Transcript Slide 1

ITC Geneva, ICRIER , CII
Conference on Regional
Integration in Asia and the
Emerging Trade Regime
Supply Chain Linkages across
borders in Asia : Automobile Industry
Dilip Chenoy
Director General SIAM
New Delhi
28 March 2007
Presentation Outline
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Asia : Vehicle & Parts Production Overview
Export of CBU’s
ASEAN Exports and Imports
Steps in producing a vehicle
Global sourcing
Automotive Supply in Asia
Supply Linkages in Asia
Status and impact of FTAs & RTAs in Asia
Asia : Vehicle & Parts Production Overview
Country
China
Production
Million nos.
5.70
India
1.64
Indonesia 0.50
Japan
10.79
Korea
3.69
Malaysia
0.56
Philippines 0.65
Thailand
1.12
Vietnam
0.35
Local Foreign Parts/Materials
firms firms
Nature of
capitalisation
8
7
8
3
1
-
17
12
7
4
3
4
5
10
14+
Nos.
Local & Foreign 2000 +
Local & Foreign
530+
Local & Foreign
171
Local
468
Foreign & local
913
Local & Foreign
117
Foreign
256
Local & Foreign
809
Foreign
46
Auto Industry Growth : 2001 -2012
(in ‘000 units)
NORTH AMERICA
EUROPE
25000
2001
2012
20,430
20,019
20000
JAPAN
CHINA
SOUTH KOREA
ASEAN
INDIA
AUSTRALIA
TAIWAN
TOTAL ASIA
17,546
17,777
15000
2001
20019
17777
5,906
2,435
1,460
1,171
821
773
347
12,913
2012
20430
17546
6,500
9,801
2,500
2,703
1,800
905
527
24,736
594
7,366
1,040
1,532
979
132
180
11,823
5%
62%
9%
13%
8%
1%
2%
100%
Source: DRI-WEFA
9,801
10000
Diff
% Share
411
2%
-231
-1%
6,500
5,906
5000
2,435
2,500
1,460
2,703
1,171
1,800
821
905
773
347
527
0
North
America
Europe
Japan
China
South
Korea
ASEAN
India
Australia
Taiwan
12 million units production growth in the period of 2001-2012
13 million units in 2001
25 million units in 2012
Production, Trade and Domestic Sales
Unit: 1,000
Year 2005
Country
Production
Export
Import
Domestic Sales
Japan
10,800
5,053
268
5,852
China
5,708
195
162
5,762
Korea
3,699
2,586
32
1,142
ASEAN
Thailand
Malaysia
Indonesia
Philippines
2,365
1,125
563
622
55
531
464
47
10
10
1,885
703
551
534
97
India
1,642
196
1,440
Taiwan
446
515
Total
24,660
16,528
World
64,539
Asia’s Share 38.2%
Source JAPIA
Importance of Asian Auto Market
• Low growth for auto in developed markets
• Importance of Asia increasing would be a 10
million market with three hubs China, India and
ASEAN.
• Number of component suppliers would increase.
• Sourcing from Asia to increase as auto makers
increase sourcing from low cost countries
• Move towards harmonisation of vehicle / parts
standards and technical regulations.
Export of CBUs by Japanese Auto
Manufacturers 2002
Source) Export from Japan: JAMA
Others: Global Insight (DRI Automotive)
Export of CBUs by N. American & European
Auto Manufacturers 2002
Source) Global Insight (DRI Automotive)
CBU Export among Developed Countries
2002
Unit: thousand (s)
1911/
Japan & S. Korea
2,447
1,1322/
32
9081/
W. Europe
991/
Source) The Society of Motor Manufacturers and
Traders Ltd./ Ward’s Communication/ JAMA
Note) 1/ France, Germany, Italy, Spain, Sweden
2/ EU 15
United States
1642/
316
Australia
12
ASEAN Exports
6000
USD million
5000
4000
3000
2000
1000
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Intra ASEAN
*Ch 86-89
Source:AFTA, ASEAN Trade Data
China YearIndia
Japan
Korea
ASEAN Imports
14000.0
USD million
12000.0
10000.0
8000.0
6000.0
4000.0
2000.0
0.0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Intra ASEAN
*Ch 86-89
Source:AFTA, ASEAN Trade Data
China Year India
Japan
Korea
Press
Shop
Stamping
Body Shop
Sub/Body
Assembly
Paint shop
•Clean
•Paint body
Trim Final
Test &
Lines assembly fix
Component plants
Diverse material &
processes
Raw
Material
Suppliers
•Steel
•Aluminium
•Polymers
Foundry
Casting of
Engine block
Forge
Forging of
High-strength
parts
Assembly plant
Engine
Dress
Engine Plant
•Machining
•Assembly &
Test
Transmission
Plant
•Machining
•Assembly &
•Test
STEPS IN PRODUCING AN AUTOMOBILE
Finished vehicle
Into distribution
And retail network
An Example of a sourcing structure of an OEM
Manufacturing
Body-in-white,
PreassemblyPainting final assembly
Key Suppliers/groups
(systems, modules)
Components suppliers /groups
(components ,subsystems)
Materials, semi-finished, standard parts
•Large Scale Effects
•High Technology
•Little product variability
•Light compact products
•ICs
•Scale Driven
•Moderate product variability
•Moderate weight/bulk
•Alternators/starter motors
•Heat Exchangers
•Hub Units
•HVAC systems
•Fuel Tanks
•Modules / Systems Assemblies
•Exact in-line sequencing
•Heavy / Bulky
•Seats
•Alarms
•Dashboards
•Painted Bumpers
20-30 km
300 – 400 Km
2,000 Km
Global
•Modules / Systems assemblies
•Moderate product variability
•Heavy / Bulky
GLOBAL SOURCING :THE THEORY
Systems Structure of an automobile
Source : Time for a model change, Maxton & Wormald
GLOBAL SOURCING : PRACTICE
• Most systems or parts cannot simply be
exchanged between different car types or even
between different models occupying the same
segment.
