Asian car industry facing a knockback

The Asian car market could see its expansion plans knocked back by a decade when it sufffers a downturn this year, according to industry analysts.

Consulting firm Autopolis says falling currencies, lower stock prices, declining exports and political instability will hit car sales.

It predicts that Asia's car markets, despite growing by 16% in the past two years, will drop by 7%.

Outside Japan, it says demand will drop by more than 10%, with the largest falls anticipated in South Korea and India.

Sales are expected to decline in most places other than China, although Autopolis even has concerns about that country.

Graeme Maxton, an economist with Autopolis, says the last few months have seen weak or declining sales in many Asian countries. He says that with the slowdown in the US and deep-seated weaknesses in Japan, the trend is likely to continue.

News of a further setback comes at a time when the region's industry is struggling with over-capacity and the threat of greater trade liberalisation.

"The effect of two downturns in three years is going to take a decade out of the industry's growth plans," says Maxton.

"Many Asian countries will still have lower car sales in 2003 than they had in 1996. With sales expected to fall in the US and Europe too, many investors are going to have to revisit their plans."

Autopolis says sales of all vehicles across Asia stood at 11,663,000 in 2000, but this year's figure is likely to be around 10,860,000.