South-east Asia's car industry is getting ready for the start of partial free trade in the ASEAN countries next year with new investments and regional supply strategies, AutoAsia Online said.

From 2002, import duty on fully-assembled vehicles shipped from one ASEAN country to another will fall to five percent or less. The exception is Malaysia, whose government insists its national car makers Proton and Perodua need greater protection from imported competition until 2005.

AutoAsia Online said that Honda has selected Indonesia as the regional production centre for its new Stream minivan. Assembly starts later this year at the rate of 7,000-8,000 units a year. Once local sales are established, the plant will begin exporting to Thailand and other ASEAN markets in 2002.

Passenger car output will be reduced to make room for the Stream leaving a new plant in Malaysia to supply the Accord and other models to Indonesia.

The new 5 billion yen (US$41 mililon) Malaysian Honda factory in is a joint venture with DRB-Hicom and Oriental Holdings and will make 20,000 cars a year by 2003, including the Civic, AutoAsia Online said.

The new company reckons DRB-Oriental-Honda will rival Honda's well-established plant in Thailand (which also builds Accords for Australia and New Zealand) in car output. Capacity will be expanded when the ASEAN Free Trade Agreement (AFTA) is fully implemented.

Honda rival Toyota, AutoAsia Online said, has designated Thailand as its key production base for the new Corolla Altis (the Asian market version of the Corolla) which will be sold in Thailand, the Philippines, Indonesia, Malaysia, Vietnam and, outside ASEAN, Taiwan.

Toyota Thailand also wants to introduce the Vitz (Yaris) subcompact city car to its assembly lines and eventually export it around South East Asia.

In February, Toyota Motor Corp. increased its stake in Toyota Motor Thailand from 69.6 percent to 85.3 percent, AutoAsia Online said.

"Our capital increase will streamline the management, production and marketing systems in order to strengthen our overall competitiveness to become a role model for other Toyota operations in Asia," TMT president Ryoichi Sasaki told the website.

"Within three years we aim to achieve 100 percent localisation of our Thai production by using the AFTA scheme."

AutoAsia Online said that Toyota group companies Hino and Daihatsu are also increasingly busy in South East Asia.

Hino will begin exporting trucks from Thailand to other ASEAN countries in 2004 as its tries to lift annual output at its Thai factory from 3,000 to 20,000 while Daihatsu is attempting to take over management of Perodua, its Malaysian joint venture, prior to lifting annual capacity at the second national car maker by 25 percent to 150,000 units.

Daihatsu believes that new investment and increased production capacity is the only way that the relatively tiny Perodua can compete against imported competition once the Malaysian market is opened up after 2005, AutoAsia Online said.

Meanwhile, Nissan wants to export its newly-launched Thai-built Almera to other ASEAN markets and, like Honda, has recently announced more investment in Indonesia.

AutoAsia Online said that Nissan will boost its stake in its Indonesian partner PT Ismac Nissan Manufacturing from 35 percent to 75 percent and change the name to Nissan Motor Indonesia.

Hit hard by the 1998 Asian financial crisis, Ismac stopped production for a time, restarting only last May. Now the ASEAN trade liberalisation is under way, Nissan Japan is eager to revive the operation, the website said, adding that the company is also increasing direct investment in its Thai subsidiaries, Siam Nissan Automobile Co. and Siam Motors & Nissan Co. Its shareholding in each will rise from 25 percent to nearly 75 percent.

AutoAsia Online said that Nissan wants to boost Thai-built exports.

Earlier, GM and Subaru announced increased co-operation based around the U.S. company's new Thai assembly plant. Subaru will sell an increasing number of cars through GM's well-established dealer networks in the ASEAN countries while GM will build Subaru-badged versions of its Zafira minivan for sale in both Japan and Asia.

GM is also helping its Fiat affiliate boost sales in the ASEAN region by building the Alfa Romeo 156 in Thailand.

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