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Mazda 13089 Presentation

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Experience Mazda Zoom Zoom Lifestyle and Culture by Visiting and joining the Official Mazda Community at http://www.MazdaCommunity.org for additional insight into the Zoom Zoom Lifestyle and special …

Experience Mazda Zoom Zoom Lifestyle and Culture by Visiting and joining the Official Mazda Community at http://www.MazdaCommunity.org for additional insight into the Zoom Zoom Lifestyle and special offers for Mazda Community Members. If you live in Arizona, check out CardinaleWay Mazda's eCommerce website at http://www.Cardinale-Way-Mazda.com

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  • There is a direct relationship between how advanced an auto manufacturing economy is, and how big its market is. That’s because for the large part, manufacturing technology in the auto industry is driven by VOLUME. In the auto industry, we tend to look at 3 stages of development in the auto industry. The first is CKD, which is where ASEAN is today. That relates to National markets, and results in low value add, limited exports, and lower technology transfer. Next step up is integrated manufacturing, which is where ASEAN will be under AFTA. The regional market will take you to a new stage of manufacturing called Integrated Manufacturing. But to really get the most advanced type of auto industry, with Product Design and Development, the market has to be global, and the liberalization has to allow for global competitiveness. In this area, the industry will provide sustained investment growth, high value added jobs, and strong export growth.
  • Investment was driven by promise of AFTA These are Partial investment numbers only However, the investments will not mature because of the spotty implementation for AFTA. Indonesia is to be praised and commended for leadership in tariff reduction. Thailand and Philippines appear committed to drop to 5% next year and should also be commended.
  • For the auto industry, AFTA may as well be renamed the “Thai Phil Indo FTA” 20% too high, free trade starts at 5%. Will have to wait until 2003 to see real rationalization. AFTA must be win-win for all countries to work. Need for OEMs to support this for it to work.
  • (at end) ASEAN should take all steps possible to encourage Malaysia to join AFTA.
  • Today there is some apprehension about AFTA and how it will impact the auto industry. This AICO is a controlled AFTA, controlled because the products are known and it’s trade balanced. Gives parts makers a measure of confidence. Could it be used as an interim measure for Malaysia?
  • One of the real impacts of China’s accession into the WTO is that it will serve as an “export accelerator” for China. Issue is TIMING – the threat is today.
  • External MFN tariffs are not harmonized. CKD parts imported into an ASEAN country from an MFN country are taxed at different rates, such as 42% in Malaysia, 33% in Thailand, 10% in Philippines. This distorts investment patterns, which should be driven by factors such as market size and supplier capability. Modernize Vehicle tax policies. In most countries taxes are still being driven by engine size. There is very little relationship between engine size and fuel economy, and engine size and emissions. Another worrying trend is governments wishing to “make up” for the loss in import duties by raising “downstream” taxes such as excise and luxury tax. This will only lead to less compliance and will further suppress volumes.
  • Transcript

