Mon, 26 Jun 2000

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.