Asian auto industry may recover by 2003

Asian auto industry may recover by 2003

BANGKOK, Thailand (AP): Asia's automobile industry should return to peak sales by 2003 as the region emerges from its recession, one expert at a conference said Thursday.

"Vehicle sales in Asia will grow faster than anywhere in the world," said Graeme Maxton, associate editor with the Economist Intelligence Unit, which organized a two-day conference on the Asian automotive sector.

While sales in the United States will grow by only 600,000 units between now and 2003, Asian sales will grow by 2 million in the same period, Maxton said.

"By 2002 or 2003 we should see the return of record volume sales," he said.

Asian vehicle sales peaked at 6 million units in 1996, before the economic crisis slashed consumer confidence across the region.

Part of the reason Asia's growth will look so high in the next few years is because of the low baseline for measuring following the recession, Maxton said.

He also said the ASEAN Free Trade Agreement, or AFTA, which sets out a timetable for reducing tariffs on trade within the Association of Southeast Asian Nations, should boost production efficiency in the region.

ASEAN comprises Thailand, Indonesia, Singapore, Malaysia, Philippines, Brunei, Vietnam, Cambodia, Myanmar, and Laos.

But countries aren't likely to fully liberalize automobile production if it entails layoffs in fledgling industries at home, Maxton said.

Under commitments to the World Trade Organization, Thailand will abolish its local-content rule on Jan. 1. Currently, more than 50 percent of a locally-assembled vehicle must come from locally-produced parts.

Thailand's exports of vehicles and parts will total 100 billion baht (US$2.5 billion) this year, compared with 60 billion baht ($1.5 billion) in 1998, the country's industry minister said, addressing the same conference.

Suwat Liptapanlop said Thailand expected to export 125,000 units of completely built vehicles in 1999, compared to 67,000 units a year earlier.

Suwat said Thailand fully supports AFTA, explaining that it would allow automakers in ASEAN to specialize in production and take advantage of economies of scale.

Thailand currently holds 44 percent of the ASEAN automotive market in terms of production, with an annual capacity of 900,000 vehicle units and 2 million motorcycles, Suwat said.