Summary: Current Trends in Automotive Manufacturing in Southeast Asia

- Philippines: Car manufacturing in the Philippines saw a 13.2% increase in the first five months of 2024, with 54,045 units produced compared to 47,761 units in the same period in 2023. This growth is part of a broader trend in ASEAN, though overall regional production dipped by 12%.

- Malaysia: Malaysia's car manufacturing grew by 12.2%, making it the second-largest auto market in Southeast Asia, surpassing Thailand. This growth is driven by sales tax exemptions and strong performance from national brands like Perodua and Proton.

- Myanmar: Myanmar experienced a staggering 847.2% growth in car manufacturing, although this is from a very low base of 89 units in 2023.

Market Dynamics

- Indonesia: Indonesia remains the largest auto market in ASEAN, with 505,985 units sold in the first half of 2023, but it has seen a 24% drop in sales in the first quarter of 2024 due to rising interest rates.

- Vietnam: Vietnam recorded the second-largest drop in auto sales in Southeast Asia, with a 25% decrease in the first quarter of 2024.

- Philippines: The Philippines saw a 13% increase in auto sales in the first quarter of 2024, the highest among the five main ASEAN markets, attributed to easing inflation and strong consumer spending.

Electric Vehicle (EV) Developments

- Thailand: Thailand has introduced a new incentive package to boost its EV industry, aiming to transform 50% of its total auto production to EVs by 2030. The package includes significant import duty and excise tax exemptions. Chinese EV brand BYD has taken a strong position in Thailand, capturing 31% of the EV market with its Atto 3 model.

- Indonesia: Indonesia is focusing on becoming a key player in the EV market, with significant investments in nickel mining and battery production. The government has also reduced the value-added tax on EVs from 11% to 1% to make them more affordable.

- Malaysia: Malaysia's auto market is also seeing growth in EV sales, driven by competitive pricing and new model launches, although it still lags behind Thailand in terms of infrastructure and incentives.

Key Investments and Expansions

- Hyundai: Hyundai is challenging the dominance of Japanese automakers in ASEAN, with significant sales growth and localized production of models like the Stargazer and Creta SUV.

- Changan Automobile: Changan has established a Southeast Asia division and is building a new-energy vehicle production base in Thailand. The company launched the DEEPAL L07 and S07 models in Bangkok, with plans for further expansion.

- Kia: Kia is planning to build its first ASEAN production plant in Thailand with an annual capacity of 250,000 units.

Economic and Policy Influences

- Thailand: The Thai automotive industry is facing challenges due to increasing nonperforming auto loans and stagnant consumption, leading to a 25% drop in sales in the first quarter of 2024.

- Malaysia: Malaysia's strong performance is partly due to government stimulus packages, including sales tax exemptions for domestically produced vehicles.

- Indonesia: Indonesia's automotive industry is supported by sustainable infrastructure development and significant foreign investments, particularly in the EV supply chain.

The ASEAN automotive market is experiencing dynamic changes, with significant growth in EV adoption and localized manufacturing. While countries like the Philippines and Malaysia are seeing positive trends, traditional markets like Thailand and Indonesia face challenges due to economic factors and shifting consumer preferences. The region continues to be a battleground for global automakers, with substantial investments in EV infrastructure and production capabilities.