Ford counts on huge pick-up in car sector - Brief Article

Business Asia, May 19, 2000 by Nopporn Wong-Anan

Ford Motor expects the motor vehicle industry in South East Asia to return to its "heyday" in the next few years.

Ford said this month it expected auto sales in Association of South East Asian Nations (ASEAN) countries to rise to 1.5 million vehicles a year by 2003, from half a million in 1998.

"From an industry perspective, we predict that over the next three years, the ASEAN market will be back to the heyday of 1997, (when) about 1.5 million cars were sold," said Gerald J. Kania, president of Ford's ASEAN operations.

He said in an interview that sales had hit a low point of 500,000 units in 1988 during the economic crisis.

Kania said Ford was pleased with the recovery in the 10-member ASEAN, which groups Thailand with Myanmar, Cambodia, Vietnam, Laos, Malaysia, Singapore, Indonesia, Brunei and the Philippines.

Last year, he said Thailand saw good economic growth and it had continued to perform well in the first quarter of this year. Growth in Indonesian auto sales had picked up in the first three months of this year.

"In Indonesia, we saw spectacular growth (to) 20,000 units sold a month in the first quarter," he said.

Kania said Ford was in talks with its former distributor, Indonesian Republic Motor Corp (IRMC) to assemble, market and sell Ford vehicles in Indonesia again after it left the country in 1996 because of the government's national car policy.

Kania said the final announcement could be made in the next couple of months, and the size of the initial investment would be below US$100 million.

"Once the Timor project (the former Indonesian national car project) had gone, and the country has changed a lot in terms of automotive regulations, we think the climate is right for Ford to reinvest in Indonesia and start building our brand," he said.

The Indonesian government in 1996 awarded tax and tariff breaks to a car maker controlled by one of then-President Suharto's sons to produce the 1600cc "national car".

The project was scrapped after the country accepted a rescue package by the International Monetary Fund.

Kania said Ford was disappointed with the decision by ASEAN economic ministers early this month to consider a Malaysian request to maintain protective tariffs on automobile imports until 2005.

"Our thought on ASEAN is to really build an industry of significant volume and efficiency," he said. "And to have a protective industry with high duties and high tariffs, customers end up getting saddled with very expensive vehicles."

He had a message to Malaysia: "To be more competitive in the world, let's compete."

Kania expected Ford sales volume in Malaysia in 2000 to rise to 8000 units from 5000 last year.

In the Philippines, Kania said Ford expected to garner 10 per cent of the 100,000 unit auto market in 2000, up from 2500 units in 1999.

Ford also said it would launch an Internet trade exchange program -- introduced in February in the United States -- throughout the Asia-Pacific region starting this month in Australia.

Ford and General Motors Corp said in February they would combine their budding on-line exchange efforts and add Daimler Chrysler AG to form the world's largest virtual marketplace.

Ford projected that the transactions of the Internet trade exchange program in the automotive industry worldwide would be worth around US$200 billion by 2005.

-- Reuters