RECIPROCUSRESEARCHBRIEF
AutomotiveMarketinASEANPreparedby:ReciprocusInternationalDate:January2017
TableofContents
ExecutiveSummary 2
MacroeconomicOutlookoftheIndustry 3
IndustryOutlook andAnalysis 4
RegionalLandscapeandAnalysis 5
OpportunitySpotlightandAnalysis 6
1StrictlyPrivate&Confidential
ExecutiveSummary
• TheASEANregionhasstrongandsustaineddemandforautomobiles,supportedbythefollowingkeydrivers:robustprivateconsumptionandaboomingconstructionindustry.Thishastranslatedintogrowingdemandforpassengercarsandcommercialvehicles.
• WeseeincreasingdemandforautomotivecomponentsproducedinSingapore,especiallyamongplayersinThailand– theregionalhubforautomotivemanufacturing.
• TheASEANregioncontinuesasthelargestdestinationforSingaporeexportersinthevehiclespace.However,autoindustryexportsfromSingaporetotheregionshrankataCAGRof-11.1%toavalueofUS$1.08billionin2015.
• Despitethis,growthopportunitiesarestillpresentintheregion, withtwoexamplesbeingMalaysiaandMyanmar,amongothers.
• Basedonourresearch,MalaysiaisthesecondlargestdestinationforautoindustryexportsfromSingapore,withatotalvalueofUS$353.9millionin2015andamodestCAGRof1.59%overtheperiod2011-2015.Malaysia’svehiclefleetisalsoforecastedtogrowataCAGRof5.5%over5yearstoreachasizeof17.3millionby2020.
• Myanmar’splanstodevelopmentitspublictransportsystemandcontinuedinfrastructuredevelopmentprojectsarealsoexpectedtocreatedemandforcommercialvehicles.Singapore’sautomotiveindustryexportstoMyanmargrewatarelativelyhighCAGRof3.73%over4yearstoreachavalueofUS$56.6millionin2015.
• Meanwhile,SingaporeexportsofautomobilestoThailandhasbeenrelativelysteadywithaCAGRof1.95%over2011- 2015toreachavalueofUS$170.3millionin2015.ThisisduetothesaturationofthemarketwithlargemultinationalmanufacturersasThailandisasignificantmarketforautomobileexportsandremainsacrucialregionalautomotivemanufacturinghub.
• GiventheamplepossibilitiesbeingobservedacrosstheASEANautomotivemarket,wewouldrecommendthatSingaporecompaniesconsiderexploringopportunitiesinthisregion,withaparticularfocusonMyanmarandMalaysia.
2StrictlyPrivate&Confidential
MacroeconomicOutlookoftheIndustry
BusinessOverview
3StrictlyPrivate&Confidential
Ø TrendAnalysis:SalesofautomobilesintheAPACmarketisprojectedtogrowatasteadyCAGRof5.3%overtheperiod2015-2020andreachsalesof46.59millionunitsby2020.ThisputsvehiclesalesgrowthintheAPACregiontobesecond-bestglobally,behindtheMiddleEast,butthemoreevendistributionofgrowththroughouttheregionmakesAPACamorestableandconsistentoptionforgrowththanMENA.
Ø KeyDrivers: TheAPACdemandforautomobilesisprimarilydrivenbystrongprivateconsumptionandagrowingconstructionindustry,whichisexpectedtocreategreaterdemandforpassengerandcommercialvehicles.ThereisalsoexpectedtobecontinuedgrowthinthedemandforautomotivecomponentswithapipelineofinvestmentsinproductionfacilitiessuchasBMW’shybridvehiclebatteryfactoryinThailandandNissan’sengineandtransmissionproductionfacilityinIndonesia.
Ø MarketLeaders:TheautomotivemanufacturingspaceisdominatedbymultinationalcompaniessuchasHonda,Toyota,MitsubishiMazdaandHyundai.ThesecompanieshaveasignificantpresenceinThailand,whichremainsaregionalproductionhubforautomanufacturers.
APACAutomotiveManufacturingVolume APACAutomotiveManufacturingOutputGeographicBreakdown
-4% -3% -2% -1% 0% 1% 2% 3% 4%
97
98
99
100
101
102
103
104
2011 2012 2013 2014 2015
Num
bero
fVeh
icles,million
Units,million Growth,%
China
44% Japan
25%
SouthKorea10%
India8%
RestofAPAC13%
IndustryOutlookandAnalysis
AnalysisBreakdown
4StrictlyPrivate&Confidential
Porter’s5ForcesAnalysisØ PowerofBuyers:Dealershipscommonlyhaveexclusive
contractualagreementswithmanufacturersresultinginveryhighswitchingcosts.Dealershipsaredependentonmanufacturersastheproductisindispensabletothem,reducingthepowerofbuyers.
Ø PowerofSuppliers:Automobilemanufacturersoftenhavesupplierswhomanufacturefabricatedcomponentsfromrawmaterials.Manufacturershaveexpandedsignificantlyinemergingcountriestohaveareliablesupplierbase,resultinginamoderatepowerofsuppliers.
Ø DegreeofRivalry:Theautomotivemanufacturingindustrymainlyconsistsoflargescaleinternationalcompanies,althoughtherelativelylownumberoftheselargecompetitorsanddifferentiationofproductsmoderatesthisrivalrytoanextent.
