The chairman of General Motors China has warned that neighbouring south-east Asia's home grown car industry will in future find itself squeezed by stiff competition from the emerging giant next door, writes Mark Rowe.

China's expanding middle class, robust economic growth and low rates of vehicle ownership means that car makers in south-east Asian countries such as Thailand will be hard pressed to compete in the growing Chinese market, according to Phil Murtaugh, chairman of General Motors China.

Speaking at an industry conference in Bangkok, Murtaugh said that China-based production would play the dominant role for the car industry in the region in two ways.

First, the major international car makers will concentrate their efforts on exploiting the Chinese market and squeeze regional producers out of that market.

Meanwhile, the phasing-out of import tariffs that accompany China's entry into the World Trade Organisation will also enable domestic manufacturers within China to flourish abroad, making things even harder for independent car manufacturers in south-east Asia, such as Malaysia#;s Proton.

Murtaugh predicted that the region could be squeezed out by the likes of General Motors, Ford and Toyota in the race to get the Chinese to swap bikes for cars.

China's potential for growth in car ownership is seen as almost unlimited, with just 13 cars for every 100,000 people.

“China's market is growing so fast. I don't think there are going to be Chinese manufacturers who will be thinking we've got to export to survive,” Murtaugh said.

The Asean economic group produced just 1.23 million vehicles out of a total of 17.8 million in Asia last year.

Japan produces the most vehicles, followed by South Korea, China, India and Thailand.