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Southeast Asia boosts domestic car industries to take on Japan

Reuters file photo

Staff work at an auto plant of Vietnamese conglomerate Vingroup on the day of its opening in Haiphong, Vietnam, on June 14.

By Yoichiro Tanaka and Shingo Sugime / Yomiuri Shimbun CorrespondentsHANOI/BANGKOK — In Vietnam, Thailand and other Southeast Asian countries, local companies have entered the automobile market in succession. They are attempting to take on the challenge of competing with Japanese carmakers, who dominate the regional market, by promoting their domestic brands.

The governments of these countries are also heightening efforts to support the development of their own auto industries, with electric vehicles as the key focus.

Vietnamese conglomerate Vingroup completed an automobile factory in June to produce Vietnam’s first auto brand.

Vietnamese Prime Minister Nguyen Xuan Phuc said at the opening ceremony that the success of the project would have a special meaning for Vietnamese industry. He stressed that the government would always support companies that take on challenges.

In September 2017, Vingroup — which is known for its wide-ranging businesses including real estate, retail, and information and communications technology — announced it intended to enter the automobile industry. In less than two years, Vingroup created new cars by adopting technologies of companies such as General Motors and BMW through business cooperation.

The company said it has already received more than 10,000 sales orders.

While the market size for cars remains at about 300,000 units a year in Vietnam, the new car plant is expected to have an annual production capacity of 250,000 units. Vingroup plans to increase this number to 500,000 units in the future, in anticipation of the expansion of the market in keeping with economic development.

EV development is gaining momentum in Southeast Asian nations, as such vehicles require fewer parts and the barriers to market entry are lower compared to engine-powered vehicles.

In Thailand, electricity generating company Energy Absolute PCL unveiled in March a minivan made in Thailand, from design and development through to parts procurement. The company, which has yet to start selling the minivan, said the car is part of a national EV concept.

The state-run Electricity Generating Authority of Thailand also plans to remodel used cars into EVs for commercial sales, according to a local paper.

In the Philippines, local companies are turning public transportation methods such as tricycles and jeepneys into EVs.

In Malaysia, which already has two national car manufacturers, the government is promoting a new national car concept for the EV age. Malaysian Prime Minister Mahathir Mohamad said in a speech on July 1 that the future of automobiles was moving toward EVs.

New-car sales in the Association of Southeast Asian Nations, excluding Cambodia and Laos, increased 6.6 percent from the previous year to a record 3.56 million units in 2018. The figure has already reached to nearly 70 percent of the number in the Japanese market, which has sales of about 5.2 million units.

The ASEAN number is expected to exceed 4 million units by the end of 2020.

Japanese carmakers currently have an overwhelming 80 percent share of the Southeast Asian market. Southeast Asian domestic brand cars will likely intensify their competition with Japanese automakers over the growing market.Speech

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