Ø SubstituteThreat:Consumerattitudeswhichincreasinglyfocusuponreducingrunningcostscouldcontributetowardsashiftindemand.Alternativessuchaspublictransport,canposeasubstitutethreat.
Ø LikelihoodofNewEntry:TherearerelativelyhighbarrierstoentryduetothehighcapitalexpenditureandinvestmentinR&Dneeded.Thetighteningofemissionstandardsposesgreaterchallengesforautomanufacturers,particularlyforsmallscaleproducers.However,theemergenceofarelativelynewsegmentforelectricvehicles,newentrantscanestablishthemselvesasspecialtymanufacturers.
012345
Power of Buyers
Power of Suppliers
Degree of Rivalry
Substitute threat
Likelihood of new entry
RegionalLandscapeandAnalysis
APAC
MyanmarandMalaysiaareexamplesofgrowth
opportunitiesintheAPACregion
AmericasEMEA
BubbleChart
Ø Growingdemandforautomobiles: Theregion’scommitmenttoinfrastructuredevelopmentisexpectedtodrivedemandforcommercialvehicles.AnimprovingeconomicbackdropintheASEANregionisexpectedtodrivesalesofpassengervehiclessegment.
Ø EmergingopportunitiesinASEANexportmarket:SingaporeiscurrentlytheseventhlargestexporterofautomobilesandcomponentstotheASEANregion.However,thereisstillopportunityforgrowthastheASEANcountries’importvolumefromSingaporeisrelativelysmallcomparedtolargermajorproductionhubssuchasJapan,ThailandandChina.
5StrictlyPrivate&Confidential
GlobalExportsofAutomobiles&ComponentstoASEAN:GrowthandVolumebyCountry
Negative Growth
High Export Volume
Low Export Volume
Singapore
Japan
KoreaIndonesia
Thailand
Positive Growth
China
Population:30.3millionTotalGDP(2015):US$296.3billionAutomobilesImport(2015):US$5.77billion10-YearCAGR:7.5%
Malaysia
Population:53.9millionTotalGDP(2015):US$62.6billionAutomobilesImport(2015):US$1.43billion10-YearCAGR:18.0%
Myanmar
Germany
UK
OpportunitiesSpotlightandAnalysis
WhyMyanmar?
6StrictlyPrivate&Confidential
WhileMyanmarandMalaysiashowsignificantpotentialforgrowth,weseepotentialforheadwindsintheThaiautomotiveindustry.DespiteThailandbeingacrucialproductionhubforallthemajorJapaneseautomakers,thepoliticaluncertaintywithinThailandhasresultedinthecountrylosingsomeinvestmentstoIndonesia.Assuch,growthofSingaporeexportsofautomobilestoThailandhaveremainedsteady,witha3yearCAGRof1.95%.However,giventheoverallgrowthofothercountriesintheASEANregion,thissuggestsSingaporehasbeenmissingoutonopportunitiesandshouldconsiderexploringthepotentialforgrowthinthisregion.
MyanmarØ GrowthinautoindustryexportsfromSingaporetoMyanmaristhethird
highestamongtheASEANcountries,withaCAGRof3.7% over2011-2015.Ø Myanmar’svehiclefleetisforecastedtogrowataCAGRof11.6%overthe
period2015– 2020toreachasizeof1.46million.Ø Thedemandforheavytrucksusedininfrastructureanddambuilding
projectsisexpectedtoincreaseasimprovedroadscreatebetterconditionsforlong-haultransportationofgoods.
Ø WithMyanmarlookingtomoderniseit’spublictransportnetwork,thereissignificantgrowthpotentialinthecommercialvehiclesegment.ThedevelopmentofanewbussysteminYangonspecificallyhighlightstheuseofnewbuses,whichpresentsakeyopportunityforautomakers.
MalaysiaVehicleFleetVolumeMalaysiaØ Malaysiaissecondlargestdestinationforautoindustryexportsfrom
Singapore,witha3yearCAGRof1.6% over2011-2015.Ø It’svehiclefleetisexpectedtogrowataCAGRof5.5%over5yearsto
reachasizeof17.3millionby 2020.Ø Ariseinbusinessconfidenceandcontinuedsupporttotheconstruction
industrytosupportgrowthinthecommercialvehiclesegment.Ø IncentivesunderMalaysia'senergyefficientvehicle(EEV)schemewillassist
thecountry'sambitiontobecomeanautoexporthubintheregion,providinganalternativetoThailandandIndonesia.ThisissupportedbytheBeijingAutoInternationalCorporation establishingaelectricvehiclemanufacturingplant,whichisexpectedtocreategreaterdemandforimportsofautomotivecomponents.
WhyMalaysia?
MyanmarVehicleFleetVolume
0%
2%
4%
6%
8%
8
9
10
11
12
13
14
2011 2012 2013 2014 2015
Vehiclefleet,mn Growth,%
0%
10%
20%
30%
40%
0.0
0.2
0.4
0.6
0.8
1.0
2011 2012 2013 2014 2015
Vehiclefleet,mn Growth,%
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7StrictlyPrivate&Confidential
ThisreporthasbeenpreparedbyTunLinWin(January2017),basedonareviewofpubliclyavailableinformationandexistingmarketintelligenceon-handatReciprocus.
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