2009 03 eco car policy in thailand impact on the global car market frost & sullivan
DESCRIPTION
Thailand has an ambition of reaching the 2 million mark in production by 2012. They are always in search of products that are emerging and have tremendous export potential. With pick-up trucks they crossed the 1 million mark and became the second biggest pick-up truck manufacturer in the world. Discover how your markets would be impacted by Thailand\'s Eco car policies and what opportunities are offered by this policy. Frost & Sullivan Program Leader, Victoria Ng, addresses the following questions in this presentation: * What is the progress of the Eco Car Policy in Thailand? * Who is participating and who is not but competing in the same segment? * What is the impact of Eco Car Policy in Thailand on ASEAN, EU and U.S.?TRANSCRIPT
1
“We Accelerate Growth”
Eco Car Policy in Thailand: Impact on the Global Car Market
March 2009
2
Agenda
4
5
3
1 Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
3
Source and Analysis: Frost & Sullivan
Thailand, traditionally dominated by one ton pick-up trucks, sees sharp growth of passenger car sales in 2008
2007 20082006
TIV: 631,251TIV: 631,251TIV: 631,251
TIV: 615,270TIV: 615,270TIV: 615,270
TIV: 682,161TIV: 682,161TIV: 682,161 -7.5%
-2.5%
• Thai automotive market shrank due to domestic
political turmoil and global economic crisis
• Down by 2.5% over 2007 with volume of 615,270
• Domestic pick-up truck sales are dwindling
• % contribution of pick-up trucks has dropped
from 66% in 2006 to 54% in 2008, have lost a
volume of over 115,000 units
• Passenger car sales are growing sharply, have
added a volume of about 35,000 units and their
contribution has grown from 28% to 37%
Eco Car: Total Industry Volume (Thailand), 2006 - 2008Eco Car: Total Industry Volume (Thailand), 2006 - 2008
4
Context of Eco Car Program
• Thailand has become a production hub by crossing 1 million mark
with this “product champion”
• Their ambition is to cross 2 million mark by 2012
• Demand for pick-up truck may not help them to achieve this level of
production
• Therefore, Thailand is looking for another “Product champion” that
would help them to meet the target
• Therefore, Eco car concept was conceived by Thailand
• Objective of Eco car program is help achieve Thailand 2 million
units of production by 2012
5
Agenda
4
5
3
1 Overview of Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
6
What is eco car?
Energy Consumption • Gasoline/Diesel <= 5L per 100 km
Environment Friendly • CO2 <= 120g per 100 km
• Euro 4 and higher
Safety Standard • UNECE 94 & 95 safety standard
• Eco car is an idea conceived in 2007 to reduce energy consumption, preserve the environment and lessen
dependence on imported oil.
• Eco car parameters are in line with the growing consumer demand for safer, more fuel efficient and
environmentally friendly modes of transportation, without sacrificing in the areas of comfort and safety
• Eco car is an idea conceived in 2007 to reduce energy consumption, preserve the environment and lessen
dependence on imported oil.
• Eco car parameters are in line with the growing consumer demand for safer, more fuel efficient and
environmentally friendly modes of transportation, without sacrificing in the areas of comfort and safety
7
A Category
• Meets all requirements of eco car
• 350K to 450K baht (9.8K to 12.7K USD*)
B Category
• Higher level of technology
• 500K to 600K baht (14.1K to 16.9K USD*)
C Category
• Hybrid electric eco car
• Very highly priced i.e. Above 750K baht (Above 21.1K USD*)
Classification of Eco Car
*Price levels are not specified in Eco car program. Price ranges are indicative only
8
What are the attractions and conditions stipulated on the vehicle manufacturers?
