Automotive Manufacturing Developments In Southeast Asia Amid COVID-19

Amid the global economic slowdown in 2019, and the current COVID-19 pandemic, global vehicle sales forecast 2.5 percent fall in 2020 instead of the previously predicted 0.9 percent drop compared to 2019 (Moody’s Investor Service).

Here’s a roundup of the latest developments happening in the automotive manufacturing industry in Southeast Asia.

Thailand

• Thailand’s 2025 Automotive Roadmap: The Government has drawn a plan to transform Thailand into a regional hub for electric vehicles by 2025
• Auto parts sector will continue shrinking as car factories close or cut production and global purchasing power weakens. (Federation of Thai Industries)
• Toyota Motor Thailand
  • Predicts that sale of domestic vehicles will drop 6.7 percent to 940,000 units in 2020
  • Extending of closure: Temporary suspensions of Thailand production operation in Samrong, Ban Pho, and Gateway facilities will continue until the end of April
• Honda Automobile Thailand announced the suspension of completely built-up (CBU) operations in its vehicle production plants in Phra Nakhon Si Ayutthaya and Prachinburi provinces from March 27 until April 30.
• Mitsubishi Motors
  • Halted production at three automobile and engine plants in Chonburi province temporarily from April 1.
  • BOI has approved Mitsubishi’s 5.48 billion baht ($167 million) electric and hybrid vehicle production plan project to renovate existing production lines at a plant in Laem Chabang Industrial Estate
• Auto Alliance Thailand which makes vehicles for Ford and Mazda, and Ford Thailand Manufacturing has also announced they will be shuttering the factory for the time being.

Vietnam

• Vietnam Ministry of Industry and Trade has forecast that most automakers will experience partial shortages during this time of crisis and sourcing from other markets would be difficult due to familiarity of technical standards of Chinese parts
• Vietnam’s industrial production growth could drop 2.3 percent due to reduced imports of parts from China (VinaCapital)
• According to Vietnam Automobile Manufacturers Association (VAMA), sales of members decreased 26 percent to 31,908 in end of February due to the impact of Covid19.
• Vietnamese government has issued several incentives in the form of tax breaks, delayed tax payments, and land-use fees for businesses impacted by the COVID-19 outbreak.
• Vingroup:
  • Produce (invasive and non-invasive) ventilators of all types and body thermometers to the domestic market.
  • With the capacity of VinFast and VinSmart factories, the group can produce up to 45,000 non-invasive ventilators and 10,000 invasive ventilators per month
  • VinFast have decided to temporarily cease their operations, starting on April 5
• Toyota Motor Vietnam, Ford, Honda Vietnam, Nissan Vietnam and TC Motor has temporarily ceased vehicle productions.

Philippines

• Fitch Solutions forecasted the country’s automotive industry to grow by 0.4 percent this year to 371,345 units, lower from its previous projection of 7.4 percent, due to negative impacts of the Covid-19 outbreak.
• According to figures collected by the Association of Vehicle Importers and Distributors (AVID), sales across all segments—passenger cars, light commercial vehicles (LCV), and commercial vehicles—are down by 31 percent in January 2020 compared to the prior year. Overall, vehicle sales have fallen by 16.2 percent compared to the same period in 2019.
• The Covid-19 crisis has delayed the rollout of the government’s Public Utility Vehicle (PUV) Modernisation Program, which aims to replace aging PUVs with more environmentally friendly Euro 4-compliant light commercial vehicles.
• Honda Cars Philippines Inc. has shut down its production plant in Sta. Rosa, Laguna province. But, automobile sales and after-sales services will continue through Honda’s regional network.
• Mitsubishi Motors Philippines Corp. (MMPC) has signed a Memorandum of Understanding with its five dealers to roll out a next-generation Showroom, DENDO DRIVE STATION which features solar power system and vehicle to home (V2H) equipment.

