Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

No Heater, Great Suspension It's The `Asia Car' (Int'l Edition)

International -- Asian Business: ASIA


The Japanese push to keep control of a revving market

Boonsong Siriyawat has never owned a car. The 28-year-old Thai insurance clerk, eyeing the sticker prices in a Honda showroom in Bangkok, says he can barely afford one. Yet Japan's auto makers figure Boonsong and other new members of Southeast Asia's middle class will buy a car someday. So they have been studying what makes these consumers tick since the late 1980s. "We've interviewed Thai motorcyclists, people with no cars, students, and families with one or two cars," says Koji Hasegawa, a Toyota Motor Corp. regional director. The fruit of that research is to be unveiled Dec. 9: a 1.5-liter-engine, four-door "Asia car," designed specifically to survive harsh Asian conditions and priced at about $14,250.

The Toyota launch is proof that Japan's auto makers intend to retain dominance of the Asian market, where 9 out of 10 cars and pickups sold already come from Japan. Southeast Asians bought 1.5 million vehicles this year--a figure expected to grow by 50% by 2000 and double by early next century. Some analysts fear too many carmakers are targeting the region and predict a serious glut. But the Japanese are determined to survive by capturing consumer loyalties first, building local supply networks early, and navigating trade barriers.

When it launches its Asia car, Toyota will be going head to head with rival Honda Motor Co., which already has a car built for the market. Honda introduced the City, a slightly more expensive sedan at $14,950, last April. The City has sold out its first 11,000-car run, becoming the best-selling passenger car in Thailand. Honda also assembles the City in six other Asian countries--from the Philippines to Pakistan. "We are the top runners," boasts Saichiro Fujie, executive vice-president of Asian Honda Motor Co. "But until now there has been no competition."

NEW FEATURES. Like Honda's, Toyota's new Asia car dispenses with heaters and pricey antipollution equipment. Instead, the cars will have arctic-strength air-conditioning, rugged suspension and higher ground clearance, with electronics placed higher to protect it from flood damage. Although the design is being kept secret until the unveiling, analysts say its styling resembles a BMW.

As sales mushroom, Japanese companies plan to beef up supply and assembly networks across the region. "If [the Asia car] is accepted well, our investment can be accelerated," says Hasegawa. Toyota plans to produce double the number of similar cars by Honda, or roughly 40,000 next year.

Local supply networks that can avoid stiff tariffs are key to Toyota's and Honda's plans to make Asia cars affordable. Parts produced within the Association of Southeast Asian Nations (ASEAN) are taxed at a maximum of just 5%, compared with double-digit taxes if they're not. Honda, big in motorcycle production in Southeast Asia, acquires about 60% of the City's components in Thailand; an additional 10% come from other ASEAN countries. Toyota plans to boost local content of its new car from 70% at first to 80% within two to three years. "It's a Japanese strength to develop the parts companies to grow with the market," says Ed Brogan, a Salomon Brothers Asia Ltd. analyst in Tokyo.

U.S. LAGGING. The plans of the Japanese may be far advanced, but Detroit's Big Three are far behind. General Motors Corp. has committed $750 million to make Opel cars in Thailand by 1998, but 80% are for developed markets in Japan and Australia. Ford Motor Co. is spending $450 million on a Thai joint venture to make pickups and possibly cars. Chrysler Corp. is pondering a minivehicle for China and India.

The U.S. projects will work best if the region opens to free trade. But national car projects in Malaysia and Indonesia make many analysts doubtful that will happen. In targeting exports to developed countries, GM concedes it will be many years before it can compete effectively against the Japanese in the region. The Asia cars will help ensure that Japan continues to rule the region's roads.By Steven V. Brull in Tokyo, with Robert Horn and Bruce Einhorn in BangkokReturn to top

blog comments powered by Disqus