ASEAN is a regional block of 10 South East Nations: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
The Light vehicle production in the ASEAN block has shown very good decadal growth in the period 2009 – 2019. The production volumes have grown from 2.06 million to a level of 4.11 million units. The growth has been cornered mostly by the Japanese Automajors, who grew from 1.57 million units (in 2009) to 3.30 million units (in 2019).
The Japanese Automajors contribution is now 80% (in 2019) from 76%(in 20009). The other OEMs too grew to 810000 units from 488000 units during this decade.
Reasons for this massive growth are primarily due to the increase in demand. The encouraging policies by the ASEAN nations, at their individual nation levels too, complimented this demand growth. Special mention needs to be made of the Thai Governments eco-car scheme and the Indonesian Government’s Low-Cost Green Car (LCGC). The Thai Government eco-car entailed having a minimum production level of 100,000 units/year and the Indonesian Programme had a price ceiling of ₹95 million (US$9,505) under the Indonesian program (at 2014 prices) – when LCGC model prices fluctuate as per economic indicators.
Both the programs also had other stringent requirements too. Due to the manufacturing abilities and economies of scale, the Japanese Automajors were better equipped to qualify for the same.
Export volumes of Sub-Compact cars were boosted due to Thailand’s eco-car scheme and Indonesia’s program boosted the Light Vehicle Market largely – accounted for 23% of total sales in 2019. The Japanese derived maximum leverage from these programs and drove the growth in ASEAN Light Vehicle Market.
However, in the coming decade, we could see visible changes in the dynamics of Vehicle Production by Automajors.
The Chinese and Korean Automajors could make a significant dent in the market share of the Japanese. This scenario could arise due to :
The Japanese OEMs, most of them, have already done substantial investments in operational plants; and have excess capacities.
The Chinese OEMs, MG/Great Wall in Thailand, and Wuling/Dongfeng in Indonesia have entered the ASEAN markets and have big plans for them. ASEAN plants would serve as export for these 4 major Automajors mentioned.
Hyundai will begin operations in Indonesia with its newly built factory getting an operation in 2021. The plant will produce vehicles for the ASEAN region while also exporting them to the Middle East.
The ASEAN nation-states are now targetting non-Japanese auto majors for new investments, as many Japanese investments are already made and with excess capacities are there today.
Example: Thailand government is looking at welcoming Chinese OEM Great Wall Motors dangling its electrified vehicle incentive scheme – despite official closure in 2018.
Indonesia too has allowed Hyundai to take part in its tax incentive scheme.