8 years Exemption on
machinery duty import and
corporate income tax
8 years Exemption on
machinery duty import and
corporate income tax
17% tax (<1,300cc petrol car,
<1,400cc diesel car) - leads to
lower prices of Eco car
(~USD2k cheaper )
17% tax (<1,300cc petrol car,
<1,400cc diesel car) - leads to
lower prices of Eco car
(~USD2k cheaper )
Up to 90% reduction
of import duties
on raw materials and
parts, depending on type of
product
Up to 90% reduction
of import duties
on raw materials and
parts, depending on type of
product
BenefitsBenefits
ConditionsConditions
• Production of 100K units on the 5th year with a minimum investment of 5 billion baht - car assembly,
engine manufacturing and component - excluding cost of land and working capital
• Should meet requirements of Eco car: Energy, Emission and Safety
• Manufacture at least 4 out of following 5 key engine parts namely Cylinder Head, Cylinder Block,
Crankshaft, Camshaft and Connecting Rod, and the process of machining Cylinder Head, Cylinder
Block and Crankshaft must be included in the project
• Production of 100K units on the 5th year with a minimum investment of 5 billion baht - car assembly,
engine manufacturing and component - excluding cost of land and working capital
• Should meet requirements of Eco car: Energy, Emission and Safety
• Manufacture at least 4 out of following 5 key engine parts namely Cylinder Head, Cylinder Block,
Crankshaft, Camshaft and Connecting Rod, and the process of machining Cylinder Head, Cylinder
Block and Crankshaft must be included in the project
9
OEMs involved in Eco Car Project: Eligible companies must manufacture no fewer than 100,000 units per annum from the fifth year
OEM
Capacity
/Year (Unit)
Investment
(Billion THB)
Probable Eco
Models
Models Planned
that Have Already Gained Approval
Target Market
120,000
• 6.2
• By Honda
Automobile
Thailand
• 1.3-L gasoline sedan
based on global
WOW concept small
car
• 2-3 models on same
platform
• Honda Jazz, but with 3
cylinder 1.2 litre engine• 50% domestic
• 50% export to
ASEAN, Asia and
Europe
107,000
• 4.71
• By MMC
Japan
• 1.3-L gasoline sedan
• 2-3 models on same
platform
• Mitsubishi Concept X
1.3L or a 660cc version• 12% domestic
• 88% export to
ASEAN, Asia and
Europe
Eco Car: Eco Car Project (Thailand), 2009Eco Car: Eco Car Project (Thailand), 2009
Honda
Mitsubishi
10
OEMs involved in Eco Car Project: 2/3
OEMCapacity
/Year
(Unit)
Investment (Billion
THB)
Probable Eco
Models
Models Planned that Have Already
Gained Approval
Target Market
100,000
• 4.64
• By Toyota
Motor
Thailand
• 1.1-1.3-L gasoline
sedan
• Rebadged MyVi,
followed by second
generation Boon
Passo
• MyVi or a new global
A segment car
developed by TMT
• Toyota Passo 1.2 or
1.3 diesel - gearbox
from India • 50% domestic
• 50% export to
ASEAN, Asia and
possibly Europe
100,000• 7.4
• By Tata India
• 1.0-1.3-L gasoline &
1,3-L diesel Tata X4
Sedan
• At least two models
on same platform
• Tata Nano 3 cylinder
623cc• 42% domestic
• 58% export to
ASEAN, Asia &
South Africa
Toyota
Tata
11
OEMs involved in Eco Car Project: 3/3
OEM
Capacity
/Year (Unit)
Investment
(Billion THB)
Probable Eco
Models
Models Planned
that Have Already Gained Approval
Target Market
120,000
• 5.5
• By Nissan
Japan
• 1.1-1.3L gasoline
sedan
• Probably next
generation
Mirca/March
• At least two models
on same platform
• Nissan Micra 1 liter 3-
cylinder Xtronic CVT • 10%-15%
domestics
• 85%-90% export to
ASEAN, Asia and
Australia
138,000
• 9.7
• By Suzuki
Japan
• 1.1-1.3L gasoline
sedan cooperation
with GM
• New global small car
on splash platform
will be Eco car, or
next generation
Wagon R
• Suzuki Cervo 3
cylinder 660 cc • 10%-15%
domestics
• 85%-90% export to
ASEAN, Asia and
Australia
Nissan
Suzuki
12
Agenda
4
5
3
1 Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
13
Eco car production is expected to gradually reach the 700K mark by 2015
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2009 2015
Eco Car: Production Forecasts of Eco car vehicles (Thailand), 2009-2015
Year
Ve
hic
le P
rod
ucti
on
40K in 2009
700K in 2015
• This is based on the production target of vehicle manufacturers and the foreseeable market condition:
domestic and export
• Honda to commence production in 2010
