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Digital Sales Offer Long-Term Opportunity To Automotive Aftermarket In Indonesia, Says GlobalData

Digital Sales Offer Long-Term Opportunity To Automotive Aftermarket In Indonesia, Says GlobalData

Auto part suppliers in Indonesia are turning to online platforms to weather the COVID-19 pandemic crisis. Following this news, Bakar Sadik Agwan, Senior Automotive Consultant at GlobalData, offers his view:

“Indonesia currently leads Southeast Asia in terms of the number COVID-19 cases and the country continues to practise large-scale social distancing measures. This in turn has kept customers away from the market and e-Commerce is expected to become new normal for the public to cater their all possible essential and non-essential needs.

Automotive industry, which is amongst one of the deeply impacted industries by the COVID-19 in Indonesia, is expanding its presence in the digital retail as the market looks far from recovery with the current rate of rising cases in the country. Both OEM and aftermarket have been responsive to the situation. Majority of the OEMs are turning up to online enquiries, bookings and virtual tours to get new vehicle sales. The players in the automotive aftermarket, including the e-Commerce companies, are also ramping up their presence in the digital space through availability of consumables, wear and tear parts, accessories and others through their online portals and also offering services home delivered.

Astra Auto Parts, Tokopedia, Alibaba, Ubuy are some of the key existing e-Retailers in the automotive aftermarket in Indonesia and there are new players entering/expanding their presence as well. Carbatama, a manufacturer of lubricant for the Exxon Mobil launched its online store in April 2020. Tokopedia, which already markets parts and components has now partnered with Carro – a leading used car platform in Southeast Asia, to expand its business to used cars.

Diversifying revenue stream through online sales of parts and services is the right move by the aftermarket players to balance the declined sales from the brick and mortar stores. Additionally, digitisation of sales means more than a mere response to COVID-19 pandemic, as the local market was already undergoing digital transformation due its growing Internet penetration, which stands at over 60 percent of total population, as of January 2020. Expanding presence in the digital sales will offer sustainability to local players and will act as long-term opportunity to the automotive aftermarket in Indonesia.”

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China’s Changzhou National Hi-Tech District Renews Partnership With ThyssenKrupp

China’s Changzhou National Hi-Tech District Renews Partnership With ThyssenKrupp

German multinational conglomerate ThyssenKrupp recently renewed its partnership with Changzhou National Hi-Tech District (CND), in Changzhou, representing its fifth investment in the Chinese city in five years.

ThyssenKrupp decided to move forward with an additional investment of US$200 million to build a global automotive electronic power steering (EPS) system facility in the district. As one of the world’s top 500 firms, ThyssenKrupp is the result of the merger of Thyssen and Krupp and has established its leadership in the steel refining sector, as well as the automotive parts and elevator manufacturing sectors.

With a focus on the high-tech manufacturing of automotive parts, the German conglomerate invested 25 million euros five years ago to set up ThyssenKrupp Steering System (Changzhou) Co., Ltd.

The conglomerate’s fifth investment in Changzhou will focus on the R&D and production of the world’s most advanced automotive EPS systems, which will vastly reduce the energy consumption of electric vehicles, giving drivers and passengers a better experience, while empowering unmanned driving technologies. Despite the negative effect that the current international economic situation and the COVID-19 pandemic are having on international economic cooperation, ThyssenKrupp remains upbeat about the prospects in China.

ThyssenKrupp’s manufacturing facilities in Changzhou have delivered increasingly exciting results, evidenced by sales from the Changzhou facilities growing 48.9 percent year on year in 2017, followed by a growth rate that advanced 85.9 percent in 2018 and 36 percent in 2019. ThyssenKrupp Presta Steering Asia Pacific Chief Operating Officer Chen Min commented after the signing ceremony that thanks to CND’s favorable business environment and the five investments in Changzhou over a five-year period, China promises a brighter future for the company.

The registered capital of ThyssenKrupp’s manufacturing facilities in Changzhou has reached approximately 900 million yuan. Chen Min said: “Looking forward, Changzhou’s facilities will become our largest steering system manufacturing base around the world and their combined annual sales are expected to double to some 5 billion yuan in three to five years.”

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Global Light Vehicle Market To Decline 17.2 Percent In 2020

Global Light Vehicle Market To Decline 17.2 Percent In 2020

The world’s light vehicle market is forecast by GlobalData to decline by 17.2 percent to 73.6 million units in 2020, due to the impact of the COVID-19 pandemic and its associated economic fallout.

“This is a bigger one-off shock than witnessed in the two years of the global financial crisis,” says Calum MacRae, Automotive Analyst at GlobalData.

