J.D. Power and Associates AutoMAPS Group Reports
4 August 1998
J.D. Power and Associates AutoMAPS Group Reports: Southeast Asia Crises Bear Opportunity for U.S. Auto Producers and Suppliers
AGOURA HILLS, Calif., Aug. 3 -- Vehicle sales in Southeast
Asia are expected to recover from their current slump by 2000, according to a
report released by the AutoMAPS group at J.D. Power and Associates. By that
time, it is forecasted that automotive sales in Thailand, Indonesia, Malaysia
and the Philippines will have resumed their upward sales trend on a path to an
annual sales rate of about 3.5 million units by 2005-a 25 percent increase
over pre-Asian crises levels. The report indicates that despite recent
financial crises and currency devaluation in the region, Southeast Asia
continues to offer an array of long-term opportunities to U.S. auto producers
and suppliers expanding into the region.
"Timing is everything for operating in Southeast Asia," said Bob
Schnorbus, director of macroeconomic analysis at J.D. Power and Associates.
"Those now entering the automotive market can take advantage of opportunities
such as bargain prices on assets in the post-devaluation environment, direct
local market access, and a large pool of skilled and experienced workers who
have recently become unemployed."
According to the report, the outlook for U.S. auto producers expanding
into the region is essentially upbeat since long-term opportunities offset the
near-term negative effects of recession. To be successful in the region, a
local presence is essential. Additionally, International Monetary Fund --
induced tightening of financial standards will improve the stability of the
financial system and will reduce risk to foreign investors in the future.
Currently, Japanese auto producers have the strongest foothold in the
region and are well positioned to take advantage of devaluation as long as
recovery isn't delayed much beyond 1998. A protracted adjustment phase,
however, could financially weaken even the most established producers to the
point of reducing their long-term commitment to the region. Japanese and
Korean auto producers may feel the financial pinch more than the Big Three
because of the huge excess capacity that already exists in their own
countries.
The rapid growth and economic development achieved over the last 10 years
in Southeast Asia has placed the region firmly on the road to sustained
long-term progress. The region is strong in areas crucial for economic
growth, such as having high rates of individual savings, an emerging middle
class, a disciplined and skilled workforce, relatively low wages, an
aggressive entrepreneurial class and close proximity to China and India-
markets that include more than two billion consumers.
"Southeast Asia has the resources to correct the flaws in their long-term
development strategy, but from here on out the road to economic development
will be a lot tougher," said Schnorbus. "Before growth can resume, outdated
business practices, corruption and limited accountability must be addressed.
Financial capital from abroad may never again flow as freely into the region
as it did in the early 1990s."
The AutoMAPS report, "Thailand and the Southeast Asian Crises:
Implications for Automotive Markets," offers a long-term prognosis for auto
producers, suppliers and investors around the world. The report focuses on
Southeast Asian economic development and the growth outlook for automotive
markets in the region. In addition to periodic syndicated studies, such as
the Southeast Asia Report, AutoMAPS provides country-level forecasts and
economic intelligence reports on a quarterly basis, including its newest
quarterly publication on developments in emerging economies -- "Global
Economic and Automotive Report."
J.D. Power and Associates is an international firm best known for its
marketing information services in key business sectors including market
research, forecasting and customer satisfaction. The firm's quality and
satisfaction measurements are based on actual customer responses from more
than one million consumers annually. Headquartered in Agoura Hills, Calif.,
the firm also has U.S. offices in Torrance, Calif., Michigan and Connecticut.
International locations include Japan, Korea, United Kingdom, Canada and
Brazil.
J.D. Power and Associates can be accessed through the World Wide Web at
http://www.jdpower.com. Media e-mail contact: john.pepitone@jdpower.com.
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Power and Associates survey results without the express prior written consent
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