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Wed, Oct 08, 2003 - Page 12 News List

DaimlerChrysler to invest US$116m in Southeast Asia

ROOM TO GROW The auto giant says ASEAN's auto market is booming and it aims to expand its presence in the region


German-US auto giant Daimler-Chrysler will invest up to 100 million euros (US$116 million) in Southeast Asia over the next two years to strengthen its presence and triple sales in 10 years, a top official says.

With a market of 530 million people, low vehicle penetration and a young age structure, ASEAN's auto market offers vast potential, said Frank Messer, president and chief executive for DaimlerChrysler in the region.

In an interview on the sidelines of an ASEAN business summit here, Messer said the company expects sales next year to grow around 10 percent to 15 percent to 35,000 units.

But this is still low in ASEAN's booming auto market where some 1.5 million vehicles were sold last year, he said.

DaimlerChrysler's sales in the region hit a billion euros last year.

Messer said the company had invested 100 million euros in the region over the past two years, employing 2,000 workers in its manufacturing and assembling facilities in Thailand, Malaysia, Indonesia, the Philippines and Vietnam.

"There is no fixed sum but we will invest between 50 million and 100 million euros again for the next two years," Messer said.

"We have made a lot of efforts in the last year to increase our presence and penetration in this region. I believe that in the next 10 years, we will triple our sales here," he said.

DaimlerChrysler and other foreign automakers such as Honda Motor and BMW have begun phasing out franchises to cut out middlemen and boost their direct presence in the region, to benefit from lower import tariffs under the ASEAN Free-Trade Area (AFTA).

Tariffs on imported cars in Southeast Asia fell below 5 percent in January under AFTA, except for Malaysia, which has obtained a reprieve for its auto industry until 2005.

Messer said AFTA would greatly boost efficiency in the industry, drive up sales and increase economies-of-scale.

But he said implementation flaws, the absence of a common product standard and custom procedures under AFTA were making it tough for foreign carmakers to plan their long-term production strategy.

Messer said Thailand has emerged as a favorite hub for many foreign carmakers because of its efficient supply chain, strong gov-ernment support and liberalized market rules. But in the mid-term, he said, Malaysia will be a "very important market to consider" as well as Indonesia.

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