Malaysia

• Malaysia has more than 20 manufacturing and assembly plants that produce passenger and commercial vehicles, as well as two-wheelers.
• National Automotive Policy (NAP) 2020: incorporates three new advanced technology elements—Next Generation Vehicle, Mobility as a Service and Industry Revolution 4.0 and focuses on three strategies—for value chain development, human capital development as well as safety, environment and consumerism.
• The following are the biggest beneficiaries of the NAP:
  • Perodua has purchased a total of RM43.5 billion worth of components from local suppliers, including RM5.4 billion in 2019, and targeted to spend RM6 billion for 2020.
  • UMW Toyota Motor Sdn Bhd’s Bukit Raja plant is equipped with automation, skilled manpower and the capacity to align with the government’s vision, with further investment to introduce more completely-knocked-down hybrid cars in the future.
• Car sales have come to a stop since the Movement Control Order (MCO) was imposed by the government on March 18 and vehicle sales are expected to plummet in March and April. The automotive industry has been grounded to a halt with “nothing really moving”, according to Datuk Aishah Ahmad, Malaysian Automotive Association (MAA) president
• Car production plants and after-sales services have also been shuttered during the 28-day MCO.
• Total industry volume (TIV), which covers the sales of passenger and commercial vehicles, fell 5.3 percent or 2,249 units to 40,403 in February against the previous month due to delays in new model launches and the negative impact of the COVID-19 outbreak on consumers’ sentiments.
• Sales volume for March 2020 is expected to be lower than February 2020 following restrictions due to the MCO, according to MAA.
• The country is also bracing for a possible recession and dented consumer sentiments.

Indonesia

• Covid-19 is pushing Indonesia’s automotive total industry volume in 2020 to 2008 levels (Globaldata)
  • According to Indonesian Automotive Industry Association (GAIKINDO), domestic vehicle sales volume in March 2020 declined by 20 percent as compared to February 2020: revised 2020 vehicle sales projection to 600,000 units
• Honda Prospect Motor (HPM) will suspend car production at its factory in Karawang, West Java for two weeks starting from April 13, 2020
• Hyundai Motor Manufacturing Indonesia (HMMI) has pledged to donate 50,000 sets of personal protective equipment (PPE), such as masks and coveralls, worth Rp 8.2 billion in stages for medical workers.
• PT Suzuki Indomobil Motor halted its car production in Indonesia for two weeks (April 13 to 24) at three factories in Cakung, East Jakarta, Cikarang in Bekasi and Tambun in West Java, in an effort to curb the spread of the coronavirus.
• Toyota Motor temporarily shut down production in Indonesia (from April 13 to 17), while subsidiary Daihatsu Motor Co. Ltd suspended work from April 10 to 18.
• Nissan Motor Corp. will shut down manufacturing operations in Indonesia amid declining vehicle sales in the country.

Singapore

• Hyundai Motor Company is establishing a Mobility Global Innovation Center in Singapore (HMGICs) to accelerate its innovation efforts and transformation into a smart mobility solution provider. The new 28,000 sqm innovative lab will be located in Singapore’s Jurong Innovation District and is set to be completed in the second half of 2022.

Myanmar

• Suzuki Motor Corp.recently announced that its subsidiary in Myanmar, Suzuki Thilawa Motor Co. Ltd, will construct a new car plant in Myanmar. Scheduled to start operations from September 2021, the new plant will conduct welding, painting, and assembly of automobiles, and will be located at an industrial park located in the Thilawa Special Economic Zone.
• Nikkei Asian Review has reported that several Chinese brands such as Soueast Motor and GAC will accelerate local production targets in Myanmar.

WE NEED YOUR INSIGHTS!

We would love to hear from you, our readers. We will use these insights in our series of articles on the impact of COVID-19 in the manufacturing industry.

1. When do you expect the lockdowns to end in your countries/regions?
2. What automotive manufacturing challenges are you currently facing?
3. During this period of lockdowns and regional quarantines due to the COVID-19 pandemic, what manufacturing strategies are you planning to implement when we come out of this outbreak?
4. Do you know of any other developments we might have missed here?

Do drop us a note at [email protected].

For other exclusive articles, visit www.equipment-news.com.

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