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As a regional auto hub, Thailand has the edge in infrastructure and location but when it comes to sales it's a three-way tussle

 

AUTOMOBILES

Asean battles in top gear

ALFRED THA HLA

Vehicle sales have increased sharply in the past year but whether Thailand is the auto industry leader in Asean is open to debate.

Sales between January and October increased by 28.6% year-on-year, totalling 205,649 vehicles. The trend confirmed automakers' forecasts of 265,000 units for the year - a target that had been reduced from 280,000 after a blip in turnover mid-year. Malaysia is expected to record 350,000 sales this year and Indonesia 300,000.

Every segment of the Thai auto industry is experiencing healthy growth, with car sales up 32.2% year-on-year and those of one-ton pickup trucks up 26.3%.

Japanese makes dominate the market with an overall share of 89%, with Korean, American and European brands making up the balance. By the end of October, Toyota was on track for first place in both car sales and total vehicle sales by year-end. Isuzu was likely to win the one-ton pickup truck title and overall commercial vehicle sales.

Yet despite the buoyant trends, Thailandûs regional leadership, based on sales of new vehicles, in Asean's automotive industry has yet to be justified.

Malaysia, with about one-third Thailand's population, is recording more car sales. Apart from the fact that Malaysia is the wealthier of the two, the country's market is distorted by state protection for its national car programme that produces the Proton and Perodua brands, which take a 92% market share.

Indonesia, with 209 million people, is the most attractive in terms of sales potential and is recording unprecedented annual growth in sales of 312%.

Sales figures aside, automakers are still confident of Thailand's regional hub status for both assembly and export operations to other Asean countries.

Rayong's Eastern Seaboard region is home to the assembly plant of BMW Manufacturing (Thailand), which makes the new 3 series; Ford-Mazda's AutoAlliance plant, which makes pickup trucks and mid-sized sedans; General Motorûs assembly plant for Zafira mini-MPVs; and a host of component manufacturers including Visteon.

In November, a French delegation of 170 component and automobile manufacturers courted by the Board of Investment (BoI), visited the Eastern Seaboard and factories of Nissan, Toyota and the Sammitr Group.

Nicholas Raphael, the delegation leader, said that there was great interest in Thailand's pickup truck industry.

''We have a lot to offer in terms of design and innovation. Thailand is the world's largest one-ton pickup market outside the United States. We want to be part of that growth.''

A key issue is the re-entry of Renault to the Thai market. Siam Nissan Automobile sources say that negotiations are pending but Renault will eventually return through existing ties between parent firm Nissan Motors and Renault in France.

Taxation of vehicles continues to irritate consumers and the industry as a whole because of the ambiguous tax structure that leaves loopholes for abuse. The problem is no accident, industry sources point out, as lobbyists representing automakers are partly to blame.

On the bright side, the government is considering a new tax structure of 3-15% for small cars with displacements less than 1,100cc and able to achieve at least 15 kilometres per litre.

The lowest city-car tax rate is now 35% on vehicles with engines smaller than 2,400cc.

Archaic and conflicting rules in the excise tax system allow vans commercial status if they are classified as 10-seater or seven-seater vehicles. The Excise department says it must be 10 seats or more, while the Land Transport Department says it is at least seven.

Dealers profit by removing some seats and selling the vehicles as MPVs or mini-vans, although the units were taxed as commercial vehicle.

DaimlerChrysler (Thailand) asked for its Wrangler sport-utility, normally taxed at 32%, to be classified as a pickup taxed at 3%. A compromise of 18% was reached.

On the export front, shipments have been increasing steadily to offset the slump in domestic sales after the recession began in 1997.

According to MMC Sittipol, the total net worth of automotive exports for the first nine months this year reached 55.897 billion baht, 31% more than in the same period last year.

Export leader Mitsubishi, AutoAlliance (Ford and Mazda) and Toyota account for 85% of shipments, with Isuzu, Honda and Siam Nissan making up the balance with roughly equal shares.

In the nine-month period, 105,324 assembled (CBU) vehicles were shipped from Rayong, earning 41.4 billion baht. Parts and components exported in the period were valued at 14.49 billion baht.

Motorcycle sales recovered at a faster pace than automobiles, with 658,204 units sold in the first 10 months, according to A.P. Honda.

Four-stroke models, with an 81% market share in October, are gaining acceptance in preference to two-stroke polluters.

Honda dominates the market with a share of 73%. Suzuki (14%), Yamaha (11%) and Kawasaki (2%) make up the balance.

Analysts say that A.P. Honda has the uncanny ability to match rivals' new product launches at any given moment. Honda's Japanese parent firm stepped up its presence in management and technical assistance in Thailand before the recession began and is now reaping the rewards.

According to an industry observer, the trends in Thailand's automotive industry make investment worthwhile for many automakers.

''The pending abolition of local content requirements for assembly and a possible free-trade breakthrough in Afta mean that the best place to be is Thailand. We have the necessary infrastructure to accommodate new players who want to use Thailand as a stepping stone toward building an Asean presence,'' he said.

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