According
to Mayban Securities Research, the Asean Free Trade Area (AFTA) liberalisation will
have a positive impact on the local automotive components sector in 2005, as it
allows manufacturers access to a larger market. However, to compete with the
more advanced Thai rivals, local companies have to beef-up their research and
development (R&D) activities, and increase exports to regional and
international markets.
The local
automotive components industry players include those that serve the original
equipment manufacturer (OEM) and replacement equipment (RE) and the export
market.
In its
industry outlook, the research house said the manufacturers should focus on
supplying to multi-brand manufacturers while staying focussed on their range of
products. The increasing pace of technological developments and escalating
costs of introducing new models have become an essential strategic thrust for
automotive component manufacturers to stay ahead. The component sector is
dependent on total car sales and total car production and Mayban Research sees
steady growth of car sales driven by the young population profile, low
unemployment rate, increasing per capita income and higher rate of urbanisation
as well as rising investments on road networks.
The Malaysian Automotive
Association expects car sales' total industry volume to hit 450,000 units in
2003 and 465,000 in 2004 from the 434,954 in 2002. However, Mayban Research
said automotive component makers were now facing stricter demands from the car
manufacturers. It said automotive component makers should also realise that the
current local content policy was not sustainable in the long-term. The local
material content was abolished in 2002 while the mandatory deletion item
programme is being phased out. With the abolishment of several items from the
mandatory
deleted items list, automotive assemblers could purchase parts from cheaper
sources both internally and externally.
As such their decision to purchase
would hinge largely on quality, reliability in supply, technological competency
and competitive price. Automotive component manufacturers should also have the
flexibility to meet end-demand design and technical specifications. It added
that specifically, the automotive component manufacturers should be in line
with the increasingly stringent requirements, among other things, the
environmentally friendly emission standards, fuel efficiency and vehicle safety
standards. Mayban Research pointed out that, as at April 2002, there were some
350 such manufactures producing 3,000 component parts with 70 per cent that
were suppliers to the OEM.
However, it said APM Automotive Holdings Bhd and
Ingress Corp Bhd were among the 19 listed component makers that offered the
best exposure to the automotive components industry.
0 Comments