Be­yond China, car mak­ers seek new driv­ers of Asian growth

Business World - - FRONT PAGE -

South­east Asia’s po­ten­tial beck­ons as global au­tomak­ers look be­yond China’s mas­sive mar­ket to ex­tend their sales boom in the re­gion, but ex­ec­u­tives say they face a strug­gle to match the ex­plo­sive Chi­nese growth. Chi­nese pas­sen­ger-car sales have quadru­pled over the past 10 years to 24.38 mil­lion last year, hav­ing be­come the world’s big­gest mar­ket in 2009. But with Chi­nese eco­nomic growth mod­er­at­ing, one ques­tion be­ing asked at the Shanghai Auto Show is: where in Asia can car mak­ers look for the next boom? “There is a chal­lenge to seek growth where the growth is. You look at coun­tries that are less equipped and are in the process of growth or ac­cel­er­a­tion,” said Marc Boilard, in­dus­try an­a­lyst at the firm Oliver Wy­man.

SHANGHAI — South­east Asia’s po­ten­tial beck­ons as global au­tomak­ers look be­yond China’s mas­sive mar­ket to ex­tend their sales boom in the re­gion, but ex­ec­u­tives say they face a strug­gle to match the ex­plo­sive Chi­nese growth.

Chi­nese pas­sen­ger- car sales have quadru­pled over the past 10 years to 24.38 mil­lion last year, hav­ing be­come the world’s big­gest mar­ket in 2009.

But with Chi­nese eco­nomic growth mod­er­at­ing, one ques­tion be­ing asked at the Shanghai Auto Show is: where in Asia can car mak­ers look for the next boom?

“There is a chal­lenge to seek growth where the growth is. You look at coun­tries that are less equipped and are in the process of growth or ac­cel­er­a­tion,” said Marc Boilard, in­dus­try an­a­lyst at the firm Oliver Wy­man.

South­east Asia’s po­ten­tial re­mains sig­nif­i­cant, with more than 600 mil­lion peo­ple, solid eco­nomic growth and just 2.1 mil­lion pas­sen­ger ve­hi­cles sold last year in the 10-coun­try As­so­ci­a­tion of South­east Asian Na­tions (ASEAN).

But car mak­ers say is­sues such as im­port taxes, re­gional dom­i­nance by Ja­panese man­u­fac­tur­ers and lag­ging in­fra­struc­ture work against broad- based growth.

ASEAN “is a mar­ket that is closed, where im­port taxes are very high,” making it nec­es­sary to in­vest in lo­cal man­u­fac­tur­ing, said Car­los Tavares, chair­man of France’s PSA, which pro­duces Peu­geot and Citroen.

In­done­sia has 250 mil­lion peo­ple, but US au­tomaker Ford pulled out last year in the face of Ja­panese firms’ more than 90% mar­ket share, said David Schoch, CEO of Ford China.

“When I sit back and look at it, and think about elec­tri­fi­ca­tion, smart mo­bil­ity, and where the in­dus­try is go­ing ... where are you go­ing to place your bet?” Mr. Schoch said.

Ford has an­nounced plans to dou­ble down on China, where elec­tric- ve­hi­cle and SUV sales con­tinue to surge.

“Al­though In­done­sia rep­re­sents a fairly large mar­ket and is grow­ing, again, we couldn’t see a way for­ward that we could be suc­cess­ful there,” Mr. Schoch said.

Viet­nam holds po­ten­tial with more than 90 mil­lion peo­ple and less than 30 ve­hi­cles per 1,000, com­pared with China’s 120 and 800 in the United States.

“The only down­side, how­ever, is that th­ese mar­kets have been dom­i­nated by the Ja­panese for a very long time,” said François Jau­main of PwC Aut­o­facts.

Ja­panese car mak­ers ac­count for 71% of sales in Thai­land and 59% in Viet­nam, ac­cord­ing to PwC.

PSA, whose China sales plunged 16% last year, plans to tar­get 5% of Viet­nam’s pas­sen­ger­car vol­ume, which reached just 158,000 last year.

It also is pur­su­ing a strate­gic part­ner­ship with Pro­ton, the strug­gling na­tional car maker of Malaysia, where half a mil­lion cars were sold last year.

In­fra­struc­ture devel­op­ment, which helped fa­cil­i­tate China’s pri­vate-car boom, has not kept up in South­east Asia.

Se­bastien Amichi of con­sul­tancy Roland Berger said: “We’ve been talk­ing a long time about the ‘ new dragons,’ which have had dif­fi­culty tak­ing off.

“When we take th­ese coun­tries to­gether, South­east Asia could be a good growth area, if the in­fra­struc­ture and bank­ing net­works are set up ef­fec­tively.” —

THE NEW FORD Mus­tang is dis­played dur­ing the first day of the 17th Shanghai In­ter­na­tional Au­to­mo­bile In­dus­try Ex­hi­bi­tion in Shanghai on April 19.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.