That’s the view of Frost & Sullivan in its new analysis, which says that smaller Japanese players such as Suzuki, Mitsubishi and Isuzu and new entrants are the ones most likely to benefit from the implementation of AEC although big Japanese OEMs are still likely to continue to lead the market.

Frost & Sullivan principal consultant Dushyant Sinha said that Indonesia, Thailand and Malaysia are the key automotive markets in ASEAN, accounting for 89% of the passenger car market, yet at a global level, they do not figure amongst the top 15 passenger car markets.


He added: ‘Smaller markets, with their individual automotive sectors, will continue to be plagued with issues of productivity and efficiency. Sector integration will lend economies of scale which in turn will help reduce costs and improve competitiveness.’

The analysis added that the capital-intensive nature of the automotive sector, coupled with the ever increasing competitive pressures, pushes for increased investment, both technical as well as financial, for the local industry to remain competitive and globally relevant.

But it said that political compulsions, accentuated by development divide serve as key restraints for the implementation of AEC.

‘Local OEMs will find it challenging to maintain their existing market positions and some degree of consolidation is expected,’ Mr Dushyant went on. ‘Automotive OEMs and suppliers should focus on increasing value and reducing cost of safety systems.’

Within the automotive value chain, suppliers as a whole are better “hedged” to weather the impact of AEC due to their multi-client share of OE business and opportunities in the aftermarket segment.

‘Under the full implementation of the AEC, a structural change is likely in the automotive sector,’ concluded Mr Dushyant. ‘Local players, both OEMs and suppliers, stand to lose the most. Overall, market concentration is set to decrease.’