Integration of the Automotive Sector under the ASEAN Economic Community (AEC)
Since its inception in 1967, the Association of Southeast Asian Nations (ASEAN) has evolved into one of the most successful politico-economic groups in the world, representing a combined Gross Domestic Product (GDP) of $2.4 trillion in 2013, which is the seventh largest GDP in the world. In terms of industry, the automotive sector is the 5th largest global market (see Exhibit 1) and is likely to retain this position over the next five years.
For investors and automotive manufacturers, the growth opportunities in ASEAN are as significant as those presented by Brazil, Russia, India, and China (BRIC). Most of the growth in demand can be attributed to the 600 million and more inhabitants in ASEAN, as their incomes increase rapidly in the near term (2015—2017), riding on steady economic growth in the region. The low motorization across ASEAN coupled with the region’s increasing purchasing power constitutes a natural growth engine that is fueling explosive and unparalleled market growth (see Exhibit 2). Moreover, as ASEAN crosses the $3,000 GDP per capita mark, vehicle ownership is poised to grow twice as fast as per capita income.
About this report
This market insight provides an overview of the integration of the ASEAN automotive sector under the ASEAN Economic Community (AEC) implementation and its effect on the barriers to trade. It also discusses the market situation in the ASEAN automotive sector, and analyzes details regarding the AEC, its impact, challenges, potential benefits, and the way forward after its implementation by December 2015. This report also includes the growth story of ASEAN, the quest towards one market for AEC, the likely impact and changing landscape of AEC, along with the achievements and challenges for destination 2015 and beyond.
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