Thailand has an ambition of reaching the 2 million mark in production by 2012. They are always in search of products that are emerging and have tremendous export potential. With pick-up trucks they crossed the 1 million mark and became the second biggest pick-up truck manufacturer in the world. Discover how your markets would be impacted by Thailand\'s Eco car policies and what opportunities are offered by this policy. Frost & Sullivan Program Leader, Victoria Ng, addresses the following questions in this presentation: * What is the progress of the Eco Car Policy in Thailand? * Who is participating and who is not but competing in the same segment? * What is the impact of Eco Car Policy in Thailand on ASEAN, EU and U.S.?

1. Eco Car Policy in Thailand: Impact on the Global
Car Market
March 2009
“We Accelerate Growth”
1

2. Agenda
1 Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
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3. Thailand, traditionally dominated by one ton pick-up trucks,
sees sharp growth of passenger car sales in 2008
Eco Car: Total Industry Volume (Thailand), 2006 - 2008
TIV: 682,161 -7.5%
• Thai automotive market shrank due to domestic
TIV: 631,251 -2.5%
political turmoil and global economic crisis
TIV: 615,270
• Down by 2.5% over 2007 with volume of 615,270
• Domestic pick-up truck sales are dwindling
• % contribution of pick-up trucks has dropped
from 66% in 2006 to 54% in 2008, have lost a
volume of over 115,000 units
• Passenger car sales are growing sharply, have
added a volume of about 35,000 units and their
contribution has grown from 28% to 37%
2006 2007 2008
Source and Analysis: Frost & Sullivan
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4. Context of Eco Car Program
• Thailand has become a production hub by crossing 1 million mark
with this “product champion”
• Their ambition is to cross 2 million mark by 2012
• Demand for pick-up truck may not help them to achieve this level of
production
• Therefore, Thailand is looking for another “Product champion” that
would help them to meet the target
• Therefore, Eco car concept was conceived by Thailand
• Objective of Eco car program is help achieve Thailand 2 million
units of production by 2012
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5. Agenda
1 Overview of Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
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6. What is eco car?
Energy Consumption • Gasoline/Diesel <= 5L per 100 km
• CO2 <= 120g per 100 km
Environment Friendly
• Euro 4 and higher
Safety Standard • UNECE 94 & 95 safety standard
• Eco car is an idea conceived in 2007 to reduce energy consumption, preserve the environment and lessen
• Eco car is an idea conceived in 2007 to reduce energy consumption, preserve the environment and lessen
dependence on imported oil.
dependence on imported oil.
• Eco car parameters are in line with the growing consumer demand for safer, more fuel efficient and
• Eco car parameters are in line with the growing consumer demand for safer, more fuel efficient and
environmentally friendly modes of transportation, without sacrificing in the areas of comfort and safety
environmentally friendly modes of transportation, without sacrificing in the areas of comfort and safety
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7. Classification of Eco Car
