Who is the Winner? EVs or Flex-Fuel Vehicles and Biofuel?

bangkok-thailandIn looking at the future of alternative fuel vehicles—principally electric vehicles (EVs)—in the Thai market, it appears that the only push for promoting EVs is coming from the Electricity Generating Authority of Thailand (EGAT). In fact, the only comprehensive study on EV use in Thailand has been conducted by EGAT, which suggests that shifting electricity generation at power plants for use in electric vehicles would improve plant efficiency. However, can this alone be the driving force for consumers to move to purchasing EVs? The answer is an emphatic ‘No.’

Thailand’s Future Energy Plans Focus on Biofuel

A major obstacle in transitioning to EV use in Thailand comes in the form of the government’s Alternative Energy Development Plan (2008‐2023), which clearly shows that planned energy output to serve the transport sector for the next decade will be provided by biofuels, not electricity.

Thailand has an abundant supply of sugar cane, which can be processed into ethanol. Ethanol is an alcohol-based fuel made by distilling and fermenting crops, such as sugar cane, and more experimental sources such as cassava and molasses. Continue reading ›

Will Asean Become Major Market for Parts Makers in India and China?

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Ammar Master

The realization of the Asean Economic Community in 2015* presents opportunities and challenges in the changing automotive landscape of the Southeast Asian region.

Foremost, a successful Asean integration will support the long‐term goal of creating a region with free movement of goods, services, investment, and skilled labor, in addition to a freer flow of capital. This in turn is likely to lead to faster economic growth and an ever‐expanding middle class.

May Arthapan, director of Asia Pacific forecasting at LMC Automotive in Bangkok, indicated in an aptly titled recent presentation that Asean could well become “Another BRIC in the Wall,”** given the region’s emergence in Asia. Not only are there opportunities for vehicle makers to expand sales in a big way, but component makers also are going to benefit from increasing manufacturing activity in Asean countries, led by Thailand and Indonesia.

Japan’s Suppliers Have Long-Term Presence in Southeast Asia

Japan’s component makers have had a long-established presence in the Asean countries, and will clearly be the biggest beneficiaries. However, there are also opportunities for companies in India and China. These companies have been eyeing the Asean region as a new market for a while. This has been evident from increased participation, especially by companies in China, at Asean region trade shows.Yet, component makers from both nations have been wary to enter unfamiliar territory and face strong Japanese competition. Continue reading ›

J.D. Power International Roundtable Provides Future Industry Outlook

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John Humphrey

After a successful 2012, the outlook in 2013 for the automotive markets in the United States and China remains optimistic, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. He gave projections for the global auto industry during a presentation at the recent J.D. Power 2013 International Automotive Roundtable in Orlando, FL. Some 500 auto industry members—including dealers, marketers and executives from automakers—attended the one-day conference that was co-sponsored with the NADA. Some highlights from the presentation:

Auto Sales Shift to Emerging Markets

In 2013, the global automotive industry faces a somewhat mixed economic bag; the average GDP of mature markets will grow at about 1.4%, while the world’s largest emerging markets will grow by 5.5%, on average.*

Clearly, the United States and China are the bright spots to watch in 2013 and thereafter, in terms of sales and production potential. That said, there are pockets of overcapacity in the global industry that need to be addressed. In 2012, total global capacity for light vehicles reached 116 million units, against total global sales of 81 million units. This roughly translates to a utilization rate of 70%—well below the 80% threshold that most automakers need to reach to achieve financial breakeven. While utilization rates can vary widely by market—and impact the health of individual industries—the overall rate for the global industry can positively or negatively affect automakers with global operations.

Looking toward the end of the decade, the global automotive industry is plainly being driven by the largest emerging markets. In 2012, Asian markets accounted for 41% of the 81 million light vehicles sold globally—primarily China and India. By 2019, Asian markets will account for 49% of the 115 million vehicles forecast to be sold globally.