    • 1. AFTA: Turning the ASEAN Dream Into Reality AFTA 2002 Symposium Jakarta, Indonesia January 31, 2002 John Parker President, ASEAN Operations Ford Motor Company
    • 2. The Automotive Industry Imperative National CKD Product Design And Development Global Stages of Liberalization Low Value-added Limited Exports Low Technology The foundation of sustainability in the auto industry is global competitiveness , which is a function of continued liberalization Regional Integrated Manufacturing ASEAN Today Sustained Investment Growth High Value-added Jobs and Strong Export Growth AFTA ASEAN under AFTA
    • 3. ASEAN Auto Growth… A Strong Recovery
      • Strong Recovery after Crisis, but lags China in overall size.
      • ASEAN Industry Size Only Competitive if Viewed as One Region
      15 2.4 Mil 14% China Ave. 106 1.15 Mil 47% TOTAL 4 29,000 67% Vietnam 49 96,000 12% Philippines 33 315,000 223% Indonesia 307 402,000 19% Malaysia 136 315,000 22% Thailand Veh/1000 Driving Age Pop. Industry Size 2002(f) Growth 1999-2000
    • 4. Auto Manufacturers Have Invested Heavily in ASEAN since 1995… Millions US ($) BUT… 5 10 15 20 N/A N/A Vietnam 5 10 15 20 N/A N/A N/A N/A Malaysia 5 15 Indonesia 5 20 20 Philippines 5 15 20 Thailand 2008 2007 2006 2005 2004 2003 2002 2001 COUNTRY
    • 5. Manufacturing Rationalization starts in 2003: Is it “AFTA” or the “ Thai-Phil-Indo FTA ?” VIETNAM ? Source: Press Reports PHILIPPINES INDONESIA THAILAND Ford Ranger Mazda Fighter Volvo S80 Chevrolet Zafira Honda Accord Nissan Sunny Toyota Altis Honda Stream Honda CR-V Nissan X-Trail Toyota Vitz Honda Stream Honda CR-V Toyota Vitz Ford Laser Ford Escape Mazda Protégé Mazda Tribute Ford Ranger Mazda Fighter Chevrolet Zafira Toyota Altis Honda Fit Ford Laser Ford Escape Mazda Protégé Mazda Tribute MALAYSIA ?
    • 6. When Will Malaysia Join AFTA? Uncertainty Jeopardizes Regional Integration
      • Largest Mid-size Car Market in ASEAN (Represents 35% of ASEAN Vehicle Market).
      • 5% AFTA Duty for CBU Deferred Until 2008 ( 5 years later than Thailand and Philippines and 6 years later than Indonesia ).
      • Malaysia Could Be Integral Part of Regional Production
        • But investment decisions for 2005 are being made today.
      • Damages Investor Confidence in All of ASEAN
      • Gives Economies of Scale Leadership to China
    • 7. CBU AICO: A Great Example of Forward Thinking Delivering Investment into ASEAN PARTS
      • BENEFITS
      • Eliminates Duplicative Vehicle Assembly and Supply Bases.
      • Major (Multimillion Dollar) Investment in Both Countries for New Products, possible because of Greater Economies of Scale.
      • “ Sneak Preview” into AFTA – product complementation, plant rationalization, economies of scale.
      Ford Thailand Ford Philippines
    • 8. Reality: China’s Diverting Investment Dollars From ASEAN Source: United Nations (Jan. 2002) 9% of Asia FDI 18% of Asia FDI 61% of Asia FDI 38% of Asia FDI
      • Consider:
      • China took 15% of Automotive FDI in 1990 but that number increased to 64% in 2000.
      • Globally, FDI dropped almost 50% in 2001.
      • According to JETRO, 8% of Japanese MNCs will relocate from ASEAN to China in 2002 because of WTO accession.
    • 9. With WTO Accession, China Will Increase Exports to Member Countries Unless AFTA is implemented for the auto industry on time in all countries, China will continue to attract more automotive FDI and will soon start to EXPORT. Source: UBS Warburg 6.8 4.8 3.7 Total 9.8 7.8 5.0 Electronics 2.2 0.7 0.1 Autos 6.5 5.5 3.4 Metals 47 19 20 Apparel 10.6% 8.8% 8.4% Textiles 2005e WTO 2005e Non-WTO 1995 China’s Share of Global Exports, in Percent
    • 10. What ASEAN Should do to Position for Future Growth
      • AFTA is key – Regional Tariffs Must Come Down
        • Most Critical Aspect of Growing Volume.
        • Malaysia’s Delay Closes the Largest Passenger Car Market in ASEAN to Regional Integration Until 2008.
      • Meet WTO TRIMs Obligations Now
        • Continuing TRIMs in Malaysia and Philippines Slows Down Global Competitiveness in Component Manufacturers and Prevents Regional Sourcing Integration for Components and Parts.
      • Harmonize Vehicle Emissions/Safety Standards
      • Harmonize “External” MFN Tariffs
        • Will Result in Lower Cost CKD Imports – China Drops to 10% in 2006!
      • Modernize Vehicle Tax Policies
        • Current Structures Actively Suppress and Distort What Consumers Want.
    • 11. AFTA: Turning the ASEAN Dream Into Reality Thank You