Japan+Asean: the new anti-China car alliance


30 May 2024 - 13:00

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The two sides intend to come up with their first joint strategy to produce and sell cars in Southeast Asia.

Japan+Asean: the new anti-China car alliance

A "four-wheel axle" to connect Japan to the Asean region. To stem the expansion of China in the automotive sector and offer local customers an alternative to electric vehicles made in China. This is the latest plan put in place by Tokyo and the Association of Southeast Asian Nations, with the two parties intending to come up with their first joint strategy to produce and sell cars in Southeast Asia.

The agreement - which will extend from now until 2035 - should include cooperation in staff training, the decarbonization of production, the supply of mineral resources, investments in new generation sectors - such as biofuels - as well as an information campaign for global audiences to explain how eco-friendly vehicles produced in Asean are.

As Nikkei Asian Review pointed out, this region is highly strategic for Japan, given that the factories of multiple Japanese car manufacturers are present there, including Honda and Toyota. For its part, the Chinese newspaper Global Times wrote, in response, that the Tokyo-Asean plan is unlikely to affect Chinese exports of electric vehicles in the region. The tug of war over EVs is therefore about to come to a head in Asia too.

Japan seeks ASEAN side on EVs

In the ASEAN region, Japanese factories assemble more than 3 million vehicles per year - equal to around 80% of total production in the region - many of which are for export to the Middle East and other markets. Reuters wrote that Japan intends to use 140 billion yen (899.51 million dollars) allocated by the Ministry of Economy, Trade and Industry in the budget for assistance to the Global South, to train ASEAN staff.

The technologies made in Japan, specifically, will be used to measure the amount of carbon dioxide emissions from factories and to promote the transition to renewable energy sources. As for investment in next-generation sectors, Tokyo and ASEAN will explore joint purchasing of rare materials used in EV batteries and explore research in areas such as battery recycling. Furthermore, among the projects taken into consideration, we find the development of biofuel obtained from used cooking oil.

Japan and ASEAN will jointly publicize these environmental efforts to the rest of the world to boost auto exports and will team up to make predictions about the global auto market, including in developing countries.

To date, each Japanese car brand has conducted its business in ASEAN on its own. However, following the strengthening of the presence of Chinese companies such as BYD and SAIC Motor in the region, it became clear that it was necessary to involve the Japanese government to develop a common strategy. A strategy which, among other things, will also involve the members of ASEAN.

The answer to China

Japan is therefore positioning itself as a reliable partner, whose contribution in sectors such as technological development and personnel training will benefit the ASEAN side, and in contrast to China. Moreover, the growth of Chinese players represents a global challenge for all car manufacturers, while the bureaucratic conditions offered by some local countries contribute to increasing the Dragon’s challenge.

Thailand, for example, guarantees subsidies and tax breaks to car manufacturers that produce EVs locally and, thanks to Chinese companies like BYD, 85% of these vehicles sold in the country in 2023 came from Chinese manufacturers.

Will Tokyo’s reaction be successful? The Chinese press has no doubts. Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, explained on GT that “whatever the circumstances, it is believed that ASEAN countries will avoid taking sides and will instead strive to maintain a relatively balanced position ”.

Last February, the total sales of passenger cars and commercial vehicles in Thailand in 2023 had reached 775,780 units, with the share of Chinese automakers occupying 11% of the pie, increasing to 2.2 times compared to 2022, while that of cars made in Japan fell by 8 percentage points to 78%. The game has just begun.

Original article published on Money.it Italy 2024-05-29 06:39:00. Original title: Giappone+Asean: nasce l’alleanza delle auto in chiave anti Cina

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