Taiwan Tightens the Nuts and Bolts of Auto Industry Rules

The Ministry of Economic Affairs (MOEA) in Taiwan has announced a ban on the import of complete vehicles and chassis parts from mainland China. Despite this, concerns persist over domestic automakers importing up to 95% of vehicle parts from China for assembly in Taiwan, raising issues of unfair competition that threaten the livelihoods of local auto parts manufacturers. To address these concerns and safeguard the competitiveness of Taiwan’s automotive industry, the MOEA has collaborated with the Ministry of Finance, the Ministry of Transportation and Communications, and the Ministry of Environment to implement a new policy aimed at increasing the localization of the supply chain. This policy was officially launched on August 1.

Under the new guidelines, any domestic automakers introducing models—whether through joint ventures with China-funded international brands, China-backed acquisitions of international brands, or models produced by international brands in China—are required to meet a gradually increasing localization target for their supply chain. Specifically, manufacturers must achieve a 15% localized supply chain in the first year of a vehicle’s listing, 25% in the second year, and 35% by the third year. This requirement applies not only to new models but also to those already listed prior to the policy’s implementation and models to be released soon.

The MOEA clarified that, given Taiwan's limited domestic market, the sale of complete vehicles from China remains prohibited, alongside the restriction on chassis imports with characteristics of finished vehicles. However, other auto parts from China remain unrestricted. Recent practices by some manufacturers, who bypass local suppliers by importing parts from China, have prompted industry-wide calls for a more equitable regulatory framework. The new policy aims to establish fair competition and ensure the long-term viability of Taiwan's auto parts industry.