Armin Keller, Volkswagen Group’s head of sales for Asean markets, discusses the prospects for the automotive sector in Southeast Asia
The middle class in Asean nations is rapidly growing. What does this mean for the automotive sector in the region?
The emergence of the middle class opens up a variety of opportunities for the auto sector, especially in Malaysia, Thailand, Indonesia and the Philippines. For example, in Indonesia alone we expect the number of households who can afford to buy a car to more than double to 14 million households by 2020.
In addition, consumers in this class have an affinity with technology, innovation and quality, all of them being key features of our products and services. The region is already very important for the group, since it has high potential.
However, conditions such as the different customs regulations have been difficult. This is gradually changing though, and purchasing power is becoming much stronger. Compared with our presence in other regions, though, we are still under-represented in Asean. We aim to change that and are looking to increase our market share quite significantly in the long term.
To what extent can the sector contribute to economic growth in the region?
The emerging middle class, combined with favourable policies such as the Eco-Car programme in Thailand, which promotes the production of eco-friendly cars, will attract investment and help to further develop the auto market. With that, the auto industry can contribute to overall economic development in a sustainable way.
What is your future expansion strategy for Southeast Asia?
The growth markets in the Asean region are of strategic significance for the Volkswagen Group. Some of our models are already being produced in Malaysia and we are systematically expanding our dealer network. We continue to investigate openings for local production in other markets in the region.
Which chances and challenges do you see for your company in the region?
Our aim is to further expand our existing market presence in Southeast Asia. We are producing the Volkswagen Passat model in Malaysia with a local partner and this will soon be followed by the Polo and Jetta models.
As a result of growing demand in Indonesia, Volkswagen recently moved into a new, higher-volume assembly plant in Cikampek. However, no decisions regarding new Asean sites other than our present initiatives have been made at the current juncture.
Beyond the immediate automotive-related challenges, we are carefully following the overall economic development of the region as a robust economic framework supported by consistent policies, as this is the key prerequisite for sustainable growth.
However, we do consider Asean a key growth region for the next decade, so we are committed to growing our business in the region significantly.
What’s the outlook for the automobile industry in Asean member states?
There are great opportunities in the Asean region given the population of some 600 million and the many countries enjoying sustained, high economic growth.
In particular Thailand, Indonesia and Malaysia are already well-developed and their vehicle markets are therefore the strongest sales markets in the region. The auto industry in Asean will continue to grow above the world average in the foreseeable future.
Volkswagen Group, headquartered in Wolfsburg, Germany, is the world’s second-largest carmaker. Last year, the group increased the number of vehicles delivered to customers to 9.73 million, up from 9.28 million in 2012, corresponding to a 12.8% share of the global passenger-car market.
The group operates 106 production plants across 19 European countries and eight countries throughout the Americas, Asia and Africa. Every weekday, 572,800 employees worldwide produce some 39,350 vehicles, or work in vehicle-related services and other fields of business.
The company sells its vehicles in 153 countries. In Southeast Asia, Volkswagen operates two assembly plants with local partners in Malaysia and Indonesia, producing nine of the group’s models.