Auto makers to use more local content in Southeast Asia
Auto makers to use more local content in Southeast Asia
BANGKOK (Dow Jones): Global auto makers Wednesday said they plan to increase localization of autoparts within the Southeast Asian region to gain from the planned reduction of tariffs within the region's nations.
Toyota Motor Corp (TM) targets to use 100 percent local content from suppliers in the region when the Association of Southeast Asian Nation's free trade area, or AFTA, is implemented.
"We have no plan to put more investment in terms of capacity, but rather increase local content utilization and update products to retain our leading position in the market," Koji Hasegawa, Toyota Motor Corp managing director told reporters.
In Thailand, Toyota uses around 70 percent of local content in its production, which will be raised to 100 percent in the next few years.
DaimlerChrysler (DCX) is considering supplying cars and parts from its Thai facility to other Asian countries. The study will take a few months before it's completed, Frank Messer, president and chief executive officer of DaimlerChryler Southeast Asia told reporters.
"There is a possibility for the Thai facility to exchange complete-built-up cars with Indonesia," he added. However, he declined to give more details.
According to Messer, the company's position in Thailand this year will improve after it solves production problems with its Thai manufacturer Thonburi Automotive Assembly Plant Co., Ltd.
In 2001, the company expects to see Thailand sales of 3,500 Mercedes Benzs, 1,200 Chryslers and 800 commercial vehicles.
"AFTA is a big opportunity for Asean countries and is considered a must for Asean to strengthen its competitiveness," Messer added.
Hasegawa said that "AFTA will not only strengthen the growth of automotive and supporting industries in Asean region, but also enhance competitiveness of ASEAN with China," once the latter enters the World Trade Organization.
Under AFTA, auto tariffs will be cut to between 0 percent to 5% by 2003 among the six original members including Singapore, Indonesia, the Philippines, Brunei, Malaysia and Thailand.
However, Malaysia has asked for a two-year extension until 2005 to project its national car maker Perusahaan Otomobil Nasional Bhd., or Proton.
Volvo plans to consolidate its facilities in Thailand and Malaysia. Each plant will manufacture a different model at a high volume, and then sell the vehicles locally and in other countries in the region, Karl-Johan Sandesjo, president of Volvo Car (Thailand) told Dow Jones Newswires.
"We have our plan ready and can go along once the AFTA is implemented. We can ship Asean-built cars to Indonesia and the Philippines," he added.
Volvo also targets to use more local content from the current level of 40 percent.
In Thailand, the company expects its sales to reach 2,500 units in 2001 against 1,485 units in the previous year.
Despite the potential for the populous region to become a lucrative auto market, ASEAN will not benefit unless its members embrace free trade, the car makers said.
The auto makers agreed that the creation of the ASEAN Free Trade Area (AFTA), which will ease trade regulations, would be critical in attracting investment and boosting economic growth in the process.