Volkswagen joins rush by Western carmakers to tap high-growth Southeast Asia

Wed Apr 2, 2014 11:22am EDT
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By Andreas Cremer

BERLIN (Reuters) - Volkswagen has joined a rush by Western carmakers to tap fast-growing Southeast Asian markets to take on Japanese rivals in a region where a burgeoning middle class has money to spend.

Volkswagen is seeking to set up operations in the Association of Southeast Asian Nations (ASEAN) countries where the German group has one of the few remaining gaps in its global factory network that encompasses more than 100 facilities.

VW has applied to build its first plant in Thailand, two sources familiar with the matter told Reuters on Wednesday, seeking to take advantage from tax breaks that already attracted investment from Ford and General Motors.

VW declined to comment.

Auto manufacturers in Europe and the U.S. are following Japanese rivals such as Toyota and Nissan in launching inexpensive and fuel-efficient models, taking aim at a market featuring increased export and domestic demand and a skilled workforce.

VW's plans for Thailand were reported late Tuesday by Bloomberg. The German group currently assembles three models in Malaysia with local partner DRB-Hicom.

Car markets in Southeast Asia, where Japanese companies dominate, offer stronger growth prospects than Europe, North and South America and even China where momentum is slowing.

"The Europeans have long overlooked the ASEAN region," Stefan Bratzel, head of the Center of Automotive Management think-tank near Cologne, said. "It's a direct attack on the Japanese. Local production is a must to be competitive in this lucrative region."   Continued...

The logo of German carmaker Volkswagen is seen at a VW dealership in Hamburg, October 28, 2013. REUTERS/Fabian Bimmer