A Category
• Meets all requirements of eco car
• 350K to 450K baht (9.8K to 12.7K USD*)
B Category
• Higher level of technology
• 500K to 600K baht (14.1K to 16.9K USD*)
C Category
• Hybrid electric eco car
• Very highly priced i.e. Above 750K baht (Above 21.1K USD*)
*Price levels are not specified in Eco car program. Price ranges are indicative only
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8. What are the attractions and conditions stipulated on the
vehicle manufacturers?
Benefits
Up to 90% reduction
17% tax (<1,300cc petrol car,
8 years Exemption on of import duties
<1,400cc diesel car) - leads to
machinery duty import and on raw materials and
lower prices of Eco car
corporate income tax parts, depending on type of
(~USD2k cheaper )
product
Conditions
• Production of 100K units on the 5th year with a minimum investment of 5 billion baht - car assembly,
• Production of 100K units on the 5th year with a minimum investment of 5 billion baht - car assembly,
engine manufacturing and component - excluding cost of land and working capital
engine manufacturing and component - excluding cost of land and working capital
• Should meet requirements of Eco car: Energy, Emission and Safety
• Should meet requirements of Eco car: Energy, Emission and Safety
• Manufacture at least 4 out of following 5 key engine parts namely Cylinder Head, Cylinder Block,
• Manufacture at least 4 out of following 5 key engine parts namely Cylinder Head, Cylinder Block,
Crankshaft, Camshaft and Connecting Rod, and the process of machining Cylinder Head, Cylinder
Crankshaft, Camshaft and Connecting Rod, and the process of machining Cylinder Head, Cylinder
Block and Crankshaft must be included in the project
Block and Crankshaft must be included in the project
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9. OEMs involved in Eco Car Project: Eligible companies must manufacture
no fewer than 100,000 units per annum from the fifth year
Eco Car: Eco Car Project (Thailand), 2009
Eco Car: Eco Car Project (Thailand), 2009
Capacity Investment Models Planned
Probable Eco
OEM /Year (Billion that Have Already Target Market
Models
(Unit) THB) Gained Approval
• 1.3-L gasoline sedan • Honda Jazz, but with 3
based on global cylinder 1.2 litre engine
• 6.2 • 50% domestic
WOW concept small
• By Honda car • 50% export to
120,000
Automobile ASEAN, Asia and
• 2-3 models on same
Thailand Europe
platform
Honda
• Mitsubishi Concept X
1.3L or a 660cc version • 12% domestic
• 4.71 • 1.3-L gasoline sedan
• 88% export to
107,000 • By MMC • 2-3 models on same
ASEAN, Asia and
Japan platform
Europe
Mitsubishi
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10. OEMs involved in Eco Car Project: 2/3
Capacity Investment Models Planned
Probable Eco
OEM /Year (Billion that Have Already Target Market
Models
(Unit) THB) Gained Approval
• 1.1-1.3-L gasoline • Toyota Passo 1.2 or
sedan 1.3 diesel - gearbox
• Rebadged MyVi, from India • 50% domestic
• 4.64
followed by second • 50% export to
• By Toyota
100,000 generation Boon ASEAN, Asia and
Motor
Passo possibly Europe
Thailand
• MyVi or a new global
A segment car
Toyota developed by TMT
• Tata Nano 3 cylinder 42% domestic
• 1.0-1.3-L gasoline & •
623cc
1,3-L diesel Tata X4 • 58% export to
• 7.4
100,000 Sedan ASEAN, Asia &
• By Tata India
• At least two models South Africa
Tata on same platform
10

