A new study by KPMG (Automotive and Components Market in Asia) looks at the questions affecting the strategies of vehicle and component companies in Asia, and examines different scenarios regarding the development of the sector within the next five to 10 years.
The study, conducted from December 2004 to February 2005, predicts that the Asia-Pacific vehicle market will double between 2004 and 2007. Japan and Korea will see their manufacturing pre-eminence in Asia diminish, losing a significant share of regional production to the growing markets of China and India.
Although much will depend on the implementation of regional free trade agreements, a likely scenario will be a number of production centres, with countries specialising in specific areas along the supply chain. More labour-intensive, lower-technology components will be manufactured in countries such as Vietnam, the Philippines and Indonesia, while technology-driven production will be centred in locations such as India, South Korea or China.
The future structure of the Asian industry will depend largely on which countries in the region decide to pursue protectionist policies, such as the onerous automotive regulations issued by China last month.
Andreas Dressler is a director of KPMG’s Global Location & Expansion Services