• Most automakers to start in 2011 hence by 2015 many would be able to achieve full production to
bring total to 700K
• This is based on the production target of vehicle manufacturers and the foreseeable market condition:
domestic and export
• Honda to commence production in 2010
• Most automakers to start in 2011 hence by 2015 many would be able to achieve full production to
bring total to 700K
14
Key Drivers & Restraints for Eco Car ProductionD
rivers
Restra
ints
Impact
Uncertainly over oil prices
Demand for fuel efficient
cars in Thailand and in the region
Frequent political turmoil
and unrest undermines confidence
New model launches to boost sales
of passenger cars
Export market potential (about
70% of total production)
Economic downturn
would take toll on consumer confidence,
credit availability
Source: Frost & Sullivan
Price pressure from small
cars imported from Malaysia
Markets that are potentially lucrative like Indonesia is quite averse
on the idea of accepting eco cars as CBU
A number of FTAs(India, Australia,
Korea & Japan) in place would benefit
Thailand eco car project
Eco Car: Key Drivers & Restraints (Thailand), 2009-2015Eco Car: Key Drivers & Restraints (Thailand), 2009-2015
15
Agenda
4
5
3
1 Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
16
The global automotive market is expected to contract at a CAGR of more than -4% between 2007 and 2010
Units (Million)
Note: CAGR calculated for 2007 to 2013; All figures are rounded; the base year is 2007. Source: Frost & Sullivan
63.8 millionCAGR: –4.1%
0.49m 0.54m0.43m
0.53m
56.2 million
2007 2010
2.4m 2.7m
Brazil
1.7m2.1m
India
7.9m6.3m
China
Global Sales Volumes of Light Vehicles, 2008
17
CO2 Legislation
Current Global Business Environment Poses Huge Challenges with Opportunities along-side
Opportunities and Threats in Global Automotive Market, 2008
Global Credit
Crunch
Falling Consumer
Confidence
Rapidly Declining Vehicle
Sales in Q3 2008 and a
weak outlook for 2009
Fluctuation in
Commodity prices
Falling Company
Valuations and Earnings
Reduced Consumer
Consumption &
Expenditure
Cut in Production
Capacity and
Workforce
Demand for Green
Technologies, Electric
Vehicles and Hybrid
Powertrain
Increase in Demand
for Small, Low-cost
and Fuel-efficient cars
Higher tax burden on
cars with higher
emissions
Sustained Increasing
demand in Emerging
Markets
Opportunities
Threats
Source: Frost & Sullivan
Unstable Business
Environment
18
Basic Small Low Medium
High Medium Large Low Luxury
High Luxury Super Luxury MPV
SUV Pickup / Truck Sports, Van & Others
Global Sales Volumes of Light Vehicles – by Vehicle Segment, 2008
*(India, China, Thailand, Malaysia,
Indonesia, Korea)
Europe (including Russia)
41%
18.9m
10% Vans
6.7%
18.8%
22.4%
10.1%
11.9%
9.6%
USA
13.2m
42%
4.0%
13.9%
4.5%
14.8%
6.5%
26.9%
15.1%
6.0%
• Basic and small cars have a
strong sales trend in Europe
and Asia at present making
one fourth of the market size
• USA to witness a strong
growth of Small cars and
super-minis in 2009 and 10
• Pickup sales expected to reach
close to 1m units, while SUVs
are expected to sell 1.3m
units in Asia by 2010
• Asia and Europe are big
markets for commercial Vans,
while Japan has Vans in the
passenger segment too
Asia*
13.5m
49%
13% Vans
11.6%
12.5%
25.0%
11.3%
7.1%
9.2%
7.0%
Japan
5.0m
30%
16.1%
7.8%
9.6%
6.8%
6.6%
10.6%
9.9%9% Vans
Small, affordable and clean cars are mega trend in the auto industry in the next 5 years: Eco car likely to be biggest gainer
Source: Frost & Sullivan
19
Russia
India
Brazil
USA
China
Europe
Others
Legislation (Emission) and Environmental Impact on Global Automotive Industry (Passenger Cars),
2008
Lowering green house gas (CO2) emission and reducing energy
dependency are the drivers: Eco car fit in well in this trend as well
2005 2008 2010 2012 2015
Electric vehicles in Israel
Bharat IV (equivalent to Euro IV)Bharat III Stds. in India (equivalent to Euro III)
Euro IVEuro II Euro III Euro V
Euro IV rolled out
first in Top 10
Indian Cities and
later nationwide
Euro IV
Euro IV introduced
in Beijing in 2008
Electric vehicles & Plug-in Hybrids in US
Euro IV
Electric vehicles for low CO2 emissions
CO2 based taxes in Germany, UK, Benelux
Euro V Euro VI
Euro II National Std III (Euro III)