Continue reading ›

Ford Aims Big with New Thailand Plant

Two years ago, Ford jumpstarted its Southeast Asia sales with the introduction of the Fiesta sedan and hatchback models. The introduction in the second half of 2010 expanded Ford’s annual sales in the region by 81%, up from just 39,000 units in 2010 to 71,000 units in 2011.

Importantly, the Fiesta launch also signaled Ford’s renewed focus to be a prominent manufacturer in a growing region of 500 million people, now more integrated since the ASEAN Free Trade Area (AFTA) became fully functional in January 2010. And the region is moving toward further integration by 2015 under the ASEAN Economic Community (AEC) agreement.*

No doubt China will remain at the core of Ford’s Asia Pacific and Africa operations. However, other emerging markets in Asia, including India and the Asean, are gaining resonance. Continue reading ›

Honda Faces Major Challenge in Southeast Asia

 

Ammar Master

Honda has had a tough sales year in Southeast Asia, as the automaker’s total sales in Thailand, Indonesia, Malaysia and the Philippines have shrunk by 18%—to 110,000 units—in the first seven months of this year vs. the same period in 2010. Yet, Honda did not start the year poorly. Sales in the first quarter were up 19% year-over-year, to about 60,000 units, partly boosted by the facelift of the Accord and minor changes to the Jazz (sold as the Fit in the United States). The Japanese automaker was betting big on the launch of the Brio, its first eco car model, to further drive up sales volumes in Thailand.

Then, disaster struck Japan in March with the 9.0-magnitude earthquake and tsunami. As a result, Honda was forced to slash output by as much as 50% in the second quarter, as key vehicle components from Japan dried up. The lack of supply at dealerships led to a sales downfall in subsequent months. Continue reading ›

Vietnam Likely To Become An Import Market—Transfers to Cars from Motor Bikes

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The growing importance of Vietnam as the next big automotive market in Southeast Asia is undeniable. With an estimated 20 million bikes on the road, compared to a car population of 1 million vehicles, the potential is clear to see. Income levels are slowly rising–real GDP per capita (in 2005 US Dollar terms) has increased from US $468 in 2000 to US $834 in 2010, according to Oxford Economics, which works with J.D. Power Automotive Forecasting.

Manufacturers are hoping that the transition from two-wheelers to cars will happen sooner, rather than later. However, how the industry develops further and what direction it takes will pretty much depend on government policies on taxation, infrastructure development and investment promotion.

We think Vietnam will transform to an import vehicle market over the long term. We believe the country’s commitments towards the ASEAN Free Trade Area (AFTA) agreement to be the major driver behind this slowly shifting trend.

Vietnam to Cut Import Taxes on Vehicles

Under the deal, Vietnam is obliged to reduce import duties on completely built-up (CBU) vehicles from Southeast Asian countries to 0% by 2018. In accordance with this schedule, import duties on vehicles built in ASEAN countries are to come down from 83% to 70% this year. Apart from this, Vietnam is also cutting import taxes on vehicles with different engine sizes under its obligations to the World Trade Organization. Plus, import duties on 4-wheel-drive vehicles were reduced from 77% to 72% under the new tax rate. Continue reading ›

New Volkswagen Partnership to Open More Asian Auto Markets

The Volkswagen Group, one of the world’s largest automakers and with core markets in Germany and China, finalized an agreement with Malaysia’s DRB-Hicom in December 2010 for the CKD assembly of VW models at DRB-Hicom’s Pekan [Malaysia] plant. The two partners plan to invest 982.5 million Malaysian Ringgits, or about US $320 million, mostly . . . Continue Reading New Volkswagen Partnership to Open More Asian Auto Markets

Premium Brands to Offer Smaller Engine Choices in Asia

Recently, a number of premium automotive brands announced that they would soon offer more eco-friendly and fuel-efficient 4-cylinder engines in some of their models in different regions of the world. For instance, Daimler’s Mercedes-Benz brand reports that it will offer its flagship S-Class sedan with a 4-cylinder engine in 2011 in regions outside the . . . Continue Reading Premium Brands to Offer Smaller Engine Choices in Asia