Bangkok--16 Aug--Frost & Sullivan
ASEAN is set to become the 6th biggest automotive market globally by 2018 with vehicle sales almost doubling to nearly 4.7 million units as compared to 2.4 million in 2011, predicts Frost & Sullivan.
Mr. Vijayendra Rao, Research Manager, Asia Pacific Automotive Practice at Frost & Sullivan said that individually, none of the ASEAN countries has featured in the top ten markets globally, but as a region, it has assumed greater importance in the last few years due to the implementation of ASEAN Free Trade Agreement in 2010 and healthy rivalry among ASEAN member countries to attract foreign investments.
New analysis from Frost & Sullivan (http://www.automotive.frost.com) CEO 360 Degree Perspective of the Automotive Industry in ASEAN (covering 4 key automotive markets in ASEAN — Indonesia, Malaysia, Thailand and Vietnam) finds that the market is likely to grow at a compound annual growth rate (CAGR) of 10.1 per cent (2011-2018), mainly driven by growth in Thailand and Indonesia.
Mr. Rao said that Thailand and Indonesia vehicle sales are likely to hit 1 million units by 2013 driven by local demand, increased buying power and significant investments from Japanese OEMs.
He added that Indian and Chinese automotive companies are also looking at expanding to ASEAN. He added that ASEAN is a competitive automotive production base and a net vehicle exporter with strong competency in certain product ranges.
“Thailand is expected to continue its dominance as a production hub in ASEAN due to the significant investments by Japanese OEMs (original equipment manufacturers), incentives from the Government, good supply base and required talents,” he said.
He also said that production in Indonesia will cater to local demand, mainly driven by the shift of ownership to cars, multi-purpose vehicles and sports utility vehicles from motorcycles.
Mr. Rao said that passenger vehicle sales in ASEAN are likely to increase at a CAGR of 10.2 per cent to 3.1 million units in 2018 from 1.5 million units in 2011. Commercial vehicles sales are expected to grow at a slightly slower pace at a CAGR of 9.8 per cent to reach 1.6 million units in 2018 from 780,000 units in 2011.
Thailand
Mr. Rao said that the 2011 Japan earthquake and tsunami and the flooding in Thailand caused the automotive production slowdown and therefore impacted the total vehicle sales. However, production and sales are likely to recover in 2012, he added.
He said that pick-up trucks continue to be the most popular vehicle in Thailand despite a slower-than-expected growth in 2011. Mr. Rao said that consumers are beginning to favor passenger vehicles from the traditionally popular pick-up trucks.
“The younger generation of Thais prefers smaller cars and eco-cars which are both stylish and affordable. Most of these cars are hatchbacks and are perceived as sporty and fast,” Mr. Rao noted, adding that the mini car segment has been established with the launch of Tata Nano Europe.
In 2011, the passenger vehicles segment witnessed a 3.9 per cent increase year-on-year with the 650 to 1,500 cc vehicles most popular, while sales of pick-up trucks declined 4.9 per cent year-on-year.
“Toyota Motor Thailand, Honda Automobile Thailand and Nissan Motor Thailand are expected to continue to be key market leaders in the passenger vehicle market in Thailand in 2018,” Mr. Rao said.
He added that the vehicle production in Thailand is expected to grow at a CAGR of 11.9 per cent from 2011 to 2018 while total vehicle sales will likely increase at a CAGR of 16.1 per cent. “Production of passenger vehicles is likely to outpace commercial vehicles,” he added.
Mr. Rao said that Asia, Middle East countries and Oceania are the key export destinations for the Thai automotive industry. A total of 73.9 percent of the vehicles exported from Thailand in 2011 were to countries in these regions, he added.
He also said that Thai consumers are becoming sophisticated, showing an increasing preference for automatic transmission vehicles with safety features such as automatic brake system (ABS), airbags and comfort enhancing features such as global positioning system (GPS) and entertainment systems such as DVD players and TV.
