Over the past decade many OEMs had strategies that focused on emerging markets that had obvious growth potential, notably China, India and Brazil. As they review their growth strategies, the case for investment in one of the world’s most dynamic automotive clusters – ASEAN – becomes most compelling.
Home to three major automotive hubs and an additional 7 attractive markets, ASEAN is an obvious next step in the growth strategies of automotive manufacturers.
Thailand continues to be the dominant hub within South East Asia, with the best automotive supply and logistics chain as well as impressive production figures for domestic and export markets. Whilst the industry has suffered significantly in recent years, the underlying trend suggests that the industry is close to being back on a growth path. As with other markets, Thailand is moving towards eco cars and SUVs, but the country’s industry is still dominated by one ton pick-up trucks.
Many OEMs and automotive component manufacturers are seeking to develop stronger revenue streams and this is bringing the aftersales market into greater focus. This market offers significant potential to the industry as a strong revenue stream.
Our latest publication on the Thailand Automotive Aftersales market highlights that there will be more than 18 million passenger vehicles in Thailand by 2020, thereby offering an attractive opportunity in the automotive aftermarket arena.
Even though parts quality is the most important criterion for selecting the aftermarket channel, the non-OEM parts has a significant share in the market.
With the largest economy in ASEAN, Indonesia expects passenger vehicle growth at a CAGR of 7.4% to 2020. The commercial vehicle sector should also enjoy solid growth.
The Indonesian growth story is not just about Jakarta and Java Island. The 76.2 million motor cycles and 8.3 million passenger vehicles in Indonesia are widely spread across the nation, with the top 4 cities accounting for only 11% of the motorcycle population and 26% of the passenger car population. With this high level of fragmentation, you might want your initial focus to be on Jakarta, due to its higher concentration of vehicles and attractive growth prospects for segments such as MPV as well as “value” vehicles.
While Jakarta is expected to maintain its contribution to national passenger vehicle growth, less developed provinces such as Kalimantan and Sulawesi, have been growing at a faster pace due to demand from first-time owners.
The Philippines has long been a market that confounds the industry, with all the key indicators showing great potential but no clear view of when this will come to fruition. However, when we look at the key South East Asia automotive markets, the Philippines stand out as the market that has enjoyed the best growth in recent times – a CAGR of 28% from 2011-2014. Looking at the performance of the wider economy in recent years, it seems clear that the Philippines demands close attention when developing a strategy for the ASEAN automotive sector.
Vietnam is emerging as an investment destination for the automotive components industry. However, it is still renowned for the level of ownership of motorbikes with approx. 42% of the country’s population owning a motorcycle. It will be some time before the demand for passenger vehicles can compare with this statistic. However we are seeing a steady increase in passenger vehicle ownership as well as the introduction of supercar brands such as Ferrari. In the interim, we expect to see major OEMs within the region continue to look at Vietnam, Cambodia and Laos as investment destinations for their logistics chain.
Malaysia offers investors a stable business environment for their ASEAN base, along with a robust logistics chain. Having lost the battle with Thailand to become the automotive hub for South East Asia, the government now looks to develop the automotive sector by focusing on incentives for emerging technologies, such as Energy Efficient Vehicles (EEV) . The domestic market is unique in that Proton and Perodua - the two Malaysian automotive brands - enjoy an unusually high market share (46.8% in 2014. However, there are already signs that this dominant position is being challenged by increased competition from foreign brands that are becoming more affordable to Malaysians.
The New Lubricant Trade In ASEAN - A Promising New Era
Global lubricant markets have seen a dramatic rebound since the global economic recession of 2008–2009. At that time, global demand dipped to its lowest point since the latter half of the 20th century, but has since surpassed its previous high mark set in 2007. One of the key drivers of this rebound can be attributed to Asia, where the developing economies of emerging markets are fueling the rising demand for lubricants.