Asia alternative to flat U.S. auto sales

Asia alternative to flat U.S. auto sales

WASHINGTON (AFP): U.S. automakers are now looking to vibrant Asian markets to offset expected stagnant sales in North America and western Europe, the head of the American Automobile Manufacturers Association said.

"Why Asia?" asked Andrew Card in a speech prepared for delivery at the New Zealand embassy later in the day.

"It's a simple matter of economics. Motor vehicle sales in their traditional markets -- North America and western Europe -- are expected to remain relatively flat over the next decade.

"Asian nations, with liberalized markets and rapidly growing middle classes, provide the best chances for growth -- and Chrysler, Ford and General Motors want to seize the opportunity."

In Japan, where the auto market was opened wider to U.S. companies in an agreement signed in 1995, the Big Three plan to establish 200 dealer outlets by the end of the year and to increase the total to 1,000 by the end of the decade.

But Card acknowledged that increasing dealerships will not be easy in Japan and noted that to date only 29 outlets had been secured.

In India a fast-growing middle class numbering between 200 and 300 million people is now free to begin buying a range of vehicles. Ford has invested US$400 million on a joint venture in India while GM has committed $100 million to a plant eventually capable of turning out 100,000 units a year.

Card pointed to Thailand as Asia's largest auto market, notably as Thais "love motor vehicles, especially pickup trucks."

Thailand is second only to the United States in worldwide pickup truck sales, he said, adding that Ford hoped to capture 10 percent of the Thai pickup truck market.

While China has begun to promote the use of private cars, Card noted that "the present political situation ... and the difficulty of negotiating with the Chinese government" are problems that cannot be avoided.

Nevertheless, GM is working on a joint venture that could produce up to 100,000 Buicks a year in China, Chrysler is already assembling Jeep Cherokees there and Ford has agreed to pay $40 million to take a 20 percent stake in a Chinese truckmaker.

Card also cited promising opportunities in Vietnam, Indonesia and South Korea, although with the latter more steps were need to be taken to deregulate the vehicle certification process.