Mr. Rao said that foreign automakers based in Thailand are planning to launch about 40 all-new models and variants in the short-to-medium term, which is likely to include 10 hatchbacks and sedans under the eco-cars scheme. “These launches are expected to stimulate sales volume in the Thai automotive market,” he added.
He said that total vehicle sales in Thailand is expected to grow at a CAGR of 16.1 per cent (2011-2018) to reach 2.26 million units in 2018, driven by positive consumer sentiment, availability of new variants and models. He added that Government schemes such as first buyer incentives schemes and tax incentives for eco cars are expected to stimulate domestic demand during the forecast period of 2011-2018.
Indonesia
Mr. Rao said that 2011 was a bumper year for the Indonesian automotive market as total industry volume (TIV) grew 16.9 per cent year-on-year to 894,164 units despite the global economic slowdown and natural disasters that hit Japan and Thailand, making it the largest automotive market in ASEAN.
He added that Indonesia’s automotive exports were worth US$203.5 billion in 2011, mainly to other Asian countries. The country’s completely built-up (CBU) grew 25.8 per cent to 107,932 units in 2011.
Mr. Rao said that Indonesia’s growing middle class segment has increased the demand for affordable vehicles, with IDR 150-200 million (US$15,870-US$ 21,160) as the preferred price point for cars.
“Premium cars are also experiencing greater demand from the high income groups triggered by increasing buying power,” he added.
He noted that multi-purpose vehicles (MPV) are the most preferred segment in the market, with the top 5 best-selling vehicles coming from the segment. Compact cars, especially hatchback type are also popular among young adults with high mobility.
He said that total vehicle sales in Indonesia is expected to grow at a CAGR of 8.7 per cent (2011-2018) to reach 1.6 million units in 2018, driven by a steady economic growth, positive consumer sentiment, a low interest rate environment and launch of new models and variants by automakers.
He added that the vehicle production in Indonesia is likely to grow at a CAGR of 9.4 per cent (2011-2018) to reach 1.57 million in 2018. “Production of passenger vehicles is forecasted to be more than 70 per cent in the next few years with consumers’ increasing buying power and preference for personal vehicles and OEMs move to increase production of passenger vehicles as compared to commercial vehicles,” he said.
Mr. Rao said that Indonesia is likely to be the production hub for low-cost green vehicles in the future and also the largest automotive production base in ASEAN due to increase of production capacities by car manufacturers to cope with growing international market demand.
Malaysia
Mr. Rao noted that the Malaysian Government has extended the full tax exemption of import duty and excise duty on hybrid and electric cars for vehicles below 2,000cc until Dec 31, 2013. “This has led to huge growth in sales for hybrid models such as the Honda Insight, Toyota Prius and Lexus CT 200h,” he said.
However, he added that automakers needs to do more to educate the public about the technology and address consumers’ concerns on the maintenance cost of the vehicles and introduce more attractive models to attract consumers’ interests.
Vietnam
Despite facing unfavorable situations in 2011, the Vietnam’s total vehicle sales fell marginally by 2 per cent to 110,113 units as compared to 2010, Mr. Rao said. He expects vehicle sales in 2012 to further slide by 12 per cent year-on-year to 96,899 units as the Vietnam government implements a number of policies such as restricting imported cars and restricting private car ownerships.
He said that total vehicle sales in Vietnam is expected to grow at a CAGR of 1 per cent (2011-2018) to reach 117,961 units in 2018 due to the uncertainty in the market especially the Government’s unstable automotive-related policies.
Mr. Rao said that demand for passenger cars, especially the 2.0 CC segment and lower, is expected to increase due to its fuel efficiency and small size which is more suitable for the road conditions in Vietnam.
He added that the pick-up truck segment is likely to continue its steady growth, with a CAGR of 4.5 per cent (2011-2018) driven by stable economic progress and its suitability to Vietnam’s road conditions and consumers’ budget.