PROCONVE L-5 (Euro IV)Euro II PROCONVE L-4 (Euro III)
Bio fuels with 25% ethanol mix in BrazilBio fuels(20–25% ethanol)
Tier 2 Emission Standards Euro V Euro VI
CAFE startin MY 2011, 35mpg by MY 2020
Emission Standards Reducing energy dependencyEmission-based TaxationKey Driver
Note: * CAFE - Corporate Average Fuel Economy Source: Frost & Sullivan
20
Eco Car has a huge potential in Europe, US and Asia
Eco Car can potentially target volume of 11.23 million
43% of the addressable volume is in Europe
• Eco car program has a huge potential. It can target a volume of 11.23M in key markets such as
Europe, US and Asia
• Bulk of the volume lies in Europe. 4.8M cars which constitute to 43% of the addressable markets
followed by Asia
• This indicates that Eco car is a product with huge potential, which can potentially be Thailand’s next
product champion after pick-up trucks
• Eco car program has a huge potential. It can target a volume of 11.23M in key markets such as
Europe, US and Asia
• Bulk of the volume lies in Europe. 4.8M cars which constitute to 43% of the addressable markets
followed by Asia
• This indicates that Eco car is a product with huge potential, which can potentially be Thailand’s next
product champion after pick-up trucks
21
Eco car would predominantly be a exported to Europe and Asia, particularly Australia and ASEAN
Eco-Cars
(700k)
Domestic Market (10%)CKD Export (20%)CBU Export (70%)
• Model variants of similar platform
acceptable
• But as per specifications and
requirements of Eco car regardless
of destinations
• Meets stringent EU standards
• CKD parts have to be the key
engine components
manufactured in Thailand
specifically for eco car.
• 40% local or ASEAN content in
order to export to ASEAN under
AFTA
• ASEAN country like Indonesia
may choose this to support local
industries
• Fuel efficient
• Environment friendly
• First time buyers likely to be
attracted
22
Europe• The Eco-car specification is
designed to meet the European requirements
• Significant volume will still be produced in Europe to satisfy the diesel vehicle demands
Impact will be Global
Australia • Australia would be one of the initial
export target for Thailand’s eco-car• Eco-car could dominate the
Australian vehicle landscape
ASEAN• Malaysia is currently the largest passenger car
market in ASEAN, however its AP license restrict the potential sales volume in Malaysia
• The focus would be on emerging economy like Vietnam and Philippine where local production is making limited progress
North America• The eco-car would replace much of
the US small car import from Japan• The challenge would be to meet the
regulatory requirements for passive safety systems
Eco Car: Impact on Automotive Market (world), 2009-2015Eco Car: Impact on Automotive Market (world), 2009-2015
23
Issues with Eco Car Program: Opportunity for non-Eco Car Players in Thai Market
24
Agenda
4
5
3
1 Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
25
Conclusions
Thailand Eco car policy is likely to help them achieve their ambThailand Eco car policy is likely to help them achieve their ambition to reach 2mn vehicle production, ition to reach 2mn vehicle production,
although there would be some delay in achieving these numbers dualthough there would be some delay in achieving these numbers due to current slow downe to current slow down
Current global trends support fundamental premise of Eco car: SmCurrent global trends support fundamental premise of Eco car: Small, fuel efficient, environment friendly all, fuel efficient, environment friendly
, safe car, safe car
Europe, Australia and ASEAN would be key export markets for Eco Europe, Australia and ASEAN would be key export markets for Eco car programcar program
Although there are some aspects of Eco car program that would giAlthough there are some aspects of Eco car program that would give a window of opportunity for nonve a window of opportunity for non--
eco car players in Thai market in short termeco car players in Thai market in short term
26
Agenda
4
5
3
1 Thailand Automotive Market
Eco Car Project in Thailand
6
Impact on Global Car Market
Outlook of Eco Car Project
Conclusions and Way forward
Next Steps
2
27
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