11. OEMs involved in Eco Car Project: 3/3
Capacity Investment Models Planned
Probable Eco
/Year (Billion that Have Already Target Market
Models
(Unit) THB) Gained Approval
OEM
• 1.1-1.3L gasoline • Nissan Micra 1 liter 3-
sedan cylinder Xtronic CVT • 10%-15%
• 5.5 • Probably next domestics
120,000 • By Nissan generation • 85%-90% export to
Japan Mirca/March ASEAN, Asia and
• At least two models Australia
Nissan
on same platform
• 1.1-1.3L gasoline • Suzuki Cervo 3
sedan cooperation cylinder 660 cc • 10%-15%
with GM domestics
• 9.7
• New global small car • 85%-90% export to
138,000 • By Suzuki
on splash platform ASEAN, Asia and
Japan
will be Eco car, or Australia
Suzuki next generation
Wagon R
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12. Agenda
1 Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
12

13. Eco car production is expected to gradually reach the 700K
mark by 2015
Eco Car: Production Forecasts of Eco car vehicles (Thailand), 2009-2015
800,000
700K in 2015
700,000
600,000
Vehicle Production
500,000
400,000
300,000
200,000
100,000
40K in 2009
0
2009 2015
Year
• This is based on the production target of vehicle manufacturers and the foreseeable market condition:
• This is based on the production target of vehicle manufacturers and the foreseeable market condition:
domestic and export
domestic and export
• Honda to commence production in 2010
• Honda to commence production in 2010
• Most automakers to start in 2011 hence by 2015 many would be able to achieve full production to
• Most automakers to start in 2011 hence by 2015 many would be able to achieve full production to
bring total to 700K
bring total to 700K
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14. Key Drivers & Restraints for Eco Car Production
Eco Car: Key Drivers & Restraints (Thailand), 2009-2015
Eco Car: Key Drivers & Restraints (Thailand), 2009-2015
New model
launches to Demand for
boost sales fuel efficient A number of FTAs
cars in Export market
of passenger (India, Australia,
Thailand and potential (about
cars Korea & Japan) in
in the region 70% of total
place would benefit
Drivers
production)
Thailand eco car
project
Impact
Markets that
Restraints
Price pressure are potentially
from small lucrative like
Economic cars imported Indonesia is
Frequent downturn from Malaysia quite averse
political turmoil would take toll
on the idea of
Uncertainly and unrest on consumer
accepting eco
over oil prices undermines confidence,
cars as CBU
confidence credit
availability
Source: Frost & Sullivan
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15. Agenda
1 Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
15

16. The global automotive market is expected to contract at a
CAGR of more than -4% between 2007 and 2010
Global Sales Volumes of Light Vehicles, 2008
CAGR: –4.1%
63.8 million
56.2 million
6.3m 7.9m
2.4m 1.7m
2.1m 0.49m 0.54m 0.53m
2.7m 0.43m
China Brazil India
Units (Million)
2007 2010
Note: CAGR calculated for 2007 to 2013; All figures are rounded; the base year is 2007. Source: Frost & Sullivan
16

17. Current Global Business Environment Poses Huge
Challenges with Opportunities along-side
Opportunities and Threats in Global Automotive Market, 2008
Sustained Increasing Higher tax burden on
Demand for Green
Increase in Demand demand in Emerging cars with higher
Technologies, Electric
for Small, Low-cost Markets emissions
Vehicles and Hybrid
and Fuel-efficient cars
Powertrain
Fluctuation in
CO2 Legislation
Commodity prices
Opportunities Unstable
Business
Environment
Threats
Falling Company Global Credit
Valuations and Earnings Crunch
Cut in Production Reduced Consumer
Capacity and Consumption &
Rapidly Declining Vehicle Falling Consumer
Workforce Expenditure
Sales in Q3 2008 and a Confidence
weak outlook for 2009
Source: Frost & Sullivan
17

18. Small, affordable and clean cars are mega trend in the auto
industry in the next 5 years: Eco car likely to be biggest gainer
Global Sales Volumes of Light Vehicles – by Vehicle Segment, 2008
• Basic and small cars have a
18.9m strong sales trend in Europe
13.2m and Asia at present making
10% 6.0% 5.0m one fourth of the market size
Vans 13.5m 9% 9.9%
15.1% Vans • USA to witness a strong
9.6% 13%
10.6% growth of Small cars and
Vans
42% 7.0% super-minis in 2009 and 10
11.9% 6.6%
26.9% 9.2% • Pickup sales expected to reach
7.1% close to 1m units, while SUVs
10.1%
30% are expected to sell 1.3m
11.3%
6.5% units in Asia by 2010
22.4% • Asia and Europe are big
6.8%
25.0% markets for commercial Vans,
41% 14.8%
9.6%
while Japan has Vans in the
4.5% 49%
18.8% 7.8% passenger segment too
11.6%
13.9%
12.5% 16.1%
6.7% 4.0%
Europe USA Asia* Japan
(including Russia) Source: Frost & Sullivan
Basic Small Low Medium
High Medium Large Low Luxury
High Luxury Super Luxury MPV *(India, China, Thailand, Malaysia,
SUV Pickup / Truck Sports, Van & Others Indonesia, Korea)
18

