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Vinfast Opens R&D Center In Australia

Vinfast Opens R&D Center In Australia

Vinfast, Vietnam’s first domestic car manufacturer, has launched its Research and Development Center in Australia to boost international activity.

The establishment of VinFast Office in Melbourne—the industrial hub of Australia is a strategic move, taking advantage of the presence of giant automakers such as such as Toyota, Ford, Mitsubishi, GM, Melbourne, its complete supply chains and industry experts.

VinFast Australia aims to expand its presence in international markets, connect with leading suppliers and to catch up with the latest technologies and trends. The facility will be focused on research and development of new car models, including both ICE and BEV variants.

Earlier in 2020, VinFast Austrialia has started operations with its Automotive Technology Institute 2. It staffs nearly 100 industry experts and engineers from the world’s leading automakers.

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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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ASEAN Aerospace And MRO Industry In The Wake Of COVID-19

ASEAN Aerospace And MRO Industry In The Wake Of COVID-19

The COVID-19 pandemic has an unprecedented adverse impact on the aviation industry and, consequently, on the MRO business, without clear visibility on the timing of its recovery, according to Singapore-based SIA Engineering Co. Ltd. Border controls imposed by countries worldwide and the precipitous decline in travel demand has forced drastic cuts in flight capacities and grounding of aircraft.

In response to the worsening crisis, the International Air Transport Association (IATA) is projecting a more realistic U-shaped recovery for the air travel industry, with domestic travel coming back faster than the international market. 

Many expect that because of the impact of the pandemic, activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago. Some players in the aerospace manufacturing industry, including Boeing and Rolls-Royce, have even announced workforce reduction and production cuts.

However, Boeing is seeing some green shoots. Some customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started, while some countries and U.S. states are starting cautiously to open their economies again.

  • Boeing, in fact, has resumed production of the 737 MAX at the company’s Renton, Washington factory.
  • On 14 April 2020, IATA released an updated analysis showing that the COVID-19 crisis will see global airline passenger revenues drop by US$314 billion in 2020, a 55 percent decline compared to 2019. Airlines in Asia Pacific will see the largest revenue drop of US$113 billion in 2020 compared to 2019 (-US$88 billion in 24 March estimate), and a 50 percent fall in passenger demand in 2020 compared to 2019 (-37 percent in 24 March estimate).

According to Oliver Wyman:

  • As of late April, over 65 percent of the pre-COVID fleet of 27,500 commercial aircraft have been parked
  • The current trajectory for fleet reductions and lower aircraft utilisation would reduce global MRO demand in 2020 by over $48 billion, or 53 percent

Here’s an update of what has been happening in ASEAN’s aerospace and MRO industry amid the ongoing COVID-19 pandemic.

Indonesia

  • Indonesia’s national airline, Garuda Indonesia, has resumed domestic flights starting May 7, 2020.
  • PT Garuda Maintenance Facilities (GMF) AeroAsia expects to see increasing demand for MRO services from non-affiliated international airlines and has projected an 80 percent y-o-y increase for MRO services, from 71 percent in 2019

Philippines

  • AirAsia is set to gradually resume services in the Philippines on June 5, 2020, following the Philippine government’s directive of easing community quarantine restrictions in Metro Manila and several parts of the country. The resumption of services will initially be for key domestic routes, and will gradually increase to include international destinations by July 1.
  • Air Carriers Association of the Philippines (ACAP), comprising: Philippine Airlines, Cebu Pacific and AirAsia Philippines, sees the industry shrinking in the next two years. The association has requested government assistance, including waiver of airport charges and credit guarantees
  • Infrastructure projects still ongoing: Lufthansa Technik and Metrojet Engineering

Thailand

  • Airbus withdraws from MRO joint venture with Thai Airways
  • Thai Airways has filed for bankruptcy protection to rehabilitate business (to restructure under the supervision of the local bankruptcy court). Will not resume its international flight operations until 30 June.
  • The proposed MRO project at the U-Tapao Airport will proceed as planned despite Thai Airways International (THAI) entering bankruptcy. The THB11 billion project has already been approved by the Cabinet and a contract is expected to be signed in June. (The Nation Thailand)

Singapore

85 percent of the Singapore industry is involved in maintaining and repairing aircraft. Singapore also plays a small but critical role in the global aerospace supply chain, with its SMEs having a key role in MRO and manufacturing—supporting special processes, tooling, testing, logistics, manpower, and other services. (Association of Aerospace Industries Singapore)

