DaimlerChrysler gears for boom in ASEAN auto market
DaimlerChrysler gears for boom in ASEAN auto market
Agence France-Presse, Nusa Dua, Bali
German-U.S. auto giant DaimlerChrysler will invest up to 100 million euros (US$116 million) in Southeast Asia over the next two years to strengthen its presence and triple sales in 10 years, a top official says.
With a market of 530 million people, low vehicle penetration and a young age structure, the Association of Southeast Asian Nations' (ASEAN) auto market offers vast potential, said Frank Messer, president and chief executive for DaimlerChrysler in the region.
In an interview with AFP on the sidelines of an ASEAN business summit here on Monday, Messer said the company expects sales next year to grow around 10-15 percent to 35,000 units.
But this is still low in ASEAN's booming auto market where some 1.5 million vehicles were sold last year, he said.
DaimlerChrysler's sales in the region hit a billion euros last year.
He said it had invested 100 million euros in the region over the past two years, employing 2,000 workers in its manufacturing and assembling facilities in Thailand, Malaysia, Indonesia, the Philippines and Vietnam.
"There is no fixed sum but we will invest between 50 million and 100 million euros again for the next two years," Messer said.
"We have made a lot of efforts in the last year to increase our presence and penetration in this region. I believe that in the next 10 years, we will triple our sales here."
DaimlerChrysler and other foreign carmakers such as Japan's Honda Motor and its German rival BMW have begun phasing out franchises to cut out middlemen and boost their direct presence in the region, to benefit from lower import tariffs under the ASEAN Free Trade Area (AFTA).
Tariffs on imported cars in Southeast Asia fell below five percent in January under AFTA, except for Malaysia, which has obtained a reprieve for its auto industry until 2005.
Messer said AFTA would greatly boost efficiency in the auto industry, drive up sales and increase economies-of-scale for carmakers.
But he said implementation flaws, the absence of a common product standard and custom procedures under AFTA were making it tough for foreign carmakers to plan their long-term production strategy.
"The countries have the framework but they don't have the same standards and that means there are problems in procedures and there are different handlings. The exchange of goods between countries is still quite difficult," he said.
"ASEAN has to speed up market liberalization. They (the member nations) have to adopt common regulations and cut the red tape. There must be transparent and predictable regulations."
Messer said Thailand has emerged as a favorite hub for many foreign carmakers because of its efficient supply chain, strong government support and liberalized market rules.
But in the mid-term, Malaysia will be a "very important market to consider" as well as Indonesia, he said.
"Thailand has a big advantage now over its very good supply structure," he said.
"Not everybody can initially be the winner but at the end or in the mid-term, I think everybody will gain because the lower tariff structures and the intra-regional additional trade that will come for sure will mean additional volume and additional income for everybody."