Asean Automotive Monthly

Executive Summary

February 2011
Asean Automotive Monthly | February 2011
On Asean
Ammar Master
Senior Market Analyst
J.D. Power and Associates
Toyota plans new small car
for Asean market
Toyota is planning to build a new small car for the Southeast
Asian market, dubbed EFC (Asean) in our forecast. We
believe this model will go into production in 2013, starting in
Thailand and Indonesia, followed by Malaysia a year later.
The EFC will be built on the same platform as the Etios sub-
compact that is currently on sale in India. Like the Etios, the
focus for the EFC is likely to be on keeping costs in check
while maintaining high quality standards and meeting specific
fuel-efficiency requirements.
In Thailand, the EFC will be developed to meet a fuel-
efficiency of 20 kpl so that the model qualifies under
Thailand’s Eco Car Program and is able to claim lower
excise duties. Because the EFC will compete against other
eco car models, Toyota will also need to price the model
competitively.
This is where it will be critical to source a high percentage of
components from domestic suppliers in order to control
production costs. This is not going to be very difficult for
Toyota to achieve though. One reason is that the local
components industry is already well developed and has been
supplying parts to Japan’s carmakers for not only vehicles
sold domestically but also for export-bound models.
The EFC will be a strong addition to Toyota’s passenger car
lineup in Thailand. We can expect sedan and hatchback
versions in the market, given the growing popularity of
hatchbacks in Thailand.
Apart from meeting domestic demand for the EFC, we also
think Toyota’s Thailand operations will aim to export this new
small car model to other overseas markets. This will be
necessary, since one of the requirements to avail excise duty
benefits under the Eco Car Program in Thailand is to achieve
annual production of 100,000 units in the fifth year after
the model’s start.
The Indonesia-made EFC is very likely to be the same
version as the model made in Thailand. This would benefit
Toyota in sourcing components from the same suppliers and
improve economies of scale.
Copyright © 2011 J.D. Power and Associates. The McGraw-Hill Companies, Inc. All Rights Reserved.
On Asean
Output in Indonesia will cater to domestic demand, and
we do not expect exports of the EFC out of Indonesia, at
least in the near term. Similar to Thailand, we expect both
sedan and hatchback versions in the Indonesian market.
It is also likely that Toyota could use its subsidiary
Daihatsu to manufacture the EFC in Indonesia, as
suggested in recent media reports. Daihatsu is investing
IDR 2.1 trillion, or USD 240 million, into a new 100,000
units per annum manufacturing plant that is to become
operational by 2012. We think this facility is a likely
candidate to produce the EFC.
Although it is yet unclear, it may also be possible for the
EFC to be branded as both a Toyota and a Daihatsu
model in Indonesia. This would be similar to previous
collaborations between Toyota and Daihatsu in Indonesia
such as Toyota Avanza - Daihatsu Xenia or Toyota Rush
- Daihatsu Terios. These are essentially the same models
but with different designs to target distinct customer
segments.
If the two companies decide on this strategy, it could
result in a significant boost to their sales in Indonesia,
where Toyota and Daihatsu are already ranked first and
second respectively in the sales chart.
Trailing Thailand and Indonesia, we expect UMW Toyota
to start building the EFC in Malaysia in 2014 at its Shah
Alam plant. Again, we expect the Malaysia-made EFC to
be the same as the other two versions in Asean. Like
Indonesia, we expect output in Malaysia to serve only
domestic sales.
Overall, we expect the EFC to be a major driver for
Toyota’s sales in the region after it is launched in 2013.
Its sales in the four major markets of Southeast Asia,
including the Philippines, are forecast to start at 54,000
units in 2013. Sales are expected to begin in Thailand,
Indonesia and Philippines in the latter half of that year.
The EFC’s sales in 2014 are projected to increase to
155,000 units, thanks to the introduction of the model in
Malaysia and the impact of having full-year sales in the
three remaining markets. By 2018, EFC sales are
forecast to reach 179,000 units.
Over the long term, we think the EFC will become
Toyota’s third highest selling model in the region, behind
the Avanza multi-purpose vehicle and Hilux pickup truck.
2
Asean Automotive Monthly | February 2011

YTD
JAN
Light Vehicle (LV) Demand 27% 27%

Passenger Vehicle (PV) Demand 24% 24%

Light Commercial Vehicle (LCV) Demand 36% 36%

Executive Summary
Asean Passenger Vehicle Trends Seasonally Adjusted Annualized Rate (thousands)
YTD 2011 Volume: 145,220 = Forecast 2011
200,000 2,600

Light Vehicles
175,000 2,400

150,000 2011 2,200

125,000 2,000

2010
100,000 1,800

75,000 1,600
2009
50,000 1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 01-07 07-07 01-08 07-08 01-09 07-09 01-10 07-10 01-11

New Light Vehicle Models to Boost Sales in 2011

Light vehicle manufacturers in the Asean region have started
2011 strongly, with volumes rising 27% year on year (yoy) to
almost 200,000 units in January.
Passenger vehicle sales increased 24% yoy to 145,000 units,
while demand for light commercial vehicles (up to GVW 6 tons)
surged 36% yoy to 53,000 units.
Demand improved in each of the four major Southeast Asia
markets. While Thailand led the region in terms of overall
volumes, Indonesia recorded the highest sales growth during
the month.
However, rising fuel prices and higher inflation are causing
concern as central banks look to further tighten monetary
policy. Another hike in key lending rates is likely to affect
consumer spending and could drag down vehicle sales.
In order to boost sales, manufacturers will therefore have to
keep consumers excited with new model and variant
introductions over the current year.
New models to be introduced in Malaysia include the Nissan
March and locally built Mazda3. The new Perodua MyVi and a
replacement for the Proton Perdana are also likely. Brands
such as Peugeot, Kia and Lexus are also keen to improve
their performance in Malaysia.
In the Philippines, the government is trying to find ways to
expand local production through a new Motor Vehicle
Development Program aimed at providing greater tax
incentives for manufacturers who expand local production for
both domestic sales and exports.
However, we think that manufacturers will opt to import
models into the Philippines from their bigger production bases
in Thailand or Indonesia. Therefore, we believe that import
models will outsell locally-built vehicles in that market.
In 2011, we forecast total light vehicle sales in the four major
markets of Southeast Asia to reach 2.35 million units. This is
an increase of 6% over 2010 sales, however the growth will be
much lower than the 36% increase achieved last year.