19. Lowering green house gas (CO2) emission and reducing energy
dependency are the drivers: Eco car fit in well in this trend as well
Legislation (Emission) and Environmental Impact on Global Automotive Industry (Passenger Cars),
2008
Euro IV Euro V Euro VI
Electric vehicles for low CO2 emissions
Europe CO2 based taxes in Germany, UK, Benelux
Electric vehicles & Plug-in Hybrids in US
CAFE startin MY 2011, 35mpg by MY 2020
USA Tier 2 Emission Standards Euro V Euro VI
Euro II PROCONVE L-4 (Euro III) PROCONVE L-5 (Euro IV)
Bio fuels Bio fuels with 25% ethanol mix in Brazil
Brazil (20–25% ethanol)
Euro IV introduced
in Beijing in 2008
Russia Euro II Euro III Euro IV Euro V
Euro II National Std III (Euro III) Euro IV
China Bharat III Stds. in India (equivalent to Euro III) Bharat IV (equivalent to Euro IV)
India
Euro IV rolled out
Electric vehicles in Israel
first in Top 10
Others Indian Cities and
later nationwide
2005 2008 2010 2012 2015
Key Driver Emission Standards Emission-based Taxation Reducing energy dependency
Note: * CAFE - Corporate Average Fuel Economy Source: Frost & Sullivan
19

20. Eco Car has a huge potential in Europe, US and Asia
Eco Car can potentially target volume of 43% of the addressable volume is in
11.23 million Europe
• Eco car program has a huge potential. It can target a volume of 11.23M in key markets such as
• Eco car program has a huge potential. It can target a volume of 11.23M in key markets such as
Europe, US and Asia
Europe, US and Asia
• Bulk of the volume lies in Europe. 4.8M cars which constitute to 43% of the addressable markets
• Bulk of the volume lies in Europe. 4.8M cars which constitute to 43% of the addressable markets
followed by Asia
followed by Asia
• This indicates that Eco car is a product with huge potential, which can potentially be Thailand’s next
• This indicates that Eco car is a product with huge potential, which can potentially be Thailand’s next
product champion after pick-up trucks
product champion after pick-up trucks
20

21. Eco car would predominantly be a exported to Europe and Asia,
particularly Australia and ASEAN
Eco-Cars
(700k)
CBU Export (70%) CKD Export (20%) Domestic Market (10%)
• CKD parts have to be the key
engine components
• Model variants of similar platform manufactured in Thailand • Fuel efficient
acceptable specifically for eco car. • Environment friendly
• But as per specifications and • 40% local or ASEAN content in • First time buyers likely to be
requirements of Eco car regardless order to export to ASEAN under attracted
of destinations AFTA
• Meets stringent EU standards • ASEAN country like Indonesia
may choose this to support local
industries
21

22. Impact will be Global
Eco Car: Impact on Automotive Market (world), 2009-2015
Eco Car: Impact on Automotive Market (world), 2009-2015
Europe
• The Eco-car specification is
designed to meet the European
requirements
• Significant volume will still be
Australia
produced in Europe to satisfy the
• Australia would be one of the initial
diesel vehicle demands
export target for Thailand’s eco-car
• Eco-car could dominate the
Australian vehicle landscape
North America
• The eco-car would replace much of
ASEAN
the US small car import from Japan
• Malaysia is currently the largest passenger car
• The challenge would be to meet the
market in ASEAN, however its AP license
regulatory requirements for passive
restrict the potential sales volume in Malaysia
safety systems
• The focus would be on emerging economy like
Vietnam and Philippine where local production
is making limited progress
22

23. Issues with Eco Car Program: Opportunity for non-Eco Car
Players in Thai Market
23

24. Agenda
1 Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
24

25. Conclusions
Thailand Eco car policy is likely to help them achieve their ambition to reach 2mn vehicle production,
although there would be some delay in achieving these numbers due to current slow down
Current global trends support fundamental premise of Eco car: Small, fuel efficient, environment friendly
, safe car
Europe, Australia and ASEAN would be key export markets for Eco car program
Although there are some aspects of Eco car program that would give a window of opportunity for non-
eco car players in Thai market in short term
25

26. Agenda
1 Thailand Automotive Market
2 Eco Car Project in Thailand
3 Outlook of Eco Car Project
4 Impact on Global Car Market
5 Conclusions and Way forward
6 Next Steps
26

27. Next Steps
Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of
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(www.frost.com/news)
Register for the next Chairman’s Series on Growth on 21 April 2009 (Tue) 11am
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Request a proposal for a Growth Partnership Service to support you and your
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(email apacfrost@frost.com)
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