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."