Honda Taiwan Rocks Local Market By Cutting Car Prices

Taipei, June 6, 2009 (CENS)--Honda Taiwan Motor Co., the 100%-owned subsidiary of Honda Japan, recently announced to cut prices of its locally assembled cars by NT$5,000 to NT$10,000 (US$154 to US$308 at US$1: NT$32.5) as rebate to consumers.

Honda Taiwan's move upsets the mildly-recovering domestic automobile market. Some counterparts complain they originally planned to raise prices but now are forced to halt such plans.

As the fourth-largest auto distributor in Taiwan, Honda Taiwan suddenly claimed to cut prices to reflect the lower cost due to the government's tariff-cut (by 50%) on 23 imported key auto parts such as engine blocks, brake systems, exhaust systems etc.

The automaker cut the price of Honda Fit sub-compacts by NT$5,000 (US$ 154), CR-V sport utility vehicle (SUV) by NT$7,000 (US$215), and Accord medium sedan by NT$10,000 (US$308), with such cuts being effective between June 1 to December 31.

A senior executive at Honda Taiwan pointed out that locally assembled Hondas adopt more imported parts and components than other-brand counterparts, so have more room to reflect lower cost.

Honda Taiwan was also the only automaker hiked its car prices early this year.

Toyota now has an average market share of more than 35% in Taiwan, compared to only about 10% for Honda; but most Hotai executives admit Honda is the most respected counterpart.

Industry sources said that Hotai would be forced to maintain car prices due to Honda Taiwan's tactics, but other automakers will continue facing high pressure from heavy losses.