  • SIA has announced that it will resume flights to 27 destinations and increase no. flights for other services in June & July
  • Government has set aside S$750 million of support for the aviation sector and consolidation is expected to happen over the next 12 to 18 months.
  • Collins Aerospace, which just opened a 10,000 sq ft innovation hub in Singapore, is “monitoring the evolving market conditions very closely”. 
  • Rolls-Royce has scaled down its operations in its facility which tests Trent aero engines (Channel News Asia)
  • ST Engineering 
    • expects a slowdown in its aerospace unit due to deferred MRO services and lowered original equipment production rates 
    • however, the company has secured about $838 million across its spectrum of aviation manufacturing and MRO businesses
      • The MRO contracts included A320 heavy maintenance contracts and CFM56-7B engine maintenance contracts from Chinese airlines, and a component Maintenance-By-the-Hour (MBHTM) contract from a Southeast Asian airline to provide comprehensive component maintenance services for its entire fleet of Boeing 737 and Bombardier Q400. 
    • The Group is discussing with its customers to adjust delivery schedules or address order cancellations due to the evolving crisis. As at the end of 1Q, the Group’s order book remains robust.
  • BOC Aviation, a company involved in aircraft sales and leasing has extended its Engine MRO contract with Lufthansa Technik for another five years.
  • Through the enhanced Jobs Support Scheme (JSS), companies such as ST Engineering and SIA Engineering Company (SIAEC) will receive millions in additional wage support to cushion the devastating blow that COVID-19 has dealt the aerospace industry. (The Business Times)

Vietnam:

  • Suspended all international and most domestic flights in March and April in an effort to curb the spread of the coronavirus, domestic flights have resumed since April 22, after the government lifted a lockdown order, while international flights are expected to partially resume from June 1.
  • Will not consider applications for new airlines as it looks to prioritise the recovery of its aviation sector after the impact of the novel coronavirus, according to the Civil Aviation Authority of Vietnam (CAAV). (Bangkok Post)

 

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COVID-19 Updates: Auto Makers Revving Up Production To Drive Market Recovery

COVID-19 Updates: Auto Makers Revving Up Production To Drive Market Recovery

In the wake of the continuing impact of the COVID-19 pandemic, global light vehicle sales in 2020 are now forecast to drop to 69.6 million units, 22 percent lower than in 2019, with risks to the forecast still skewed to the downside, according to IHS Markit.

In Southeast Asia, sales of new vehicles in the region’s six largest markets combined are estimated to have declined by over 19 percent to 700,528 units in the first quarter of 2020, according to GlobalData. Thailand saw first quarter sales down 24 percent as its economy reeled under the impact of much-reduced travel and tourism. Malaysia Q1 vehicle sales were down by 26 percent and Vietnam saw a slump of almost 32 percent.

Although 2020 is seeing a setback for the automotive sector in ASEAN markets, long-term prospects for the region remain very strong. GlobalData’s analysis points to strong indicators for long-term demand as motorisation rates rise with high economic growth—especially in Indonesia with its increasingly transportation hungry population of 273 million. Its market of around one million new vehicles a year is forecast to double to two million vehicles a year by the end of this decade.

In addition to strong long-term market prospects, the automotive manufacturing industry in the region benefits from relatively low costs, favourable government policies for investment, as well as free trading regimes for vehicles and components, according to GlobalData.

Here’s a roundup of the latest activities being done by automakers, parts manufacturers, and government units in ASEAN to drive the industry’s market recovery after the COVID-19 pandemic.

Thailand

  • According to the Federation of Thai Industries (FTI) automotive club, Thailand’s automotive production is likely to plunge 37 percent to 1.33 million units this year and could drop even further to 50 percent (to one million units) if the pandemic lasts till June.
    • Proposed measures to boost demand includes: a car trade-in scheme, 50 percent excise tax reduction until the end of the year and a delay in enforcement of Euro 5 emission standards
  • According to MarkLines Data Center, April vehicle sales in Thailand declined by 65 percent YoY to 30,109 units
  • Japan’s Isuzu Motors Ltd forecasts that demand for pickup trucks and other light commercial vehicles in Thailand is likely to fall 35 percent this year
  • Nissan Thailand has resumed production in its first Thai plant as well as plant 2 (on 1st June)
  • Mercedez-Benz Thailand plans to postpone the launch of the EQC BEV in Thailand to 2021 amid the coronavirus crisis, according to MarketLines, quoting a report from (Thansettakij)
  • Summit Auto Body Industry Co. Ltd (SAB) will continue with its project despite the pandemic, investing THB810 million—mostly for its plant expansion and purchase of new machines. SAB initially targeted THB8.8 billion for its 2020 revenue; but because of COVID-19, it revised down its forecast by 50 percent. (Prachachat Turakij)
  • TAPMA (Thai Auto Parts Manufacturers Association) expects exports of Thailand’s auto parts to drop in the second quarter of 2020 (2Q 2020) following the temporary suspension of car manufacturing plants both in Thailand and overseas amid the COVID-19 pandemic. However, recovery is expected in Q3 as plants are reopening (Marklines).

Indonesia

  • Gaikindo, Indonesia’s automotive manufacturers association, have reported that Indonesia’s total vehicle sales in April 2020 were 7,871 units, down by 90.7 percent YoY due to the coronavirus, according to MarkLines. January-April sales were down by 28 percent to 244,762 units.
    • In terms of automaker sales in April, Toyota was down by 90.3percent YoY to 2,056 units (26.1 percent market share); Daihatsu was down 91.8 percent to 1,330 units (16.9 percent market share); Honda was down 89.8 percent to 1,183 units (15 percent market share); Suzuki was down 86.4 percent to 1,042 units (13.2 percent market share); and Mitsubishi was down by 89.7 percent to 808 units (10.3 percent market share).
  • The Indonesia Coordinating Ministry for Economic Affairs has announced incentives in the form of stimulus, amounting to IDR 70 trillion, for the automotive industry players to minimise the impact of COVID-19.
  • Toyota Motor Manufacturing Indonesia (TMMIN) is set to resume operations this month after it suspended manufacturing operations from May 1 to June 1, 2020.
  • PT Toyota Astra Motor also announced to restart production around the same time, according to VietnamPlus.
  • PT Astra International: Its automotive sales drop by 91.2 percent year-on-year (yoy) in April to 3,807 units, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo).
  • Suzuki Indonesia: Gradually resumed operating the plant starting on May 26, 2020. Before this, Suzuki Indonesia had temporarily suspended factory operations from April 13 to May 22, 2020.

