Yulong Group Cites Three Warning Signs in Local Auto Industry

Yulon Group lowered its car sales forecast for this year from 435,000 to 425,000 units, citing cautious consumers and economic uncertainty due to the U.S.-China trade war.

Yulon Group hosted its institutional investor conference on Wednesday, where Yulon Motors General Manager Yao Chen-hsiang made the announcement. This year's domestic automakers sales are likely to see a drop to only 210,000 units after an annual decline of 3 percent over the past six to seven years, not even making up half of the local car industry. Yao warned that the industry must heed this warning, adding that the company also held a conservative view of next year's local automotive industry growth.

Despite the decline of domestic automaker sales, Yao still expressed that there was a possibility of making a rebound next year.

Yulon-Nissan Motor General Manager Lee Cheng-chen pointed out domestic sales were floundering due to local and international woes; that this year's auto sales were strongly affected by the trade tensions between China and the U.S, as well as Taiwan's pension reform.

Lee said the most affected age group under the pension reforms happen to be Yulon's consumer base that are more likely to purchase luxury goods. Other factors attributing to the industry's less-than-desirable performance were the upcoming local elections and waning influence of the replacement program.

Taiwan's government offers subsidies and tax credits for new car purchases to encourage replacements, part of its program to curb pollution. However, as the program has entered its third year, most owners have already replaced their older cars and thus pushed down demand for new units.

Lee said Yulon-Nissan Motor's sales this year was estimated to be around 38,000 units, a dip compared to last year's 42,000 units. He named lack of incentive to purchase new vehicles as the main reason behind their struggling sales, though pointed out that their newest Kicks line has already receive orders for 2,000 units, despite only coming out this month.

Lee expects the new Kicks series will help buoy the company's sales for the end of the year and see the main profits come in next year, holding out a more positive note for next year's sales than 2018.

As for the Chinese market, Lee offered a positive outlook, as its subsidiary Dongfeng Yulong sees a chance to reach 1.3 million units in sales, higher than last year's 1.25 million unit, serving as a major revenue for the company.

Despite seeing a small decline in sales as well, China Motors was also positive of a rebound next year to around 428,000 units. With China's economic growth, the subsidiary sees continual growth as well, despite the increasing competitive automotive market.