Asia/Pacific Growing

The Asia/Pacific region is where most new production capacity is expected to be added between now and the end of the decade, but that doesn't mean auto making operations in North America and Europe will suffer. Most of the region's additional production will be aimed at emerging markets closer to home.

With the lion's share of new capacity being added in China, production capability in the Asia/Pacific region will rise by 8.3 million units by 2010, according to data compiled by Miru Worldwide Ltd., an automotive forecasting and consulting company based in France. That's close to half of the 18.3 million units in new capacity expected worldwide during that period, Miru says.

Aside from China, the rest of the growth will be spread throughout the region, from South Korea to Australia and from the Philippines west to India.

Bucking the trend is Japan, which is expected to see capacity fall by more than 500,000 units by decade's end, though it will remain the region's capacity leader. Japanese auto makers continue to hike production outside of Japan to serve regional markets. In some cases, the Japanese also are taking advantage of cheaper labor and building vehicles in other Asia/Pacific countries for their home market. India and Thailand are No.2 and No.3, respectively, behind China in projected growth.

China's potential has been well chronicled. Most of its capacity increase — nearly 5 million units by 2010 — will service the home market, but export production also is expected to swell.

But with growth, China also is starting to attract imports. That trend could be a boon to other production bases in Southeast Asia where manufacturers are pursuing major expansion plans and banking on exports to fill capacity. Already, General Motors Corp., which is growing its presence in China, plans to export 10,000 vehicles annually there from Australia and some day hopes to ship vehicles there from India, as well. Other auto makers may ship there if they find they need to fill capacity in regional markets where demand falls short.

India also has great potential: Miru says capacity will rise by 1.24 million units to 3.49 million in 2010. Some of that increase will fuel exports.

Thailand's auto industry depends heavily on exports. And most of its future capacity growth, forecast at nearly 900,000 units, is hinged on aggressive export plans.

Both Toyota Motor Corp. and Mitsubishi Motors Corp. are making Thailand their regional production hubs for light trucks. GM is using its Thai operations to export minivans (badged as Subarus) to Japan and Europe. Ford is planning to send Thai-built Ranger pickups to India this year, and Honda is shipping cars back to Japan.

However, the region is being encroached from production bases the world over. GM is considering sending some vehicles from North America to China and Japan, and South American countries are eyeing Asia as they look for new export markets. BMW AG even is sending vehicles to Australia and Japan from South Africa.