Vietnam

  • According to a report from the Vietnam Automobile Manufacturers’ Association (VAMA), the automotive market suffered a decline of 36 percent over the first four months and only 11,761 units were registered in April 2020
    • Sales of passenger cars decreased by 40 percent, commercial vehicles by 26 percent and specialised vehicles by 16 percent, compared to the previous month.
  • On May 20, the government approved a plan to reduce auto registration fees by 50 percent until the end of the year which could help domestic enterprises recover and stimulate car consumption for domestically-made cars over imports

Malaysia

  • Malaysian Automotive Association: Malaysia recorded just 141 sales of new automobiles in April, down 99.7 percent compared to the same period in 2019 (49,939 units)
    • Estimates point to a plunge to 400,000 this year. Sales for the first four months of the year declined 45 percent to 106,600 autos.

Philippines

  • The Chamber of Automotive Manufacturers of the Philippines (CAMPI) expects vehicle sales to decline by at least 20 percent in 2020 amid the COVID-19 lockdown. Earlier, the Association of Vehicle Importers and Distributors Inc. (AVID) expects total vehicle sales to decline by 40 percent. Total automotive sales covering vehicles sold by both CAMPI and AVID reached more than 410,000 units last year.
    • Toyota Motor Corp. restarted production in the Philippines, Pakistan, and Russia, on May 22. Toyota’s vehicle plant in the Philippines, which produces models such as Vios, resumed operations on a single shift on May 18. The six overseas plants where Toyota has not resumed plant operations yet include Indonesia, Brazil, India, Venezuela, Portugal, and Czech Republic.

 

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Automotive Manufacturing Developments In Southeast Asia Amid COVID-19

Automotive Manufacturing Developments In Southeast Asia Amid COVID-19

Amid the global economic slowdown in 2019, and the current COVID-19 pandemic, global vehicle sales forecast 2.5 percent fall in 2020 instead of the previously predicted 0.9 percent drop compared to 2019 (Moody’s Investor Service).

Here’s a roundup of the latest developments happening in the automotive manufacturing industry in Southeast Asia.

Thailand

  • Thailand’s 2025 Automotive Roadmap: The Government has drawn a plan to transform Thailand into a regional hub for electric vehicles by 2025
  • Auto parts sector will continue shrinking as car factories close or cut production and global purchasing power weakens. (Federation of Thai Industries)
  • Toyota Motor Thailand
    • Predicts that sale of domestic vehicles will drop 6.7 percent to 940,000 units in 2020
    • Extending of closure: Temporary suspensions of Thailand production operation in Samrong, Ban Pho, and Gateway facilities will continue until the end of April
  • Honda Automobile Thailand announced the suspension of completely built-up (CBU) operations in its vehicle production plants in Phra Nakhon Si Ayutthaya and Prachinburi provinces from March 27 until April 30.
  • Mitsubishi Motors
    • Halted production at three automobile and engine plants in Chonburi province temporarily from April 1.
    • BOI has approved Mitsubishi’s 5.48 billion baht ($167 million) electric and hybrid vehicle production plan project to renovate existing production lines at a plant in Laem Chabang Industrial Estate
  • Auto Alliance Thailand which makes vehicles for Ford and Mazda, and Ford Thailand Manufacturing has also announced they will be shuttering the factory for the time being.

Vietnam

  • Vietnam Ministry of Industry and Trade has forecast that most automakers will experience partial shortages during this time of crisis and sourcing from other markets would be difficult due to familiarity of technical standards of Chinese parts
  • Vietnam’s industrial production growth could drop 2.3 percent due to reduced imports of parts from China (VinaCapital)
  • According to Vietnam Automobile Manufacturers Association (VAMA), sales of members decreased 26 percent to 31,908 in end of February due to the impact of Covid19.
  • Vietnamese government has issued several incentives in the form of tax breaks, delayed tax payments, and land-use fees for businesses impacted by the COVID-19 outbreak.
  • Vingroup:
    • Produce (invasive and non-invasive) ventilators of all types and body thermometers to the domestic market.
    • With the capacity of VinFast and VinSmart factories, the group can produce up to 45,000 non-invasive ventilators and 10,000 invasive ventilators per month
    • VinFast have decided to temporarily cease their operations, starting on April 5
  • Toyota Motor Vietnam, Ford, Honda Vietnam, Nissan Vietnam and TC Motor has temporarily ceased vehicle productions.