GlobalData’s analysis suggests that the damage to the global market will turn out to have been most acute in the second quarter of this year, when strict lockdown measures were in place across the world.

“Our forecast sees Q2 around 34 percent down on last year’s pace and way below the 2008 Q4 low point reached during the last big global downturn,” MacRae says.

“However, vehicle markets are on the turn as we get into the second half of the year. China was first in to the crisis and was first out. China’s light vehicle market was up eight percent in May and South Korea’s was up nearly 10 percent. In Europe we’re seeing some improvement to vehicle markets now, too, helped by government subsidies for new vehicle purchases.”

A combination of pent-up demand and the effects of the government subsidy program saw the French vehicle market surge back to life in June. Light vehicle sales increased by 2.4 percent year-on-year in June to nearly 286,000 units. Passenger car sales increased by 1.2 percent to just under 234,000 units.

However, MacRae cautions that uncertainties remain in this crisis and COVID-19 infections are rising in a number of countries in Asia and the Americas – most notably in the US.

“COVID-19 cases are on the rise in a number of US States, prompting new restrictions on populations. This brings further downside to GlobalData’s US light vehicle sales forecast. Increasing infection rates in three key US sales markets – California, Texas and Florida – means that stronger headwinds are a real threat.

“If tighter social restrictions are introduced or re-introduced in the coming days and weeks, prospects for the US market will suddenly look much dimmer than the 14.5 million (-15.2 percent) GlobalData currently forecasts for the US light vehicle market and will potentially result in a sub-14 million market.”

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ASEAN Automotive On The Road To Recovery

ASEAN Automotive On The Road To Recovery

Despite continued softness in the market, the automotive manufacturing market is steadily moving towards recovery. According to Globaldata, although the global light vehicle sales fell 33.8 percent in May compared to a year ago, it showed an improvement from April when sales fell a record low of 47.5 percent. Analysts believe markets will begin the long climb back and we will begin to get more signals on market demand for the rest of the year.

In fact, China will lead the global auto market recovery. With automotive production and supplies resuming and China lifting restrictions on the movement of people and goods since early April, vehicle sales have started to stabilise.

Here, we take a look at the latest developments in the ASEAN automotive market and its road to recovery:

Thailand:

With phase 4 of relaxations, Federation Of Thai Industries (FTI) expects gradual recovery of the automotive market as businesses restart operations.

However, May vehicle production production was down 69.1 percent in May YOY, totalling 56,035 units. They noted that 2020 vehicle sales could be 700,000 units if the outbreak stays under control, or 500,000 units if local infections continue into September. 

Furthermore, 50 percent decline is expected for the auto parts market, but the Auto Parts Industry Club expects gradual recovery of auto parts industry as Thailand enters Phase 4 relaxation

  • AAPICO Hitech (AH) expects losses in its Q2/2020 amid the continuing decline in the local automotive industry from the beginning of the year due to the pandemic, Marklines cited a Thun Hoon report. Among AH’s businesses is the manufacture of OEM automotive parts. The company, according to the report, plans to boost its production capability this year to serve new auto parts products.
  • Mazda has reported sales of 1,602 vehicles in May 2020, down by 60 percent YoY, but up by 58 percent from the previous month. In a statement, Mazda is seeing positive signs that the automotive market is gradually recovering, given increased sales in every segment.
  • Mazda has announced that it will resume two-shift operations at all its plants in Japan in July. Its plants in Thailand and Mexico will be operating on limited days. Mazda expects global production volume in July to increase by 50 percent from June, according to a MarkLines report citing Nikkan Jidosha Shimbun
  • Auto parts maker T. Krungthai Industries Public Ltd (TKT) has over THB500 million ($16.15 million) worth of backlog order in hand, waiting to be delivered to customers, according to MarkLines, citing a Thun Hoon report. TKT expects sales to recover in the second half of 2020.

Indonesia:

GAIKINDO, Indonesia’s automotive manufacturers association, reported Indonesia’s total vehicle sales in May 2020 were 3,551 units, down by 95.8 percent YoY due to the coronavirus. Meanwhile, the government is encouraging innovation through its Industry 4.0 program which includes the automotive industry and EV industry.

Although sales have experienced a downward trend since the beginning of the year, PT Suzuki Indomobil Sales (SIS) remains optimistic that it can increase its market share this year. From January to April 2020, Suzuki’s market share increased to 11.5 percent, compared to 9.3 percent in the same period last year. (GAIKINDO)

Vietnam:

According to the Vietnam Automobile Manufacturers’ Association (VAMA), automobile sales declined 30.6 percent YOY to 19,081 units in May.

