The second Automotive News Asia-Pacific Congress was held in Bangkok on May 22-23. Michael Dunne, president of Automotive Resources Asia Ltd., a marketing research firm in Bangkok, provided this overview.
BANGKOK -- Think of Asia's major automotive markets as five pieces of a giant jigsaw puzzle that do not quite fit together, however much strategic planners would like them to.
For starters, consider that Asia's north-south geographic stretch is comparable to traveling from Maine to Argentina. Even the most modern jumbo jets take nine hours to cover the 5,800 miles that separate Beijing from Jakarta, the capital of Indonesia.
Income differentials are even more glaring. In Japan the average worker takes home $2,400 a month, while in Thailand the monthly income is about $175.
But what about Asia's most talked-about common denominator: growing consumer demand? Sales figures reveal that Asian markets are not expanding at the same clip. Surprisingly, Thailand sold nearly as many vehicles in 1990 as it did in 2001. Japan's vehicle sales have declined for five straight years. At the other end of the spectrum, China's vehicle sales have increased almost 500 percent since 1990.
To track some of the larger trends in Asia's automotive markets, 130 industry leaders gathered in Bangkok for the second annual Automotive News Asia-Pacific Congress.
Guest speakers from General Motors, Ford Motor Co., Delphi Corp., DaimlerChrysler, DRI-WEFA and others agreed on three points:
1. Asia is expected to account for 50 percent of the growth in global car sales over the next 10 years. China, India, Thailand and Korea will be the top performers in terms of market growth.
2. China alone will account for one-third of total Asian sales growth through 2012. Sales of passenger cars will increase from 800,000 last year to 3 million units in 2010. By that time, China will be the world's third-largest vehicle market.
3. Japan, Korea and China will dominate the region's vehicle production. However, production will rise sharply in Korea and China, while falling in Japan.
While Asia defies easy summaries, it is useful to view the region as five automotive blocs: Japan, Korea, China, ASEAN and India. With that framework in place, here are the projections for change.
This hollowing out is explained in part by Japanese manufacturers' decision to move production offshore to places such as Thailand, China and India. By 2007, Japanese carmakers plan to add 1.4 million units of production in Asian nations outside Japan.
Renault purchased Samsung, and GM acquired Daewoo.
Five years later, the Korea auto industry looks more resilient than ever. Last year, production totaled 2.9 million units, of which more than half was exported. By 2012, Korean light-vehicle production is projected to climb to 3.9 million units annually.
"It is only a matter of time before China becomes the world's largest car market," said Philip Murtaugh, chairman of GM China and a speaker at the Asia-Pacific conference.
But for all its promise of growth, China also presents risks. Some Chinese automakers will survive that nation's entry into the World Trade Organization, and they will challenge foreign automakers by offering low-priced vehicles.
"Local manufacturers have two distinct advantages," said Lloyd Xing Hong, executive vice president of Brilliance China Automotive Holdings Ltd. and a conference speaker. "They have an intimate knowledge of the local market, and they have a special knowledge of low-cost production."
But sales did not meet expectations. Foreign automakers found it difficult to make money in a market that preferred $5,000 Maruti models. Still, India's market is growing. According to Chotai, India will remain Asia's fourth largest vehicle producer.
China got only the scraps. In the wake of the Asian financial crisis, however, China is taking the lion's share. The ASEAN region comprises Vietnam, Cambodia, Myanmar, the Philippines, Malaysia, Indonesia, Singapore, Laos, Thailand and Brunei.
Nations in that region still are trying to cut tariffs to create a unified market. One bright spot is Thailand, which is moving quickly to assert itself as a key global production base.
Thailand plans to boost exports from 175,000 units in 2001 to 400,000 units in 2006, according to Vallop Tiasiri, executive director of the Thai Automotive Institute and a speaker at the congress.
Tiasiri says Thailand will pursue exports to markets outside the ASEAN region. He acknowledges that it will be some time before Thailand's protectionist neighbor, Malaysia, permits free automotive trade within the region.