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IEK: Output Value by Taiwan's Auto Industry to Stand at Around NT$600 Bn. in 2018

Jan 22, 2018 | By CENS

Industrial Economics and Knowledge Center (IEK), an institute organized by Industrial Technology Research Institute (ITRI), one of the world's leading technology R&D institutions, with an aim to help businesses in Taiwan meet revolutionary changes in a fast moving knowledge economy, has published the Economic Outlook and Key Issues for Taiwan's auto industry, forecasting that the industry's output value will grow by 1.2-2.1 percent year on year in 2018, to remain at the NT$600 billion (US$20.4 billion) levels.

Shi Yu-xian, manager of IEK, noted that on growing consumer confidence amid a steady economic recovery in Taiwan, as well as more new car arrivals, the domestic auto market will likely continue to expand this year. Shi mentioned that the local automotive industry will gain more steam from a couple of factors, including multiple incentives offered by the government to local consumers on new-car replacements and to enterprises on exports of used vehicles, as well as the brisk development of autonomous vehicles worldwide, to further boost overall added-value.

However, IEK points out that while Taiwan's overall new-car sales in 2017 totaled 444,600 units, a new high since 2006, sales of locally assembled vehicles, however, dropped by 3.7 percent in terms of volume, compared to those of imported cars, whose market share in the year exceeded 40 percent for the first time in history.

Seeing the results, IEK explains that with around 92 percent of their output destined to the Middle East, Taiwanese car assemblers witnessed overall export slump by over 20 percent year on year to less than 40,000 units in 2017, due to inertia in consumers' replacement demands for new cars, which was caused mainly by persistently weak international prices of crude oil. The worse is that as roughly 50 percent of Taiwanese auto parts suppliers, mostly small and medium in size and suffering from underselling rivalry, rely on local carmakers, the fewer locally assembled cars are produced, the more challenging market the upstream sector is forced to deal with.

While imported cars have continuously encroached on sales of locally assembled cars in Taiwan, exports by Taiwanese carmakers have shrunk significantly for two successive years mainly due to sluggish demands in major export markets. IEK opines that in the face of a deteriorating competitive position, as well as obstacles to their developments of Advanced Driver Assistance Systems (ADAS), Car Navigation and Entertainment System, and new car makes and models, Taiwanese companies in the auto industry will have to come up with new strategies to develop sustainably in the coming few years.

According to IEK, overall output value of Taiwan's auto industry totaled NT$61.9 billion (US$2.1 billion) in 2017, with 30.4 percent of which being generated by vehicles, 35.6 percent by auto parts, and 34 percent by auto electronics. Noteworthily, output value of auto electronics surged by 14.3 percent yearly, surpassing that of vehicles, which dived by 3.5 percent, for the first time.

Encountering an increasingly competitive landscape, IEK suggests that the industry should cooperate with the government to pour resources into R&D of subsystems for electric vehicles (EVs), so as to better compete globally. Moreover, the government could help promote the use of ADS (adaptive damping system), smart seatbelts and airbags to make safety a fresh appeal of newer locally assembled cars, which will hopefully turn out to be a savvy strategy to nourish local carmakers, given that over a half of cars in operation in Taiwan are 10 years old and above.

In a view of autonomous vehicles and AI (artificial intelligence) to lead the development of the global automotive industry as a foreseeable trend in the near future, IEK indicates that the government should consider developing ADAS, Internet of Vehicles (IOV), and other related technologies first in the six metropolises in Taiwan, which are Taipei, New Taipei, Taoyuan, Taichung, Tainan, and Kaohsiung, so as to lay a solid foundation for the local auto industry to sharpen its competitive edges in such fortes and go global more smoothly.

news-photophoto provided by EDN.com


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