Car Industry Under Pressure From Taiwan-US Trade Deal
Taipei has agreed to open Taiwan's auto market to the US under a new trade deal with Washington. As part of the deal, Taiwan will lower tariffs on US car imports from 17.5% to zero, raising concerns among local auto manufacturers, who now face tougher competition from imported brands.
Title: Taiwan Opens Auto Market to US Imports in New Trade Deal
REPORTER:
Taiwan and the US have finally signed a long-awaited trade deal. But one part of the deal raising the most concerns in Taiwan is cars.
Taiwan has agreed to open its auto market to the US as part of the final deal, lowering tariffs on US car imports from 17.5% to zero.
This could be a big blow to local auto manufacturers, who now face tough competition from imported US models. Analysts are even warning of potential job losses.
BITE:
If US-made car, you know export to Taiwan increase in the future, of course that will crowding out the space of the domestic automobile industry in Taiwan. Okay. Of course, that may jeopardize the, you know, the employment opportunities for the automobile in employment.
REPORTER:
Some 414,000 vehicles were sold in Taiwan last year, with domestically made cars making up 51% and imported cars 49%.
Domestic cars are priced lower than US imported models, which gives them a competitive advantage.
But now, an influx of lower-priced US-made cars could affect domestic car purchases.
BITE:
Many imported cars are now priced at US$32,000, US$38,000, US$41,000.
So will this have an impact on domestically produced cars?
It will be very, very significant.
It will happen, but not immediately.
It won't happen quickly.
It might take 3 to 5 years for this deferred effect to occur.
REPORTER:
Consumers may react positively to zero tariffs on US-made cars, potentially leading to price reductions and boosting auto sales. Mercedes-Benz Taiwan says it plans to lower prices on five models, while Yulon Motor is evaluating the import of other US-made vehicles.
BITE:
Should the prices of domestically produced cars in Taiwan be lowered?
Of course they must be lowered.
Because if the government strictly requires us to simply be contract manufacturers and cannot demand technology transfer then we will never make progress.
REPORTER:
Taiwan's government has said it is setting aside $95 million US dollars to help the auto industry weather the storm.
But despite government support, it’s clear the auto industry must make a strategic shift, as imported models push local producers to innovate and upgrade to stay competitive.
Justin Wu and Lily LaMattina for TaiwanPlus.