Philippines

  • Fitch Solutions forecasted the country’s automotive industry to grow by 0.4 percent this year to 371,345 units, lower from its previous projection of 7.4 percent, due to negative impacts of the Covid-19 outbreak.
  • According to figures collected by the Association of Vehicle Importers and Distributors (AVID), sales across all segments—passenger cars, light commercial vehicles (LCV), and commercial vehicles—are down by 31 percent in January 2020 compared to the prior year. Overall, vehicle sales have fallen by 16.2 percent compared to the same period in 2019.
  • The Covid-19 crisis has delayed the rollout of the government’s Public Utility Vehicle (PUV) Modernisation Program, which aims to replace aging PUVs with more environmentally friendly Euro 4-compliant light commercial vehicles.
  • Honda Cars Philippines Inc. has shut down its production plant in Sta. Rosa, Laguna province. But, automobile sales and after-sales services will continue through Honda’s regional network.
  • Mitsubishi Motors Philippines Corp. (MMPC) has signed a Memorandum of Understanding with its five dealers to roll out a next-generation Showroom, DENDO DRIVE STATION which features solar power system and vehicle to home (V2H) equipment.

Malaysia

  • Malaysia has more than 20 manufacturing and assembly plants that produce passenger and commercial vehicles, as well as two-wheelers.
  • National Automotive Policy (NAP) 2020: incorporates three new advanced technology elements—Next Generation Vehicle, Mobility as a Service and Industry Revolution 4.0 and focuses on three strategies—for value chain development, human capital development as well as safety, environment and consumerism.
  • The following are the biggest beneficiaries of the NAP:
    • Perodua has purchased a total of RM43.5 billion worth of components from local suppliers, including RM5.4 billion in 2019, and targeted to spend RM6 billion for 2020.
    • UMW Toyota Motor Sdn Bhd’s Bukit Raja plant is equipped with automation, skilled manpower and the capacity to align with the government’s vision, with further investment to introduce more completely-knocked-down hybrid cars in the future.
  • Car sales have come to a stop since the Movement Control Order (MCO) was imposed by the government on March 18 and vehicle sales are expected to plummet in March and April. The automotive industry has been grounded to a halt with “nothing really moving”, according to Datuk Aishah Ahmad, Malaysian Automotive Association (MAA) president
  • Car production plants and after-sales services have also been shuttered during the 28-day MCO.
  • Total industry volume (TIV), which covers the sales of passenger and commercial vehicles, fell 5.3 percent or 2,249 units to 40,403 in February against the previous month due to delays in new model launches and the negative impact of the COVID-19 outbreak on consumers’ sentiments.
  • Sales volume for March 2020 is expected to be lower than February 2020 following restrictions due to the MCO, according to MAA.
  • The country is also bracing for a possible recession and dented consumer sentiments.

Indonesia

  • Covid-19 is pushing Indonesia’s automotive total industry volume in 2020 to 2008 levels (Globaldata)
    • According to Indonesian Automotive Industry Association (GAIKINDO), domestic vehicle sales volume in March 2020 declined by 20 percent as compared to February 2020: revised 2020 vehicle sales projection to 600,000 units
  • Honda Prospect Motor (HPM) will suspend car production at its factory in Karawang, West Java for two weeks starting from April 13, 2020
  • Hyundai Motor Manufacturing Indonesia (HMMI) has pledged to donate 50,000 sets of personal protective equipment (PPE), such as masks and coveralls, worth Rp 8.2 billion in stages for medical workers.
  • PT Suzuki Indomobil Motor halted its car production in Indonesia for two weeks (April 13 to 24) at three factories in Cakung, East Jakarta, Cikarang in Bekasi and Tambun in West Java, in an effort to curb the spread of the coronavirus.
  • Toyota Motor temporarily shut down production in Indonesia (from April 13 to 17), while subsidiary Daihatsu Motor Co. Ltd suspended work from April 10 to 18.
  • Nissan Motor Corp. will shut down manufacturing operations in Indonesia amid declining vehicle sales in the country.

Singapore

  • Hyundai Motor Company is establishing a Mobility Global Innovation Center in Singapore (HMGICs) to accelerate its innovation efforts and transformation into a smart mobility solution provider. The new 28,000 sqm innovative lab will be located in Singapore’s Jurong Innovation District and is set to be completed in the second half of 2022.

Myanmar

  • Suzuki Motor Corp.recently announced that its subsidiary in Myanmar, Suzuki Thilawa Motor Co. Ltd, will construct a new car plant in Myanmar. Scheduled to start operations from September 2021, the new plant will conduct welding, painting, and assembly of automobiles, and will be located at an industrial park located in the Thilawa Special Economic Zone.
  • Nikkei Asian Review has reported that several Chinese brands such as Soueast Motor and GAC will accelerate local production targets in Myanmar.

 

WE NEED YOUR INSIGHTS!

We would love to hear from you, our readers. We will use these insights in our series of articles on the impact of COVID-19 in the manufacturing industry.

  1. When do you expect the lockdowns to end in your countries/regions?
  2. What automotive manufacturing challenges are you currently facing?
  3. During this period of lockdowns and regional quarantines due to the COVID-19 pandemic, what manufacturing strategies are you planning to implement when we come out of this outbreak?
  4. Do you know of any other developments we might have missed here?

