Automotive Industries: Korea, Malaysia and Thailand


The production of automobiles has increased tremendously in South Korea, Malaysia, and Thailand accompanied by positive economic development. Since success in the modern market environment has been complicated mostly by fierce competition, these countries need to introduce positive changes in their automotive industries, so as to maintain and enhance their success in production and sale of automobiles both nationally and internationally.

Goals and Objectives: Korea, Malaysia and Thailand Automotive Industries

South Korea's main goal for its automotive industry is to become the leading industry for national and international development and for its green growth in the 21st century. Both long-term and short-term goals focus on improving export conditions via FTA, establishing partnerships between suppliers and OEMs coping with global environmental requirements and improving product quality for global competitiveness. The Malaysian automotive industry main goal is to encourage, protect, and promote the interests of the automotive industry in Malaysia. In terms of short and long term goals, this will be accomplished through information dissemination on matters affecting the automotive industry, representation, support or opposition legislation formulation in issues affecting the industry. Additional goals include promoting and encouraging formulation of tests and standards as well as mutual cooperation and consultation in the industry.

Thailand's automotive industry main goal is to become the world's permanent top 10 automotive makers. Specifically, the industry seeks to maintain a 2 million production capacity, sustained by an over 30% manufacturing growth and increasing sales to over the 200,000 units mark as well as increasing exports over 40% to Asia, Oceania, and the Middle East. Additionally, the production of eco-cars in line with global environmental requirements also features as a main long-term goal as well as it enhances its global competitiveness. The country's current successes in obtaining competitive advantage and economic growth have been influenced by the reduction of the government interference in the industry. For Korea, product differentiation, quality, and diversity have enabled the industry to thrive despite heavy taxes, while the Malaysian automotive industry's strategy for competitive advantage and economic growth is dependent upon its supportive automotive policies, which generally highlights government protection, especially in high import duties.

Competitive Auto Industries: Approaches and Strategies

Essentially, through product differentiation, quality, and diversity, the Korea automotive industry has been able to thrive despite heavy taxes and other prohibitive factors. For instance, the industry diversified into the production of larger cars which served to broaden the industry's product portfolio aided by good brand image. Additionally, due to prohibitive factors, especially the introduction of heavy vehicle excise duties among other related taxes, the industry has adopted aggressive measures in pricing and production of the high quality products so as to meet varied consumers' needs. Conversely, the Malaysian automotive industry's strategy for competitive advantage and economic growth is supported by its automotive policies, which generally highlights massive government protection. Although abolished, the local material content policy enabled the industry to increase utilization of locally manufactured components, which enhanced the development of the local motor component industry to what it is today (Wad & Govindaraju, 2011).

For now, the industry is relying on the high import duty policy on non-national cars which will increase demand and production of national cars. Malaysia's protectionist policies have facilitated product innovativeness and sophistication which has endeared the industry to the local and international consumers. With the goal of rising to international status Thailand's automotive industry sought to exploit opportunities due to the reduced government's interference, so that the partial opening of automobile imports and substantial cuts on tariffs precipitated the growth of the local automotive industry. These were supported by the country's 5-year economic development plan which spearheaded the growth of the industry. However, the main strategy that the industry has used to enhance competitive advantage and economic development involves attracting foreign capital through the investment incentives as well as incorporating higher marketing capabilities in regional international markets.


Progress results: Korea, Malaysia and Thailand Automotive Industries

For the Malaysian automotive industry, a trend analysis based on previous market review highlight an increase in the total industry volume in production of over 600,000 units in year 2010/2011, supported by a 12% increase in the registration of new motor vehicles. The monthly sales also rose to their all-time height which was attributed to the various factors, such as strong economic growth of over 6%. Other factors include a slew of bold plans, geared towards economic development, increased consumer spending, and aggressive sales campaigns, which saw commercial vehicles and expand their market share by over 5%. The success of Korea's Kia and Hyundai brands of automobiles is viewed as the one that has contributed heavily to the country's fast economic growth in the previous 15 years. The opening of the automotive industry in Korea to foreign investment has recorded high amounts to the excess of over two billion and keeps increasing.

The industry's inputs in relation to engineering and technology transfers has enhanced the industry's ability to manufacture high quality products, enabling it to rise to one of the top ten supplier country for automotive parts. For Thailand's automotive industry above 50% increase in car sales was recorded. It was supported by associated industries in automotive components and parts as well as a skilled and committed workforce. This also led to a huge increase in export revenues for automobile related products, supported by opportunities presented by the Asia Free Trade Agreement, which facilitated exports to ASEAN countries. There was also a 38% increase in production of vehicles, which also saw a rise in demand of one-ton pick-up trucks not only in the exports markets, but also in the domestic markets.

Recommendations and Conclusion

Korea's automotive industry must invest in new and innovative technologies so as to upgrade and differentiate their products in the light of rising competition from many other counties in South East Asia. This means that automotive policies and programs enable the industry embrace the utilization of technology to augment the low prices of automotives, which will include procurement of technology from foreign automotive companies. Other policies and programs will have to involve the creation of mutual partnerships between suppliers and OEMs, as well as it will facilitate foreign investments through reduced costs in doing business in the industry.

With a narrow focus on the internal development, Malaysian automotive industry will need to enact automotive policies and programs that will facilitate foreign investment in the industry. In other words, the reduction in tariffs and other taxes will precipitate economic development. Enacting effective legislations that promote production of quality automobiles that are in line with tests and standards as well as environmental regulations will enable the industry to grow. Essentially, these recommendations will provide a strategic fit for the industry creating a firm foundation for national as well as international expansion and development.

For Thailand, growing domestic consumption is bound to be affected by the increase of petroleum prices which imply that the industry must facilitate the formulation of automotive policies and programs so that it will help to attract and retain the domestic consumer through reduced prices. With a major goal for international achievement, the industry also needs to enact policies and programs that will enable and support automotive companies' engagement in the marketing initiatives. In addition to automotive policies and programs that support small enterprises engaging in automotive parts and components sales, the industry will be able to achieve its goal, based on a firm foundation of an enhanced domestic economy. In conclusion, I believe taking into consideration the above recommendations and a further build-up will enable the automotive industries to acquire a strategic 'fit' in accomplishment of their objectives.

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