French car maker Citroen on Tuesday said it had no plans to build a manufacturing or assembly plant in the Association of Southeast Asian Nations (ASEAN) region for now, citing uncertainties about vehicle tariffs in the Asean Free Trade Area (AFTA), Dow Jones reported.
“Today, we cannot make a decision about an assembly plant (or manufacturing plant) because AFTA rules aren’t completely fixed. It is very risky,” Citroen general manager for Asean Philippe Heno, reportedly told reporters following the launch of the new Citroen C3 model in Malaysia.
“Malaysia is the main actor [in the ASEAN region]. As the main actor we have to look very carefully at what is going to happen,” he added, according to Dow Jones.
The news agency said the Malaysian government’s vehicle sector policy is of major concern to car makers within the ASEAN region, in which Malaysia has a one third share of the new motor vehicle market.
Dow Jones noted that Malaysia is also the biggest passenger car market in ASEAN with 434,954 motor vehicles sold in the country last year, up from 359,934 units in 2001, and with passenger cars accounting for about 80% of the total.
Besides Malaysia, ASEAN comprises Brunei, Indonesia, Laos, Myanmar, Philippines, Singapore, Thailand, Vietnam and Cambodia, Dow Jones added.
The news agency said that current tariffs for motor vehicle imports into Malaysia can go as high as 300% but, under the AFTA plan, regional tariffs on motor vehicle imports among member states would fall to between zero and 5% this year. ASEAN has already agreed to exempt Malaysia’s car industry until 2005 and for now, Malaysia has said the car sector will only reduce import tariffs to 20% in 2005.
The Malaysian government hasn’t informed member states when it will meet AFTA target range and government officials have hinted the government will increase excise duties to compensate for lost revenue resulting from import tariff cuts. It hasn’t been specific.
According to Dow Jones, Heno said the French car company aims this year to sell 25% more Citroen cars in ASEAN than the 2,000 units it sold in 2002 and, in Malaysia alone, hopes to sell about 1,000 Citroen cars this year, up from about 700 units last year.
Heno told Dow Jones the introduction of the new Citroen model is likely to attract more people to buy his company’s cars in 2003.
Apart from the C3, Citroen will introduce the Xsara Picasso and C8 minivan models to the Malaysian market in the coming months, supplementing the Berlingo van and C5 car models it already sells, according to Dow Jones.