Do drop us a note at [email protected].

 

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Siemens On Automotive Manufacturing Trends, E-Vehicles, COVID-19, And VinFast

Siemens on Automotive Manufacturing Trends, E-Vehicles, COVID-19, and VinFast

Alex Teo of Siemens Digital Industries Software talks about the current automotive manufacturing trends; their collaboration with VinFast; and the impact of COVID-19. Article by Stephen Las Marias. 

Siemens on Automotive Manufacturing Trends, E-Vehicles, COVID-19, and VinFast

Alex Teo

Alex Teo is the Managing Director for Southeast Asia at Siemens Digital Industries Software. In an interview with Asia Pacific Metalworking Equipment News, he discussed the trends happening in the automotive manufacturing industry right now, how these trends have changed the requirements from manufacturers, the impact of COVID-19 pandemic, and their collaboration with VinFast.

WHAT TRENDS ARE HAPPENING IN THE AUTOMOTIVE MANUFACTURING SPACE RIGHT NOW?

Alex Teo (AT): Overall, the automotive manufacturing sector is expected to continue its rapid journey of transformation. Global competitive intensity will also rise, as manufacturers in China and Vietnam expand their attention beyond domestic markets. Technological advances—including interactive safety systems, vehicle connectivity, and self-driving vehicle technology, among others—will continue to drive development. 

READ: Siemens Connects Healthcare Providers And Medical Designers To Produce Components Through AM

In particular, two trends are leading the way in automotive manufacturing. On the one hand, autonomous vehicles are expected to become mainstream soon, with some estimates projecting that up to 15 percent of all vehicles sold worldwide will be autonomous by 2030. For automotive manufacturers, the rise of autonomy also comes with a new premium on agile development cycles, shorter production runs of a wider array of vehicle types, and new partnerships and collaboration across the supply chain. The new autonomous vehicle ecosystem includes new chip, software, sensor, and systems-oriented technology companies, in addition to the traditional manufacturers and their upstream partners. Meanwhile, automakers must still maximise revenue from existing product lines and appropriately balance R&D spending to refresh these lines today while investing for a likely radically different future.

On the other hand, growing efforts to fight climate change in the region are also likely to drive an increase in demand for electrification in vehicles. Government regulations, such as Singapore’s recently announced plans to incentivise electric vehicle adoption, will drive significant shifts in consumer demand. To capitalise on this demand, car-makers must be able to develop and produce electric vehicles with adequate range, fast-charge capabilities, and multiple design variants in each vehicle segment. Achieving all this with the same (or lower) cost of ownership as conventional vehicles requires bringing innovations and engineering efficiency that has been unheard of in the automotive industry – without risking safety, reliability, and quality.

HOW HAVE REQUIREMENTS FROM AUTOMOTIVE MANUFACTURERS CHANGED?

Siemens on Automotive Manufacturing Trends, E-Vehicles, COVID-19, and VinFast

AT: Across the region, trends in automotive manufacturing are largely being driven by governments, through policy and regulatory initiatives, as well as end-consumers, whose preferences continue to shape the market. Automotive manufacturers will have to tap on digital technology and software-driven solutions to balance these needs while maintaining profitability.

READ: Siemens Addresses Overheating Challenges in Additive Manufacturing

Regulations arising from the need to go green will likely require manufacturers to better understand both the performance of their final products, as well as the sustainability of their supply chain. Aside from emissions data of the finished vehicle, manufacturers also need to assess the environmental impact of their operations throughout the value chain. At the same time, evolving regulations relating to autonomous vehicle development will require that automotive manufacturers are able to ensure the safety of passengers, pedestrians and property.

A lot of this can be addressed with digital twin technology, which will allow automotive manufacturers to simulate and test at much greater scale, and lower cost. This will allow them to uncover in greater detail the performance of their products, as well as gain visibility into their product lifecycle.

HOW DOES INDUSTRY 4.0 IMPACT AUTOMOTIVE MANUFACTURING? WHAT ARE THE BENEFITS AND CHALLENGES?

AT: The car of the future will be connected, working seamlessly as part of a larger, intelligent mobility network. It will be able to communicate with other vehicles, devices and smart roadway infrastructure. As every vehicle becomes a source for receiving and transmitting bits of information, key concerns for consumers, governments and manufacturers alike will include factors such as cybersecurity and energy efficiency. As interconnectivity between vehicles and systems grow, automotive manufacturers will have to work with a large range of other technology partners to provide a seamless customer experience for their products.

READ: VinFast Deploys Siemens’ Full Portfolio To Deliver Cars Ahead Of Schedule

Similarly, Industry 4.0 brings unprecedented connectivity to the product lifecycle, while allowing manufacturers to innovate at lower cost, step up efficiency across the supply chain, and reduce their impact to the environment.

However, manufacturers—especially in various parts of developing Asia—should also focus on upskilling their workforce to fully realise the benefits of a digital factory. While new technologies possess great autonomy, humans must provide direction and control—and apart from overseeing technology, they are needed to gather, compare, analyse and apply data. Implementing Industry 4.0 technologies without knowing how to interpret, manage, and act on the insights leaves businesses with just a buzzword that has no real applicable value. There is a need for organisations to develop talent strategies, as well as build up staffing and training plans to meet the changing needs in terms of skills, job description and organisational models of the companies.

