* VW latest example in carmakers' push into ASEAN
* Europeans "have long overlooked" ASEAN region -analyst
* Key ASEAN markets to grow 35 pct by 2020 -IHS
* Momentum in China, South America slowing -IHS
By Andreas Cremer
BERLIN, April 2 Volkswagen has
joined a rush by Western carmakers to tap fast-growing Southeast
Asian markets to take on Japanese rivals in a region where a
burgeoning middle class has money to spend.
Volkswagen is seeking to set up operations in
the Association of Southeast Asian Nations (ASEAN) countries
where the German group has one of the few remaining gaps in its
global factory network that encompasses more than 100
VW has applied to build its first plant in Thailand, two
sources familiar with the matter told Reuters on Wednesday,
seeking to take advantage from tax breaks that already attracted
investment from Ford and General Motors.
VW declined to comment.
Auto manufacturers in Europe and the U.S. are following
Japanese rivals such as Toyota and Nissan in
launching inexpensive and fuel-efficient models, taking aim at a
market featuring increased export and domestic demand and a
VW's plans for Thailand were reported late Tuesday by
Bloomberg. The German group currently assembles
three models in Malaysia with local partner DRB-Hicom.
Car markets in Southeast Asia, where Japanese companies
dominate, offer stronger growth prospects than Europe, North and
South America and even China where momentum is slowing.
"The Europeans have long overlooked the ASEAN region,"
Stefan Bratzel, head of the Center of Automotive Management
think-tank near Cologne, said. "It's a direct attack on the
Japanese. Local production is a must to be competitive in this
New-car sales in the six main ASEAN economies of Indonesia,
Malaysia, the Philippines, Singapore, Thailand and Vietnam may
rise 35 percent to 3.16 million by 2020 from 2.34 million last
year, according to research firm IHS Automotive.
Market growth in Indonesia is set to overtake China in the
next five years, IHS said, pegging its new car sales growth at
48 percent compared with 41 percent for the world's No. 1
VW is seeking to participate in a Thai government programme
offering tax breaks and other incentives to carmakers when they
meet production targets for small, fuel-efficient vehicles, the
sources said on condition they not be named because the matter
is confidential. Final decisions have not been taken yet.
The move is designed to take on Japanese competitors which
have been investing in Thailand for decades and have come to
rely on the country as an export hub, one of the sources said.
They also control around 80 percent of the Thai car market, the
biggest in Southeast Asia.
The ASEAN region may also become a future market for the
first-ever VW budget car which Europe's largest automaker has
been striving to develop, Bratzel said.
Volkswagen will have to go back to the drawing board to meet
the requirements for the budget car, Bangkok-based IHS
Automotive analyst Jessada Thongpak said. "They will probably
have to create an all-new platform," Thongpak said.
Separately, Renault aims to announce a new plant
in Southeast Asia this year, a company source said.
The French carmaker and 43.4 percent-owned Nissan are
"working on many projects", Chief Executive Carlos Ghosn said on
Wednesday when asked about the plan during a trip to South
Korea. "We announce only decisions, we don't announce projects."
French rival Peugeot Citroen and its Chinese joint
venture partner Dongfeng Motor Group are discussing
exporting Dongfeng's Fengshen brand to the region.
Ford kicked off production of the all-new EcoSport compact
SUV in January at its $450 million assembly plant in Rayong,
By comparison, Toyota makes about one-in-10 of its cars in
Thailand and plans to invest around 20 billion baht to boost
annual capacity by 200,000 vehicles over the next three or four
years, to 1 million vehicles.
"There's huge potential in ASEAN markets for the Europeans,
especially in low-cost vehicles," said Bratzel. "It's high time
for them to stand up to the Japanese."
(Reporting by Andreas Cremer. Additional reporting by Laurence
Frost and Hyunjoo Jin. Editing by Jane Merriman)