Suzuki Leaves U.S. Auto Market; Focuses on Asian Markets

After 27 years in the United States, Japan’s Suzuki Motor Corp. will stop selling its current lineup of four models here and concentrate on other parts of its global business, particularly business in India and Southeast Asia. The company, which is a major mini car maker in Japan, will continue to market motorcycles, all-terrain vehicles and marine engines in the United States, according to a company statement.

Recently, Suzuki’s U.S. distributor filed for Chapter 11 bankruptcy protection in California. Declining sales, a small, aging product lineup, and the strength of the yen were listed as reasons for the Japanese automaker’s decision to exit this market. Separately, Suzuki has stated that it will continue to sell vehicles in Canada, where it once operated a joint venture production plant with General Motors.

In regard to dwindling sales in this market, Suzuki, with a lineup of four models in the U.S. market, sold only 21,172 units through the first 10 months of 2012, which was 5% fewer than last year. Sales have been sliding during the past few years. In fact, Suzuki had its best sales year in the United States five years ago when it sold 102,000 vehicles. Since the company still has 220 U.S. car dealerships, it plans to work out an agreement with dealers to continue to serve current Suzuki vehicle owners with parts and service. All warranties will be honored, according to a company statement.

Suzuki to Focus On Stronger Asian markets

The Japanese automaker may be leaving the U.S. auto market, but plans to bolster its business in other parts of the world—especially in the growth markets of India and Southeast Asia. Currently, Suzuki has a 3% share of global auto sales—the same as in 2011, according to analysis from our strategic partner LMC Automotive.

Region 2011 2012
Global 3.0% 3.0%
Japan 13.4% 12.3%
India 33.8% 33.5%
ASEAN 3.2% 3.7%

 Source: LMC Automotive

Its Maruti Suzuki India unit is a market leader in that country, and deliveries accounted for nearly 40% of the company’s total 2.49 million unit sales in its last fiscal year. This year, Suzuki’s market share in India—though still the largest—is 33.5%, down slightly from 33.8% a year ago. Continue reading ›

Power Up: Hybrid/Electric Vehicles in Southeast Asia

Southeast Asia’s hybrid/electric vehicle market may yet get another boost with the announcement from Honda that it will assemble its Jazz Hybrid in Thailand. Initially, Honda had contemplated assembling the Civic Hybrid in Thailand, but decided that it was not the right business proposition.

The popularity of the Jazz in Thailand means that a hybrid version will potentially do well. We expect the Jazz Hybrid to follow in the footsteps of Toyota’s locally assembled Camry Hybrid, which is slowly gaining sales. Planned for introduction in the first quarter of 2013, we estimate the hybrid version to improve Jazz annual sales by 25‐30%.

Although Honda has been an active participant in the global hybrid electric vehicle (HEV) market with the launch of the original Insight a decade ago, it has taken its time to bring HEVs to Southeast Asia. The Jazz Hybrid will be the third HEV to be built in Thailand, following the rollout of the Camry Hybrid in July 2009 and the Toyota Prius in December 2010. 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 ›

Toyota Plans New Small Car for ASEAN Market

Ammar Master

Toyota is planning to build a new small car that we call the EFC in our forecast  for the ASEAN member countries in Southeast Asia. We believe this new model will go into production in 2013, and will first be sold in Thailand and Indonesia, followed by Malaysia a year later.

The EFC will be built on the same platform as the Etios sub-compact that is currently on sale in India. Like the Etios, the focus for the EFC is likely to be on keeping costs in check, while maintaining high quality standards and meeting specific fuel-efficiency requirements. Continue reading ›

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

Ammar Master

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 ›

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