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.