Since opening up to the outside world in 2011 Myanmar, seems to be the latest battle ground for industry giants in every sector, now it's the automakers' turn.
While used cars currently make up 99 percent of the country's annual domestic sales, major automakers are staking out territory with an eye to future market share.
Nissan Motor Co., Ltd. (TYO:7201) is the latest to launch a showroom and service department in Myanmar’s commercial center Yangon. The company began sales on Wednesday, according to the Myanmar Times.
Nissan vehicles will be distributed in Myanmar through a publicly traded Malaysian firm, Tan Chong Motor Holdings, which will invest $2.5 million over three years to begin operations, and expects to sell 300 vehicles per year.
Even though Myanmar’s auto market is still mainly filled with used cars, experts believe the future holds promise for automakers in one of Southeast Asia’s last frontiers.
“On the whole the market is on a growth path, but the next few years are going to be crucial to carry on the momentum,” said Dushyant Sinha, principal consultant of automotive practice Asia Pacific at Singapore-based firm Frost and Sullivan.
Myanmar’s automobile buyers are very price-sensitive, and consumer awareness and exposure are limited, said Sinha, adding that a number of regulatory issues need to be addressed.
Other automakers have already entered Myanmar. Ford Motor Company (NYSE:F) opened a showroom, and Suzuki Motor Corporation (TYO:7269) restarted operations to reassemble trucks in Myanmar in May, according to the Myanmar Times.
“The [new car] industry is starting out,” said U Khin Tun, managing director of Capital Automotive, the Myanmar distributor of Ford.
Domestic production of vehicles would increase with an improved regulatory climate, Tun added. Import taxes made used cars preferable to new cars, but this could be adjusted to promote sales of new cars.
“We need a little time for the industry to be going smoothly,” Tun said.
Mercedes, a division of the German manufacturer Daimler AG, is partnering with Carriage and Cycle Automobile Myanmar, and aims to complete its showroom by the beginning of 2014, but has already started to promote its mid- and upper- range vehicles in the country, according to the Myanmar Times.
General Motors (NYSE:GM) Southeast Asia Operations also recently enlisted Pacific Alpine, a division of Alpine Group, for distribution, sales, and servicing in Myanmar, with the first Chevrolet showroom to open in the third quarter, according to the Nation, a Thai news outlet.
"One of the most watched sectors in Myanmar is the automotive industry," said Albert Pang, managing director of Pacific Alpine. "About 90 per cent of the vehicle population in Myanmar is more than five years old. The change in policy to allow the import of new cars will see a swift response from global and regional players.
The South Korean Hyundai Motor Co (KRX:005380) is planning to open a showroom and service center in Yangon in September of this year. Fortune International Limited, a local company, will be Hyundai’s sale representative, according to Eleven Myanmar, a Myanmar news outlet.
Sophie is a graduate of Northwestern University. She covers the emerging markets in Southeast Asia, with a particular interest in foreign investment in the region....