The purpose of this study is to apply the theory of industrial organization to examine the competitive nature, business conduct characteristics and market performance of Taiwan motorvehicle industry. The policy implications regarding to the operation of this industry are also discussed. How market structure and market conduct affecting the market processes as well as operational performance under the operation of motorvehicle industry are main issues in this study. The procedure of this analysis consists of three steps: (1) Identifying market characteristics of the industry by using the index of market share, concentration ratio, product differentiation and etc, (2) Discussions of market conduct variables including pricing, marketing channel decision-making, behaviors of advertising, franchise agreement, excess capacity and technological innovation, (3) Analyzing the market performance on this industry, (4) Explaining the operational strategies and policy implication of this industry. The analytical results have indicated that the market power or market imperfection world affect not only the behaviors of competing firms but also the performance of the entire market. Therefore, to achieve the effective competition and to improve the operational performance of this industry, it needs adjustments of business management strategies, otherwise, government policies should be involved.