Siemens Digital Industries Software addresses this issue through initiatives such as its Technical Competency Hubs, one of which was launched in Penang in 2019, the only such facility in Southeast Asia. It is part of Siemens’ efforts to support Industry 4.0 development efforts with countries in the region. The hub will also serve as a platform for Siemens to help companies, especially SMEs, begin their digitalisation journey in order to meet the needs of the new economy.

HOW WILL THE TREND TOWARDS ELECTRIC VEHICLES IMPACT THE AUTOMOTIVE MANUFACTURING INDUSTRY IN ASEAN?

AT: Undoubtedly, automotive manufacturers in the region will need to adapt their production capabilities to accommodate these changes and trends. As the ASEAN region grows in importance as an automotive manufacturing hub for the world, businesses here will have to cater to these changing trends.

More importantly, however, businesses need to recognise that the shift towards electric vehicles is just one trend in a long line of many. Consumer demand is always shifting—and at an ever-increasing pace. Instead of concentrating on one trend, automotive manufacturers in ASEAN should focus on becoming more nimble and agile, which will allow them to capitalise on the pace of change in consumer preferences, especially amidst growing uncertainty in global markets.

For carmakers, the ability to analyse real-time road data should improve the efficacy of sales and marketing, while digital design and manufacturing can raise productivity in a dramatic way: big data simulations and virtual modelling can lower development costs and speed up time to market. That should resonate with customers conditioned to the innovation clock speed of consumer electronics, such as smartphones or laptops.

COVID-19 PANDEMIC: WHAT HAS BEEN THE IMPACT IN THE AUTOMOTIVE MANUFACTURING INDUSTRY, AND WHAT LESSONS CAN BE LEARNED FROM THIS?

AT: It is difficult to assess definitively the impact of COVID-19 on the automotive manufacturing, or any other, industry in Asia at the moment, given that the situation is still developing, and is expected to persist for quite a while more. 

READ: Vingroup To Produce Ventilators And Body Thermometers In The Fight Against COVID-19

What we do know is that there is now a pressing need for manufacturers to pivot their operations to become more innovative and agile, so that they are able to quickly capitalise on new trends, or leverage technology to become more efficient. For example, capabilities such as additive manufacturing may allow manufacturers to minimise the impact of supply chain disruption, as it allows for a much larger range of complex parts to be built onsite, while also reducing the need for tooling. Manufacturers need to take this period of downtime to upgrade their capabilities, so that they can fully realise the positive effects from when the economy recovers.

TELL US ABOUT YOUR COLLABORATION WITH VINFAST. WHAT WERE THE COMPANY’S CHALLENGES AND GOALS, AND WHERE DID SIEMENS COME IN TO HELP ADDRESS THEIR ISSUES?

AT: VinFast had big goals. Before its 335-hectare plant in Hai Phong was established, there was no Vietnamese brand for passenger cars. It wanted to be competitive both domestically in Vietnam and globally right from the beginning, and relied on Siemens’ expertise to utilise the latest technology. This resulted in a closed-loop manufacturing system which uses digital twins of the products, the production, and the performance of production and product. The fully digital factory was built in 21 months—50 percent faster than usual—and is designed to be easily scalable for future expansions.

READ: Siemens Partners With VinFast To Develop First Made-In-Vietnam Automotives

VinFast uses the comprehensive offerings from Siemens that combines Product Lifecycle Management (PLM) software such as the Tecnomatix portfolio with Manufacturing Operations Management (MOM), through the new harmonised, holistic portfolio Siemens Opcenter, to realise lean manufacturing across all phases, and with Totally Integrated Automation for all automation, including robots, conveyors, presses and milling machines. 

This holistic approach has increased the speed and flexibility in development, ensured high global standards in production, optimised the manufacturing process, and made the entire plant future-proof for further expansions and new business models.

VinFast also works closely with Siemens Digital Industries Software to implement a fully functional digital twin. Developing new cars and scooters, planning the new plant, and finally producing with the help of digital tools creates a detailed virtual image, the digital twin. The digital twin creates new insights, thanks to the combination of physics-based simulations with data analytics in a fully virtual environment. This makes it possible to realise innovations faster and more reliable, while also requiring significantly fewer real prototypes. Even more data are created when the product is being produced or a plant begins operation.

These performance data of the real production and of the real product can be collected, analysed, and fed back into the development cycle. Here, they help VinFast to improve and optimise new products and processes at an early stage.

 

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Vietnam’s Economy To Remain One Of The Fastest Growing In Asia Despite Sharp Slowdown Due To COVID-19

Vietnam’s Economy To Remain One Of The Fastest Growing In Asia Despite Sharp Slowdown Due to COVID-19

Vietnam’s economic growth rate is expected to slow sharply in 2020, to 4.8 percent, from the initial supply shock to economic activity from the outbreak of the novel coronavirus (COVID-19) and the subsequent and ongoing drop in demand from Vietnam’s principal trade and investment partners, according to a report by Asian Development Bank (ADB).

