Taiwan saw strong growth in Q1-Q3 of 2018 but saw a decline in the fourth quarter. Uncertainty in U.S.-China relationships is delaying many Taiwanese purchases in both the retail and commercial markets.
 - Photo of Taiwan courtesy of n23club via Pixabay.

Taiwan saw strong growth in Q1-Q3 of 2018 but saw a decline in the fourth quarter. Uncertainty in U.S.-China relationships is delaying many Taiwanese purchases in both the retail and commercial markets.

Photo of Taiwan courtesy of n23club via Pixabay.

Taiwan, one of the “Asian tigers”, features a dynamic, capitalist economy driven by electronics, industrial manufacturing, and petrochemical products. But the ongoing cat and mouse game between China and the U.S., sparring over tariffs and other import/export barriers has resulted in a modest slowdown in 2018, after a strong 2017 performance, including commercial vehicle sales.

The 2018 GDP is forecast at $585 billion, showing a modest 2.6% increase over 2017, and forecasts for both 2019 and 2020 remain relatively static. Inflation remains low at less than 1.5%, which contributes to stable if unspectacular growth. It is the ongoing uncertainty regarding the U.S.-China tariff/trade questions that will have the most impact on 2019 growth.

Automotive Industry

The year of 2018 resulted in declining sales in the fourth quarter, after strong growth in Q1-Q3. With the uncertainty of U.S.-China trade relations and a declining stock market, Taiwanese are delaying purchases in both the retail and commercial markets.  

Total passenger vehicle sales are forecast to decline 1.6% - 2%, the first decline in vehicle sales since 1990. Commercial vehicle sales, after strong growth in Q1-Q3, hit the wall beginning in September, sliding 8.4%, year over year. Total sales are forecast to 435,135 units (including light commercial vehicles).  

The market for commercial vehicles in Taiwan is estimated to be around 280,000. Logistic trucks account for 34% and taxis 31%, according to the Ministry of Transportation and Communications. 

Commercial vehicles in Taiwan are defined as any four-wheel vehicle for commercial use. Logistic fleets in Taiwan comprise mail delivery fleets, fixed route freight transport fleets, general freight transport fleets, and container freight transport fleets. 

Tax and Regulatory Climate

Not unlike the U.S., all “transportation” equipment that uses public roads (and rivers, as the tax applies to waterborne vessels as well) are required to obtain a license and pay the tax requisite to it. The tax is charged on a progressive scale depending upon engine size: For small passenger vehicles (seating nine or fewer), cylinder capacity (cc) is up to 3,000 cc, and the tax amount ranges from NTD1,620 to NTD15,210; cylinder capacity is 3,001 cc or more, and the tax amount is within the range of NTD28,220 to NTD151,200 (current exchange rate is approx. 30 NTD to $1 USD).

Vehicle registration and component safety certification are conducted by the Vehicle Safety Certification Center (VSCC). Vehicles older than five years are required to have annual safety and emission inspections, older than 10 years, every six months.  

Operating Costs

Gasoline prices have declined over the year in 2018, from highs in excess of $3.68 per gallon to slightly over $3.20 per gallon through the first week in January, 2019. The overall cost of living in Taiwan is approximately 14% lower than here in the U.S., however fuel costs being more than a dollar a gallon higher than in the U.S., and fuel being a majority percentage of operating costs, this does not extend to vehicles. Maintenance costs will range from $500 to $700 per year (generally these are retail numbers, based upon 20,000 km/year, or 12,427 miles).  

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