The ASEAN Economic Community (AEC) is now upon us, and if you think that will sparkle up the auto industry, you are a born optimist. Ford’s new ASEAN President Mark Kaufmann does not have the same optimism and is predicting a 6 percent fall in vehicle production for 2016 for the region.
There are many factors involved here. Malaysia introduced a 6 percent GST, Thailand has a new excise tax based on CO2 emissions, decreasing overseas investment, a credit squeeze and the carry-over from artificially inflated demand brought out by the first car buyers scheme, producing an extreme slow-down when the scheme ended.
In 2014 regional sales dropped 10 percent, with Thailand the biggest loser on a 34 percent drop.
In 2015 the negatives outweighed the positives, so that although Vietnam and the Philippines showed an upwards sales movement, their entire auto industry was still small, and with Thailand’s sales being again so low, along with Malaysia, Indonesia and Brunei, these factors have produced the outlook of a further fall of 6 percent.
Quite frankly, if the member countries in the AEC don’t apply themselves to this problem, China will take over as the manufacturing hub for ASEAN. China has the capacity and has been importing technical assistance.