READ: Vingroup To Produce Ventilators And Body Thermometers In The Fight Against COVID-19

Economic growth decelerated to 3.8 percent in the first quarter of 2020, from 6.8 percent in the corresponding period in 2019. Travel and other restrictions imposed by the government to slow the spread of the virus led to lower domestic consumption. Manufacturing managed to weather the headwinds early on but the inventory of inputs, including those part of global value chains, are being depleted. Growth in agriculture stagnated because of lower demand for agricultural exports and severe salinity intrusion in the Mekong Delta. Growth in services, the sector hardest hit by the pandemic, was halved to 3.2 percent in the first quarter of 2020, down from 6.5 percent in the corresponding period in 2019.

READ: Ford & Toyota—First Automakers To Suspend Production In Vietnam Due To Covid19

To support economic activity, in early March the government unveiled a $10.8 billion (0.4 percent of gross domestic product) credit relief package of debt restructuring and lowered interest rates and fees. The government also launched a fiscal package worth $1.3 billion that reduces taxes and fees for affected firms and defers tax payment, and the fiscal support is expected to rise. The central bank also cut policy rates by 0.5 percent to 1.0 percent, lowered interest rate caps on dong deposits of less than 6 months and on short-term dong lending to prioritised sectors.

The economy’s fundamentals remain resilient, according to ADB’s flagship annual economic publication, the Asian Development Outlook (ADO) 2020. If the pandemic is contained within the first half of 2020, growth should rebound to 6.8 percent in 2021—ADB’s pre-COVID-19 forecast for Viet Nam in 2020—and remain strong over the medium and long-term.

READ: Impact of COVID-19 On The Automotive Manufacturing Supply Chain

“Despite the deceleration in economic activity and the downside risks posed by the COVID-19 pandemic, Viet Nam’s economic growth is projected to remain one of the highest in Southeast Asia,” said ADB Country Director for Viet Nam Eric Sidgwick.

Drivers of economic growth—a growing middle class and a dynamic private sector—remain robust. The country’s business environment continues to improve. Public spending to combat the impact of the pandemic, which rose significantly in January and February, will likely be raised further. The large number of bilateral and multilateral trade agreements Viet Nam participates in, which promise improved market access, will help the country’s economic rebound. Viet Nam would also benefit from the containment of the COVID-19 pandemic and eventual return of economic growth in the People’s Republic of China, which would help revive the global value chains.

 

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Ford & Toyota—First Automakers To Suspend Production In Vietnam Due To Covid19

Ford & Toyota—First Automakers To Suspend Production In Vietnam Due To Covid19

In response to the growing impact of the coronavirus pandemic (Covid19), Ford Motor Company has announced that the company will be temporarily suspending vehicle and engine production at its International Markets Group (IMG) manufacturing sites which includes Vietnam.

READ: Coronavirus Hits Automotive And Aerospace Supply Chains

In January 2020, Ford announced an expansion plan for its plant in Vietnam to increase annual production capacity from the current 14,000 to 40,000 vehicles, with an investment of US$82 million.

However, Ford Vietnam’s Hai Duong assembly plant has now been scheduled to stop operations by March 26—the first to do so in the country. This will continue for several weeks depending on the pandemic situation, national restrictions, supplier constraints and dealer stock requirements.

READ: Coronavirus Outbreak Reveals the Weakest Links In The Supply Chain

Similarly, Toyota Motor Vietnam (TMV) has also temporarily halted vehicle production starting March 30—the second in Vietnam. According to TMV, the outbreak has impacted all aspects, from economy to society, including the automobile industry and resumption of production will be dependant on the outbreak situation, market demand, supply chain situation, the dealers’ stock and Government’s restriction regulation.

“We are taking necessary actions to protect their safety and health as well as minimising any impact on our company’s operation. While closely monitoring the situation, we will consider and make decisions guided by the direction from the Government,” said a representative from TMV.

READ: COVID-19 Forces Companies To Evaluate How They Operate And Embrace Technological Investment

According to Vietnam Automobile Manufacturers Association (VAMA), sales of members decreased 26 percent to 31,908 in end of February due to the impact of Covid19. In particular, sales of passenger and commercial vehicles dipped 30 and 12 percent respectively due to changing consumer behaviour in light of the pandemic.

 

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Heimatec On Thailand Opportunities And Challenges

Heimatec on Thailand Opportunities and Challenges

Karl Moessmer and Dirk Hund of Heimatec sound off on the company’s Thailand market and the opportunities they are seeing in the region. Article by Stephen Las Marias.

At the recent METALEX 2019 event in Bangkok, Thailand, Asia Pacific Metalworking Equipment News (APMEN) spoke with Karl Moessmer, regional manager for Singapore, and Dirk Hund, sales manager, at Heimatec, about the company’s Thailand market and the opportunities they are seeing in the region.

READ: Thailand Sets Sight on Industry 4.0

HOW LONG HAS THE COMPANY BEEN IN THAILAND AND HOW HAS YOUR BUSINESS BEEN?

Dirk Hund (DH): Compared to Vietnam, Thailand is a better market for us so far. We have really good partnerships here, and projects are more promising. It is a more-developed market, that is why I think, it is a better situation here in Thailand as of the moment.

