Asean region to emerge as key automotive hub by 2019

The Association of South East Asian Nations (Asean) region is likely to become the fifth-largest automotive market in the world by 2019, according to market research firm Frost & Sullivan.

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The Asean automotive market will grow by 5.8% between 2012 and 2019 to reach 4.71 million units, driven mainly by rapid market expansion in Indonesia and Thailand, the researcher said in a report published on Thursday August 15.

The lower level of vehicle ownership and use in the Asean region offers strong growth potential for the automotive market, while vehicle-heavy Western Europe and North America represent a saturated “replacement” market, Frost & Sullivan’s research director for Asia Pacific, Vijay Rao, said.

Indonesia is expected to become the largest automotive market in the Asean region by 2019, accounting for 2.3 million vehicles, Rao said. This move will be driven by sustained economic growth, rising middle classes with larger disposable incomes, greater investment in the automotive sector and the introduction of automotive regulations supporting market growth.

Car demand in Thailand is also expected to grow, driven by an improving economy, higher disposable incomes, capacity expansion by vehicle manufacturers, and the launch of several new vehicle models.

The Malaysian market will also see growing demand, supported by a proliferation of competitively priced foreign vehicles and by price reductions resulting from market liberalisation, Rao added.

Meanwhile, total vehicle production in the Asean region is expected to grow by 8% between 2012 and 2019 to hit 7.05 million units.

Thailand is likely to continue to be the dominant vehicle production hub in the Asean region, because of significant capacity expansion, increased export and domestic demand, the availability of skilled labour and its well-developed automotive component industry, Rao said.

Vehicle production in Indonesia will serve more local sales because of strong domestic demand and the inflow of foreign investment to expand production.

European and Chinese original equipment manufacturers are looking at Malaysia as an assembly and manufacturing hub to set up production plants, Rao added.

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