The automotive markets in Southeast Asia (Asean), having been on an uphill drive since end 2007 due to oil price hikes and the global economic crisis, are now looking forward to returning to growth as early as next year. Industry analysts and automotive players alike are optimistic, cautiously though, that car sales – both domestic and exports – will pick up speed again.
There are signs of recovery Thailand, Malaysia, Indonesia and the Philippines, thanks to massive stimulus packages whose effect has begun to show. Similarly, economies in the United States, Europe and Asia- Pacific markets – buyers of made-in-Asean cars – are also seen turning around.
Besides, the recent movements by Asean-based car manufacturers and new entrants planning to make inroads into the region indicate impending market rebound and reaffirm long-term prospects of Asean as a car-making hub.
Aapico Hitech Plc (AH) has a positive outlook. The auto-parts maker listed on Thailand’s stock exchange has seen improved financial results since the second quarter although it forecast a year-on-year decline in revenues due to decrease in overall car sales.
The industry has bottomed out in the second quarter and orders have started flowing in to revive the sector’s performance, a boost for Aapico, which produces a variety of auto parts including chassis and door frames for leading automakers such as Toyota, Isuzu, and Nissan.
In October, Aapico will begin supplying parts to Ford Motor's new compact passenger vehicle B-car production in Rayong, eastern Thailand, bringing in more revenue in the final quarter.
Aapico’s two new factories in Rayong have been operated for the manufacturing of plastic fuel tanks, press parts and door sets for Ford's new model, of which a few thousand units are expected to roll out this year from the maximum capacity of 100,000 units a year.
Ford is confident in Asean
US car maker Ford, the only Detroit auto firm which has taken no emergency support from the government, launched a new $500 million passenger car plant in southeast Thailand in July, a move aimed at raising its share of a lucrative small car segment in Asia dominated by Japanese firms.
The plant, a joint venture with Japan's Mazda for producing Ford Fiesta and Mazda2 models, will export 85 percent of its annual capacity of 100,000 cars a year.
Thai-built Fiestas will be shipped to neighbouring countries in Asean as well as Australia, New Zealand and South Africa starting as early as 2010 when production starts.
The half-a-billion-dollar investment in Thailand is a strategic statement Ford has made to underline the importance it attaches to Thailand as its production base.
The 1.4-to-1.6-litre-engine Fiestas to be exported from Thailand to Australia, New Zealand and South Africa will replace those imported from Cologne in Germany and Valencia in Spain.
Ninety percent of all passenger cars sold in Thailand, the biggest car market in Asean, are built by Japanese companies led by Toyota and Honda.
Sub-compact cars, such as Fiesta, make up 45 percent of the Thai passenger car segment. Ford sold 465 passenger cars in Thailand in the first five months of 2009, a paltry 0.6 percent market share. In contrast, Toyota sold 33,344 and had 43 percent of the market.
Proton resumes search for strategic suitor
While Ford’s big move in Thailand makes headlines in automotive columns in the region and beyond, Proton of Malaysia returns into the spotlight as the national car maker announces that it again is in talks with Germany’s Volkswagen, and that its founder, ex-premier Mahathir Mohamad is back at the national car maker as its chief adviser, the job he quit a few years ago.
The new talks could lead to a strategic partnership and the assembly of vehicles at the national carmaker’s plant in Tanjung Malim but the partnership was not expected to see the German auto giant taking an equity stake in Proton.
Malaysian government probably would like Proton to have a strategic alliance before the review of the National Automotive Policy (NAP), which is expected to be completed in October.
However, the return of Mahathir after more than four years may not necessarily facilitate the talks if Volkswagen still insists on a stake in Proton as it did in the numerous rounds of earlier negotiations.
Mahathir, saying that he was happy to be back at the national car maker, sees that Proton is now capable of competing in the local and international markets, noting Proton’s pre-tax profit of 18.3 $ for first quarter of 2009.
Proton, without a strategic partner, will see tougher competition when the government removes the control on the number of foreign models that can be brought into the country through the so called approved permits.
Mahathir is unlikely to agree with the government lifting the import restrictions if that could endanger Proton’s survival.
For Volkswagen Malaysia remains an important market in the region as it is the largest passenger car market in Asean. Yet, there are other markets for the German car maker to explore.