'No turnaround in sight' for Asia automobile market<\/p>\n
TOKYO (Reuters): The severe slump in Southeast Asia's auto
\nmarkets is likely to linger after dismal results for the first
\nhalf of the year, analysts say, although fresh car financing
\nschemes may offer some relief, albeit modest.<\/p>\n
Industry data for the first half of 1998 painted a grim
\npicture throughout the region: Vehicle sales in Thailand,
\nSoutheast Asia's largest market, fell 71.7 percent from the same
\nperiod a year earlier to 70,277 units, while Malaysia was down 64
\npercent at 51,605 units and the Philippines slumped 50.6 percent
\nto 20,036 units.<\/p>\n
In Indonesia, one of the hardest-hit Asian economies,
\nautomobile production in the first half of the year plummeted
\n82.4 percent to 35,789 units.<\/p>\n
\"I don't think there's a turnaround in sight,\" said John
\nBonnell, a director of Automotive Resources Asia Ltd. in Bangkok.<\/p>\n
He and other analysts predicted sales in Southeast Asia would
\nremain sluggish for at least another two years.<\/p>\n
The market slump has already forced some car plants in the
\nregion to close their doors.<\/p>\n
Last Friday, Mazda Motor Corp. said one of its joint venture
\nassembly plants in Thailand would shut down, after production had
\nbeen halted in late May due to the poor economy.<\/p>\n
A Mazda spokesman said output at the 23-year-old facility had
\nslumped from 25,794 units in 1995 to 12,123 units in 1997 and to
\n2,160 units so far in 1998.<\/p>\n
Mitsubishi Motors Corp., a major Japanese automaker burdened
\nwith heavy losses, said in March it would close one of its two
\ncar plants in Thailand as part of a restructuring plan. But
\nMazda, despite the plant closing, last month launched pickup
\ntruck production at a new, much bigger Thai facility built
\njointly with Ford Motor Co. The plant is scheduled to have
\nproduction capacity of 135,000 units per year.<\/p>\n
In defiance of the economic slump, Ford has successfully
\nboosted its sales in Thailand and built up a dealer network, due
\nin large part to what analysts said was an aggressive financing
\nprogram.<\/p>\n
\"No matter how good your products are, in a climate like
\nThailand's right now you're not going to sell anything if you
\ndon't do more than just supply good products,\" said David Reuter,
\na Tokyo-based spokesman for Ford.<\/p>\n
He said a Ford Credit Co. subsidiary in Thailand was
\ndeveloping unique leasing options, such as allowing farmers to
\nmake lump-sum payments at harvest time, while extending credit to
\ndealers as it seeks to build up a network of 60 dealers by the
\nend of the year.<\/p>\n
He added that the company's approach in Thailand may be
\napplied elsewhere in the economically troubled region.<\/p>\n
\"I'm sure it's going to spread because it's been very
\nsuccessful for us,\" he said.<\/p>\n
Analysts expected other carmakers to follow Ford's lead.
\n\"I don't think any (carmaker) will be allowed to have the race to
\nthemselves in Thailand,\" said Ryuichiro Inoue, an analyst at
\nMitsubishi Research Institute.<\/p>\n
Bonnell of Automobile Resources Asia agreed. \"I think other
\ncompanies like Toyota (Motor Corp.)...will probably step up their
\n(financing) activities in the future,\" he said.<\/p>\n
In line with such efforts, last Thursday Malaysia announced
\nplans to raise the maximum credit on car purchases to 85 percent
\nof the price from 70 percent, while extending the maximum
\nrepayment period to seven years from five.<\/p>\n
But Bonnell said financing schemes were not a solution to the
\nregion's problems, and could even make them worse.<\/p>\n
Noting that imprudent credit policies helped cause Southeast
\nAsia's economic mess in the first place, he said of Malaysia's
\nplan, \"I think it would probably help the market, but I don't
\nknow if it would help Malaysia.\"<\/p>\n
He also saw the carmakers' efforts as having only a limited
\nbenefit for the market.<\/p>\n
\"Financing may be able to push some extra vehicles that
\notherwise wouldn't be sold, but I don't think it's going to save
\nthe industry,\" he said.<\/p>\n
\"I think it all relates back to the economy,\" he added. \"I
\nthink we're in for a long recovery period which will definitely
\nimpact sales of vehicles.\"<\/p>",
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