ASEAN KEY DESTINATIONS
AEC will level playing field for auto industry
The implementation Asean Economic Community (AEC) in 2015 will likely reduce the regional dominance of big Japanese automakers, such as Toyota & Honda.
Global market research firm Frost & Sullivan said on Wednesday in Kuala Lumpur, Malaysia there would be a more level playing field.
Its principal consultant for automotive and transportation practice Asia Pacific, Dushyant Sinha said that smaller Japanese players such as Suzuki, Mitsubishi and Isuzu and new entrants would gain the most from the implementation of AEC, as the level playing field would make it easier to expand their presence and challenge incumbents.
"However, big Japanese original equipment manufacturers (OEMs) are still likely to continue to lead the market," he said.
Dushyant noted that AEC seemed to be less favourable to the Malaysian automotive sector, as the dominance of national players would come under pressure and the effects will cascade to the entire value chain.
He said market concentration in Malaysia was likely to increase as new players enter the market and challenge the dominance of Proton and Perodua.
"The implementation of AEC will be challenging for local players and their weak competitiveness is likely to dampen export further," he said.
However, he predicted that under AEC, Indonesia would further capitalise on its large, high growth market and low cost of labour.
"Indonesia's local automotive manufacturing is likely to see a big jump as the country becomes more attractive as a regional hub for production.
"There will be increase in competitive activity as Indonesia becomes more attractive in terms of a large market, lower costs and regional access," he predicted. He added that there would also be an increase in the number of dealers as new players enter the market and tackle the geographic complexity of the market.
"Exports are likely to grow as AEC and Free Trade Agreements will make it easier for OEMs to set up base and supply to other markets," he said.
He also said the relatively "under-developed" vendor base was likely to get a boost as more OEMs come in to set up assembly and cater to the region.
He noted Thailand is the second largest automotive market in ASEAN and AEC was not expected to impact sales and growth is likely to continue at existing pace.
"The number of automotive players is likely to increase as new entrants find it easier to enter the market," he said, adding that there will be more dealerships being set up as new entrants try to increase their presence and expand into the market.
Dushyant also expected Thailand's vehicles exports to further grow in ASEAN and outside the region.
He said Thailand has the most developed supplier network in the region and it would likely stay that way under AEC.
Dushyant said Malaysia, Indonesia and Thailand were the key automotive markets in Asean, accounting for 89% of the regional passenger car market
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