Karl Moessmer (KM): Our first exhibition was in 2011. Since then, we have participated in the same show until today, and we are going to continue this basis because we believe in the continuity of activities here.

As Dirk mentioned, we have now shaped a team that is quite reliable and performing in our interests. As far as the market potential is concerned, there is an increased investment flowing into Thailand. So that, among the Southeast Asian market, Thailand has a great potential for us in the next couple of years. There is no such thing as instant success—if you come in for a quick buck, you are wrong, because any place that is solidly growing is going to be there forever.

A quick success might not be continuing. This is why we believe in continuity. To see where our chances are, and come in with more professional support, that is our intention.

READ: Thailand’s Roadmap To Become The Regional EV Hub By 2025

DH: And to set up the right strategy. You have to adjust the strategy, every year. It is still challenging, since it is a different country, different culture. You can’t compare it with other countries, especially in Southeast Asia. If you do not have a direct sales team here, everything will then rely on your partner—so you have to have the right partners in the country.

IN WHICH INDUSTRIES DO YOU SEE GROWTH HERE IN THAILAND?

KM: It is still the automotive industry, with some machine makers. We will have to see if they will continue to be automotive because of all the uncertainties with the electric vehicles. This might cause some hesitation with people interested in investment. We are here to survey the market to see what is coming up within the next couple of years.

We are of high hopes that we are still placed in a potential market, especially since we know that a lot of German manufacturers based in China are moving out and trying to establish themselves in some other markets in Southeast Asia. Thailand, Vietnam, maybe Indonesia to some extent, will be benefitting from the reduction of the German investment, or European investment in China. This is why, I think, this is a good location to focus on.

READ: Light In Thailand’s Economy Despite Coronavirus Outbreak

WHAT TECHNOLOGY TRENDS ARE HAPPENING RIGHT NOW IN THE MARKET?

DH: The whole topic of Industry 4.0—I think it’s a big step to go for manufacturers here and Southeast Asia as a whole. It is a big step in Europe, but I think we are in the early stages here.

I don’t know if people really know what is behind Industry 4.0. For big companies with many machineries, it is a trend already. Here, I think it is a small portion at the moment. We can offer tools for Industry 4.0, but I think it is still a long way to go, especially here in Asia.

READ: Heimatec Discusses Market Opportunities, Challenges and Strategies

KM: I think everybody is just in a sort of wait-and-see attitude. This is also affecting investments. Nobody knows in which direction the markets will move, and this is causing hesitation. This is why I think foreign direct investments (FDI) will not be as much as it has been in the past. So, we have nothing else in mind but to be around, survey the situation, and then adapt to however necessary.

IN OUR PAST DISCUSSION, YOU MENTIONED VIETNAM’S MANUFACTURING TECHNOLOGY IS SOMEHOW NOT MATURED YET IN RELATION TO HEIMATEC’S ADVANCED SOLUTIONS. IS IT THE SAME IN THAILAND?

KM: Thailand is a bit more advanced than Vietnam because they have experienced a long-term investment of Japanese and European companies. From that point on, they started to grow and develop. Also, in terms of technical knowledge, they are one, if not, two steps ahead of Vietnam. But Vietnam will upgrade themselves also. So, we have a lot of market studies to do to benefit from the move in the market.

DH: I can underline that. It is still, I think, the technology you have to offer. They are more advanced, yes, but still not on the high level.

READ: heimatec to Showcase New Tool Features and Innovations at METALEX 2019

KM: We cannot compare a European technical standard to the Southeast Asian standard, so, we should not move into the market with the wrong perception. This is why we have learned to be patient, and provide more support and assistance, because to handle a catalogue is not enough—this is not a wear-and-tear part, it’s not a consumable—this is an important part of a solution for a machining process.

DO YOU HAVE ANY FINAL COMMENTS?

KM: There is no perfect solution. From my point of view, the only thing you can do is be present, observe the market, and stay in contact with your partners. Expect a good feedback from their side and try to realize whatever perception you have. There’s no other way around it. And nobody knows which the appropriate direction is to move—nobody.

Even the people who come here often do not know everything about Thailand. The market is always full of surprises. So, as long as the economical and political situations remain stable, we have a good perspective for the future. But you never know what is going to happen. That is why you have to be highly flexible.

 

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Vietnam Automobile Sales Rebound In February

Vietnam Automobile Sales Rebound In February

The Vietnam Automobile Manufacturers’ Association (VAMA) has reported a month-on-month increase of 11 percent in automobile sales in February—its members sold 17,616 vehicles in the month.

READ: Vietnam Supports Domestic Automotive Manufacturing

Sales of domestically assembled vehicles increased 22 percent to 11,697 units while imported vehicle sales dropped four percent to 5,919 units.

The Vietnam government is implementing favourable policies to drive further growth in the automotive market in 2020. This includes removal of import tax for auto parts and reducing tax on domestically manufactured car components, which would help to reduce operational costs.

Other policies proposed by the Ministry of Industry and Trade (MoIT) includes lowering corporate income tax for auto industry and lower loan interest rates for purchasing of domestically manufactured vehicles.

 

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