Vietnam ratified a free trade agreement with the European Union that will cut or eliminate 99 percent of tariffs on goods traded between the Southeast Asian country and the bloc, and provide Vietnam with a much-needed post pandemic boost, according to Bangkok Post. Vietnam will have a transition period of up to 10 years for some imports, such as cars. With this, insiders predicted the domestic automobile market will prosper in the last six months of the year and domestic automakers have the opportunity to develop as well as compete with imported cars. (VNS)

  • Toyota Vietnam has announced sales of 4,311 units in May 2020, up by 48 percent from April. (Auto Daily)
  • VinFast Production and Trading LLC announced in April that the inauguration and start of production of its automobile manufacturing plant will take place in June 2019 instead of September 2019 as previously planned.

Malaysia

Malaysian Automotive Association (MAA) reported new car sales decreased 62.2 percent YoY in May. They expect sales volume for June 2020 to be higher than May as businesses resume after restrictions for economic activities are lifted and sales tax exemption announced by the government.

Furthermore, The Malaysia Automotive, Robotics and IoT Institute (MARii) estimates a 28 percent drop in new car sales in 2020 due to the Movement Control Order (MCO) brought about by COVID-19, and that a minimum 500,000-unit total industry volume is needed in 2020 for automotive businesses’ continued survival.

  • The Malaysian government has agreed to reduce the sales tax for new vehicles for six months until December to revitalise the market, according to a report from New Straits Times.
  • For the 1Q 2020, UMW Holdings Berhad registered a lower revenue as disruptions caused by the COVID-19 pandemic led to lower sales in the automotive and equipment businesses.
  • In May 2020, PROTON sold 5,676 vehicles, accounting for an estimated market share of 23.3 percent, but down by 46.5 percent compared to last year. Sales in May, however, was a 73 percent improvement over that of March. For January to May 2020, PROTON’s sales volume declined by 23.3 percent, while the overall industry dropped by 48.7 percent over the same period.
  • Perodua has sold 52,920 vehicles as of the first five months of 2020, giving it a 41 percent market share against an estimated year-to-date total industry volume of 129,401 units.

Philippines:

Operations of both assembly plants and dealerships have resumed with easing of restrictions. The Chamber of Automotive Manufacturers of the Philippines (CAMPI) and the Truck Manufacturers Association (TMA) reported a 84.6 percent decrease in May car sales YoY. According to Philippine Star, however, May’s production figure of 4,788 units was a vast improvement over the 133 units manufactured in the previous month. Furthermore, CAMPI expects total vehicle sales to drop 20 percent in 2020 due to the pandemic.

  • Auto parts makers have renewed their call to the government to support local parts manufacturing by implementing higher duties on vehicle imports and prevent small and medium parts makers from closing shop amid the COVID-19 pandemic, according to a Philippine Star report.
  • Comprehensive Automotive Resurgence Strategy (CARS) program
    • Government introduced Incentives to encourage investments in vehicle manufacturing, while manufacturers have to manufacture at least 200,000 units of enrolled vehicle model within six years
    • According to the Department of Trade and Industry (DTI), volume of vehicles required to be produced will remain unchanged even if automakers are unable to reach the target

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Gates To Donate More Than $535,000 To COVID-19 Response

Gates To Donate More Than $535,000 To COVID-19 Response

Gates a leading global provider of application-specific fluid power and power transmission solutions, has announced charitable donations of more than $535,000 in support of organisations responding to the COVID-19 pandemic. Directed by the company’s global headquarters in Denver, the Gates Industrial Corporation Foundation (Foundation) is working with nearly 100 Gates facilities around the world to identify and help fund local nonprofits that are making a difference. The Foundation is also offering double matching for U.S. employee donations to COVID-19-related organisations in this time of greatest need.

Responding quickly to the global outbreak, Gates initiated the charitable initiative with a substantial donation to the Hubei Charity Federation to support the medical needs in the area where the virus is believed to have originated. The aid campaign now spans other parts of South and North America, Europe, Middle East and Africa; Greater China; and East Asia and India, including 17 locations across the United States. Among the recipient organisations are chapters of large NGOs, such as the United Way and the American Red Cross, as well as local hospitals, food banks and other humanitarian organisations.

Donations, totaling more than $535,000, are being provided on an unrestricted basis to allow recipient charities maximum flexibility to address the most urgent needs in their area. Among those are Personal Protective Equipment (PPE) for frontline medical professionals and health care services and food and housing for the most vulnerable populations impacted by the pandemic.

In addition to its worldwide charitable donation initiative, Gates continues to actively monitor, manage and adapt to the evolving pandemic. Thanks to prompt implementation of COVID-19 safety protocols at all of its approximately 100 plants, offices, labs and distribution centers around the world, Gates has been able to continue serving its customers and maintain employment levels while protecting the health and safety team members, their families and communities.

 

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