The ASEAN region offers a significant opportunity to global automakers in the near to medium term, says Frost & Sullivan.

Frost & Sullivan Strategic Analysis of ASEAN Automotive Outlook finds that the market is likely to grow at a compound annual growth rate (CAGR) of 5.8 per cent (2012-2019) to reach 4.71 million in 2019, mainly driven by rapid market expansions in Indonesia and Thailand.

Vijay Rao, Research Director, Asia Pacific at Frost & Sullivan said on that the importance of ASEAN as a cluster cannot be denied as the region is likely to be the fifth largest automotive market in the world by 2019.

Low level of motorization in ASEAN offers strong growth potential for the automotive market, while the heavily-motorized regions of Western Europe and North America represent a saturated "replacement" market.

Passenger vehicle segments are likely to dominate the market. "Thailand, the key pickup market in the region is shifting to passenger vehicles with increased consumer preference for compact, environment friendly eco cars," he said.

The analysis predicts Indonesia to emerge as the largest automotive market in ASEAN by 2019, accounting for 2.3 million vehicles, driven by sustained economic growth in the country, growing middle class with larger disposable incomes, increased investments in automotive sector and introduction of automotive regulations supporting market growth.

Automotive demand in Thailand is also expected to grow driven by an improved economy, more disposable incomes, capacity expansions by automakers, and launch of several new vehicle models. "The Malaysian market is expected to grow supported by foreign model proliferation at competitive price points and by price reduction as a result of market liberalization," Rao said.

He added that total vehicle production in ASEAN is expected to grow at a CAGR (2012-2019) of 8 per cent to hit 7.05 million units in 2019.

"Thailand is likely to continue its dominance as a major production hub in ASEAN due to expected significant capacity expansions, increased export and domestic demand, availability of skilled labor force with a well-developed automotive component industry." 

Vehicle production in Indonesia mostly caters to local sales driven mainly by the expected expansion in automotive demand and foreign investment inflow for production expansion. The analysis notes that European and Chinese OEMs are looking at Malaysia as an assembly and manufacturing hub to set up production plants.

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