'Auto industry to worsen'

'Auto industry to worsen'

Agence France Presse, Kuala Lumpur

Asia's auto industry will experience a roller-coaster ride
next year but a recovery can be expected from 2003, according to
industry experts at a regional conference here.

"There was general consensus that 2002 is going to be a
roller-coaster ride for Asia but the good news is that in 2003,
the industry is going to have a healthy recovery," according to a
statement Wednesday.

The statement was issued at the conclusion Tuesday of a two-
day conference on Asia's automotive industry, attended by more
than 120 top executives from across the region.

"Asia's automotive industry is going to get worse before it
gets better again but the long-term prospects make the region the
most attractive in the world," the statement said.

Graeme Maxton, an economist with London-based consultancy
Autopolis, was quoted as saying the main problem currently facing
global economies was over-capacity.

"It is over-investment and the build-up of debt that has led
to over-capacity in a hundred different industries. Not until all
the excess capacities are cut, will the economies get better," he
said.

Although a recovery would begin 2003, Maxton predicted that
car sales would only return to levels reached last year in 2005.

He said Asia's "baby boomers" in the auto sector would
experience the strongest growth over the next five years such as
Tata in India, Tianjin and Chang'an in China, Iran's Khodro and
Malaysia's Proton.

Gerald Kania, Ford Motor Co.'s operations president for
Southeast Asia, predicted 2003 would be the year of growth once
the ASEAN Free Trade Area (AFTA) was implemented.

Under AFTA, tariffs on auto products will fall to between zero
and five percent by 2003 but Malaysia has delayed cutting tariffs
until 2005.

Rudolf Schlais, General Motors' Asia-Pacific president, said
the company expected eight countries to account for 67 percent of
its global growth over the next decade, of which four are in
Asia.

The company's strategy in Asia was to form partnerships,
rather than taking up controlling stakes in companies, he said.
"We enjoy the same benefits of a full merger but we avoid many of
the pitfalls of combining companies and cultures."

The conference agreed China was "the sleeping dragon" in the
long-term because significant changes were expected in its auto
sector after its entry into the World Trade Organization later
this year.

"The conclusion was one of cautious optimism," the statement
said.

"While markets in the region were likely to find the going
harder short-term, Asia offered more growth and fewer risks than
any other region in the world to carmakers."