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.
* 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
Figures or 1996-99 are actual; the remainder are forecasts. Source; Industry sources; EIU forecasts.
ASEAN vehicle sales by country, selected years 1996-2005a
Figures for 1996-99 are actual; the remainder are forecasts.