery Shen, Ford Lio Ho (Ford's Taiwan subsidiary) Motor Corporation's president, is pessimistic about Taiwan car market in 2007, predicting new-car sales to go below 350,000 units. He said that the slow domestic new-car market is likely to remain sluggish until 2008.

According to Shen, exodus of about a million Taiwanese middle class workers to China, no major improvement in social order & political stability, and persistent debt problems with credit cards and negligible signs of betterment in economy are responsible for his pessimism.

Ford Lio Ho had originally estimated domestic new car sales at 360,000-380,000 units next year but lowered their predictions, as sales were sluggish in November.

As per an analyst at
RNCOS, "Taiwan car market is likely to remain affected by exodus of Taiwanese population to China. This exodus is a major setback as those moving to China are young population who otherwise, would be buying themselves a new car in Taiwan."

He added, "Taiwanese govt. could slow this exodus by opening direct transportation links between mainland China & Taiwan. This would allow Taiwanese people to continue living in Taiwan & travel to China, rather than making a complete move on to the mainland."

The outlook for next year sales has also been affected by financial sector problems. Earlier this year, credit card firms were concerned that borrowers were over-extending their expenses than they can actually pay for. Many customers had utilized the cards to such a high level that personal bankruptcy was the only choice left. Since then, the lending firms have become more restrictive in proving new loans which has adversely affected auto sales in the country as people are unable to get loans for buying new cars.

Moreover, relocation of domestic firms to Mainland China is continuously hindering the development of new car sales in Taiwan. On the whole, overall economic state of Taiwan will dictate terms for the new car sales in future.

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