Development of automotive sector in three major production hubs in ASEAN- Thailand, Indonesia and Malaysia

Posted on 12 September 2014

Source: SEAISI
Thailand's automotive production slowed down significantly after the first-car campaign launched by the previous government in 2012/2013. Total vehicle production reached 2.4 million vehicles in 2012 and the volume was sustained in 2013. However, production volume is expected to drop significantly to 2 million vehicles in 2014.

The Federation of Thai Industries (FTI) reported that Thailand's auto production registered 151,339 vehicles in July 2014, a decline of 26% y-o-y. Production of commercial vehicles contracted 19% y-o-y in July 2014 while passenger car production declined 32% y-o-y in the same month. Though the sector will continue to see declines in production volume in the coming months, the rates of contraction are expected to moderate somewhat when compared to the previous months.

It is expected that there will be an improvement of automotive production in October 2014 with a much lower contraction rate, at 6% y-o-y.

Exports of completely built up (CBU) vehicles, on the other hand, continued to edge higher in July 2014, at 91,785 units, an increase of 11% y-o-y.
Indonesia, on the other hand, enjoys a promising growth rate in automotive demand. The Indonesian government offers tax incentives to LCGC (Low Cost Green Car) producers that meet the requirements of fuel efficiency targets. The government aims to turn Indonesia into a regional hub for LCGCs ahead of the start of the ASEAN Economic Community in 2015, which seeks to turn ASEAN into a single market and production base.

Indonesia-Investments reported that vehicle export volume in Indonesia expanded significantly in recent years. It is expected that vehicle export may reach 310,000 units in 2014, a 12.72 percentage point growth from last year (275,000 units). Exports of completely built up (CBU) units are expected to number 200,000 units while completely knocked down (CKD) vehicles are estimated to reach 110,000 units by the year-end.

Meanwhile, Malaysia's government is now more open for foreign investments into the country's automotive sector although no further reduction in excise duty is expected in the upcoming budget announcement. The revised National Automotive Policy (NAP), however, contains incentives to promote the production of energy-efficient vehicles (EEVs). This could boost sales of automotive in the country.

According to the Malaysia Automotive Association, auto production in the country grew 5.6% in 2013, to 601,407 units. While passenger car production registered a healthy growth rate of 6.7%, to 543,892 units, output in the commercial vehicle (CV) segment contracted 4.1%, to 57,515 units. For 2014, Malaysia auto production is expected to grow at 4.9%, to 630,590 units.

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