Sales incentives will also be key to boosting sales, although it Passenger vehicle sales are projected at 1.75 million units, up
remains to be seen to what extent manufacturers are able to 8% in 2011, from 1.61 million units (+34% yoy) in 2010, with
maintain current vehicle prices. sub-compact cars being the largest PV segment.

In Thailand, we expect the introduction of new models such as
Honda Brio eco car and next generation pickup trucks to be
some of the major sales drivers in 2011. We also think that new
models launched last year, such as Nissan March and Ford
Fiesta, will continue to have strong demand.
In Indonesia, volume models like Toyota’s Avanza, as well as
Daihatsu’s Xenia and Gran Max are due for generation change.
Nissan is likely to launch the Juke compact SUV in the latter
half of the year.
Meanwhile, demand for light commercial vehicles is estimated
to shrink 2% yoy to 603,000 units in 2011. This decline follows
a healthy 43% growth in sales to 613,000 units in 2010. Our
forecast remains unchanged from the previous month.
We continue to believe that Indonesia will overtake Thailand
as the largest light vehicle market in Southeast Asia by 2013.
We further estimate that both Thailand and Indonesia will
achieve sales of over 1 million light vehicles by 2014, with
Indonesia surging ahead of Thailand.

Copyright © 2011 J.D. Power and Associates. The McGraw-Hill Companies, Inc. All Rights Reserved. 3
Asean Automotive Monthly | February 2011

Asean Top Lines Market Performance

Jan Growth YTD Growth 2011f Growth Jan Growth Share YTD Growth Share

Sales 209,398 27% 209,398 27% PV 35,014 45% 53% 35,014 45% 53%
Thailand
PV 145,220 24% 145,220 24% 1,750,344 8% LCV 31,600 32% 47% 31,600 32% 47%

LCV 53,504 36% 53,504 36% 603,417 -2% PV 49,299 8% 91% 49,299 8% 91%
Malay sia
M&H CV 10,674 36% 10,674 36% LCV 5,040 7% 9% 5,040 7% 9%

Executive Summary
Production 283,548 36% 283,548 36% PV 50,747 33% 78% 50,747 33% 78%
Indonesia
PV 174,108 38% 174,108 38% 1,718,962 37% LCV 14,679 74% 22% 14,679 74% 22%

LCV 99,573 33% 99,573 33% 1,146,844 56% PV 10,160 7% 82% 10,160 7% 82%
Philippines
M&H CV 9,867 24% 9,867 24% LCV 2,185 -3% 18% 2,185 -3% 18%

Group Sales Performance

ASEAN GROWTH RATE YTD VOLUMES

= Month = YTD

-20% 0% 20% 40% 60% 80% 100% Volume Grow th Volume Grow th Volume Grow th Volume Grow th Volume Grow th

Toy ota Group 77,292 30% 26,843 32% 7,063 -2% 39,179 39% 4,207 9%

Honda Group 20,404 23% 9,772 27% 4,484 16% 4,928 31% 1,220 -8%

Proton Group 16,461 7% 562 4% 15,806 9% 93 -72% 0 N/A

Perodua Automotiv e 15,337 -6% 0 N/A 15,337 -6% 0 N/A 0 N/A

Isuzu Motors 13,748 11% 10,836 13% 838 12% 1,314 -5% 760 22%

Mitsubishi Motors 13,235 52% 4,458 105% 1,083 17% 5,416 68% 2,278 -4%

Renault-Nissan Group 12,812 45% 4,508 72% 3,258 12% 4,400 69% 646 -6%

Suzuki Group 8,173 37% 574 76% 693 31% 6,630 38% 276 -3%

Hy undai Group 4,621 21% 322 34% 1,820 69% 796 -2% 1,683 -1%

Mazda Motors 4,186 65% 3,008 55% 507 135% 437 82% 234 65%

Segment Sales Performance

Jan YTD

Growth Volume Share Growth Volume Share

-50% -25% 0% 25% 50% 75% -50% -25% 0% 25% 50% 75%

Mini Car 6,549 5% 6,549 5%

Sub-Compact Car 49,560 34% 49,560 34%
Compact Car 20,600 14% 20,600 14%
Midsize Car 5,509 4% 5,509 4%
Fullsize Car 18 0% 18 0%
Sporty Car 100 0% 100 0%
Lux ury Car 1,887 1% 1,887 1%
SUV 17,956 12% 17,956 12%
MPV/Miniv an 43,041 30% 43,041 30%
PV Market PV Market
Average, 24% Average, 24%
LCV Growth Volume Share Growth Volume Share
0% 25% 50% 75% 100% 0% 25% 50% 75% 100%

Mini Truck 5,829 11% 5,829 11%

Light Truck 5,195 10% 5,195 10%
Van-Light Bus 6,733 13% 6,733 13%
Mini Bus 25 0% 25 0%
Pickup 35,722 67% 35,722 67%
LCV Market LCV Market
Average, 36%
Average, 36%

Copyright © 2011 J.D. Power and Associates. The McGraw-Hill Companies, Inc. All Rights Reserved. 4
Asean Automotive Monthly | February 2011

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