• They are typically dimensioned precisely to the
requirements of the individual model and have to
fulfill very precise interface requirements.
• Family of suppliers uniquely affiliated to a given
vehicle manufacturer
• Some suppliers large & powerful : supply to
many
Automotive Supply in Asia
• Auto parts production increasing in Asia
• Production of labour intensive parts being
transferred to low cost countries
• Industry in each country at different stage of
development
– China & Malaysia : preferential treatment
– Thailand & India : Enhancing competitiveness
– Technical assistance to local companies poor
• OEMs looking to increase local content
• Specialist suppliers for steel, plastics, aluminium
Supply Linkages in Asia (1)
• Nissan
– China & Thailand to supply parts globally
– Thailand Engine plant would supply to Malaysia and
Indonesia
– Thailand to promote procurement from ASEAN and
optimise investments relating to vendors
• Honda
– Moved Asia Pacific HQ to Thailand
– Local component production started in Indonesia,
Philippines, Malaysia & Thailand
– Consolidation of sourcing launched in India
• Hyundai
– 10+ Korean suppliers in Thailand supply parts to India
Supply Linkages in Asia (2)
• Toyota
– Thailand emerging as centre for engines, India &
Philippines for transmission
– For the IMV in ASEAN 90% parts from Thailand rest
from ASEAN.
– CKD exports from Thailand
• Mitsubishi
– Tires, sintered parts, wheels and gaskets from
Malaysia, forged parts from Indonesia, transmissions
from Philippines
• India
– OEMs start sourcing from China & ASEAN
• Steel
– Preferred supply base Japan & Korea
FTAs Status in Asia
Japan China
Japan X
China
India
ASEAN
Thai
Malay
Sing
Phil
Korea
Indonesia
S
N
EPAA
EPAA
EPAE
EPAA
N
N
N
AFTA
X
EHPE EHPE
X
CECAA
EHPE
CECAA
X
AFTA
AFTA
AFTA
AFTA
X
AFTA
AFTA
AFTA
AFTA
AFTA
AFTA
X
AFTA
AFTA
AFTA
CECA AFTA
AFTA
X
AFTA
AFTA
AFTA
AFTA
X
India
S
ASEAN
N
EHPE
Thai
N
EHPE EHPE AFTA
Malay
N
Sing
EPAE
Phil
N
Korea
N
Indonesia
N
S
CECAA
AFTA
N
AFTA
FTAA
AFTA
AFTA
AFTA
FTAA
AFTA
AFTA
X
AFTA
X
S = Studying, N = Negotiating EPA = Economic Partnership Agreement
A= Agreed E = In effect EHP = Early Harvest Programme
CECA = Comprehensive Economic Cooperation Agreement
( as of 2005)
Impact of RTAs & FTAs on Supply Chain
• Duties lowered and or eliminated within AFTA
• External tariff rates lowered but much higher than AFTA
• Application specific models and variants being developed
for and manufactured in ASEAN.
• Japanese, US and European automakers have moved
base to Thailand : Export to ASEAN and other regions
• Exports of vehicles, parts, components to ASEAN and
other markets to grow in volume and type
• Parts and components for after market sourced principally
from the ASEAN.
• Most global TIER 1 part makers to set up manufacturing
facilities in ASEAN linked to local firms.
• Currently China, Korea and India have negligible exports
to ASEAN.
• OEMs would continue to determine sourcing.
Thank you
[email protected]
FTAs in Asia Pacific Region
(as of Jan. 2004)
MFN IMPORT DUTIES IN ASEAN
INDONESIA
MALAYSIA
PHILIPPINES
THAILAND
CKD
25% - 50%
25% - 35%
10%
33%
CBU
45% - 80%
80% - 200%
20% - 30%
80%
CKD
25%
0% - 40%
3%
10% - 33%
CBU
5% - 45%
30% - 200%
15% - 30%
30% - 60%
CKD
5% - 25%
5% - 30%
3%
0%
CBU
35% - 60%
60% - 120%
30%
60%
PASSENGER CARS
COMMERCIAL VEHICLES
MOTORCYCLES