ASEAN automotive sector bouncing back

ASEAN automotive sector bouncing back

JAKARTA (JP): The ASEAN automotive sector is now bouncing back
from the devastating economic crisis of 1997/1998 which crippled
the region's automotive industry, according to a new report from
the Economist Intelligence Unit (EIU).

After falling by 63 percent in 1998 to a third of peak 1996
levels, new vehicle sales in the ASEAN region recovered strongly
in 1999 - up by 49 percent.

The EIU predicts the recovery will continue, albeit at a
slower pace, but warns that there are still a number of economic
and political barriers to overcome before stability is ensured.

Average annual growth to 2005 is forecast at 16 percent, led
by commercial vehicles with average growth of more than 19
percent each year. Commercial vehicles accounted for just under
half the market in 1999, and are forecast to increase this share
to just over 51 percent by 2005.

But total sales are not expected to recover their pre-crisis
volumes until after 2005.

Indonesia was the hardest hit in 1998 with political and
social upheaval adding to the economic difficulties. The ongoing
political instability and the danger of disintegration have
discouraged foreign investors from supporting the current
tentative recovery in the country's economy. However, the report
predicts that Indonesia will lead the growth in the car market-
albeit up from extremely depressed levels-in 2000.

Similarly, the Philippines is still in a tentative recovery
phase and the outlook has not been helped by recent political and
stock market events. The EIU predicts a slower recovery in
vehicle demand, with car sales strengthening in the second half
of 2000.

Vietnam is experiencing strong growth in vehicle sales,
particularly domestic sales, as the beneficial effects on the
local industry of earlier restrictions on imports begin to filter
through.

Other findings

* Malaysian models hold top three positions in the ASEAN car
market. Three Malaysian models-the Proton Wira, the Perodua
Kancil and the Proton Saga/Iswara are the top sellers in the
ASEAN market, almost entirely due to their strong dominance of
the Malaysian car market.

Very little is exported to other ASEAN markets. Toyota's Corolla and
Honda's Civic are the next most popular in terms of total sales volume, but
they are also the most widely sold cars in the region, with a presence in
all markets.

* The Isuzu pickup and the Toyota Hilux pickup, both built in
Thailand, lead the ASEAN commercial vehicle market.

They are followed by the Toyota Kijang, the largest-volume vehicle in
Indonesia, and the Daihatsu Terios.

Apart from the Malaysian manufacturers, only three non-Japanese cars-BMW
3-series, Kia Sephia and Hyundai Accent/Excel-are represented in the top 20
selling models in the ASEAN region.

Two of these are Korean models which are based on Japanese technology,
as are the Malaysian products. This leaves only BMW as a true non-Japanese
contender, reflecting the slowness of the European and US manufacturers to
take up the challenge of the region.

* The lower-medium C-segment will continue to account for the
lion's share of the ASEAN passenger car market - but lower
segments will grow rapidly. To date, vehicle manufacturers have
concentrated most of their efforts on the C-segment-compact
family cars such as the Honda Civic and City and Toyota Corolla-
predominantly because it offers the best combination of providing
value to their customers while also securing reasonable margins
and volumes for themselves.

However, the report predicts that lower segments will grow
rapidly as manufacturers offer smaller cars to more markets in
the region.

Suzuki has already launched the small Wagon R model into Indonesia which
has been met with very significant market demand. C-segment sales amounted
to over 66 percent in 1999, but are predicted to fall to just over 60
percent in 2005.

Improving corporate health will help D segment growth. The report
predicts that the larger saloons in the medium D segment will have
recovered the volumes lost during the crisis by 2005 as corporate
purchasing recovers and as wealth in general improves across the region.

European manufacturers such as BMW and the Volkswagen Group will
strengthen their presence as they establish regional assembly facilities,
says the report. Similarly, the report predicts that the luxury E & F
segments will also grow strongly from this year, after their poor
performance in 1999. Singapore will be the main driver of growth in this
segment initially, but demand there is expected to weaken from 2001, which
will limit the segment's overall growth during the forecast period.

Commercial vehicle recovery is concentrated mainly in light vehicle
segments.

* The sports utility vehicle (SUV) and utility segment,
classed as commercial vehicles in this report, has seen the
strongest growth rates in the region's commercial vehicle sector.
Its performance has been underpinned by new product development,
particularly in utility vehicles, which has seen very strong
growth in Indonesia and in the Philippines.

SUV sales in Thailand have also increased, and the launch by Perodua of
the Daihatsu Terios-based Kembara in Malaysia has also helped drive growth.
This has mostly been consumer-based, with many utility vehicle designs now
having a much stronger appeal to private motorists. The minibuses and van
segment has perhaps suffered as a result of this rise. The light truck
segment has also seen significant growth so far in the recovery cycle,
though not to the same extent as the utility/SUV segment.

ASEAN vehicle sales by type, selected years 1996-2005a

 
1996
1997
1998
1999
2000
2001
2003
2005

Passenger cars
622,890
625,108
264,952
392,498
491,830
538,460
619,600
716,300

Commercial vehicles
886,857
718,185
232,477
348,720
475,360
554,400
667,020
754,480

Total vehicles
1,509,747
1,343,293
497,429
741,218
967,190
1,092,860
1,286,620
1,470,780

Figures or 1996-99 are actual; the remainder are forecasts.
Source; Industry sources; EIU forecasts.

ASEAN vehicle sales by country, selected years 1996-2005a

 
1996
1997
1998
1999
2000
2001
2003
2005

Indonesia
337,399
382,301
58,317
94,376
167,000
203,000
247,000
271,000

Malaysia
364,789
404,831
163,850
288,547
348,100
390,500
445,000
493,000

Philippines
162,944
143,718
79,988
73,871
86,910
98,500
125,820
147,080

Singapore
34,256
34,766
37,530
49,501
71,000
59,000
44,000
49,000

Thailand
585,958
358,836
144,097
218,372
273,000
316,000
392,000
472,000

Vietnam
10,401
8,841
8,647
10,051
12,180
14,360
17,800
20,700

Others
14,000
10,000
5,000
6,500
9,000
11,500
15,000
18,000

Total
1,509,747
1,343,293
497,429
741,218
967,190
1,092,860
1,286,620
1,470,780

Figures for 1996-99 are actual; the remainder are forecasts.