Automotive OEMs adjust to changing growth and EV trends in ASEAN

Original equipment manufacturers (OEMs) and logistics providers in the ASEAN region are facing significant changes in market trends, specifically related to electric vehicle (EV) adoption and alterations in supply chain flows. The ASEAN automotive market saw a decline in 2024, but signs of recovery are visible this year. However, the six core markets within the region are displaying varying trends influenced by factors such as uneven demand, increased EV adoption, and evolving OEM strategies, all of which are reshaping vehicle flows and supply chain logistics. PwC’s recent market outlook reports a 5.4% decline in light vehicle sales across the ASEAN-6 in 2024, with countries like Thailand and Indonesia experiencing significant reductions due to economic challenges and tightened access to auto loans. In contrast, Malaysia, Vietnam, and the Philippines witnessed growth in vehicle sales driven by economic expansion, new product introductions, and improved consumer sentiment. PwC predicts a 2% increase in total vehicle sales for 2025, with Malaysia and the Philippines expected to lead the rebound, while Indonesia and Thailand remain as potential risks.

A notable trend in the region is the increasing influence of Chinese car manufacturers, particularly in the thriving EV market segment. Chinese OEMs are rapidly gaining a foothold across ASEAN with competitive and affordable models, intensifying competition with longstanding Japanese OEMs that traditionally dominated the market. The penetration of EVs in the ASEAN-6 surged from 9% in 2023 to 13% in 2024, with countries like Thailand, Indonesia, and Malaysia witnessing rapid adoption. This shift is being accelerated by government incentives, the development of charging infrastructure, and a growing consumer interest in sustainability practices. Notably, Thailand and Indonesia are emerging as key manufacturing hubs for EVs, while Malaysia has set ambitious targets for EV market share in the coming years, backed by a mix of policies including incentives and local manufacturing regulations.

As EV production volumes increase, OEMs are adapting their supply chain strategies and logistics operations accordingly. Chinese brands are localizing their manufacturing processes in Indonesia, Thailand, and Vietnam, establishing EV component and battery plants to cater to regional demand. In contrast, Japanese OEMs are concentrating their operations in more stable markets like Malaysia and the Philippines. This transition is leading to a surge in cross-border trade within ASEAN, particularly in complete knock-down (CKD) kits and parts moving between countries like Thailand, Indonesia, Vietnam, and the Philippines. Logistics providers are also playing a pivotal role in managing these complex supply networks, ensuring smooth operations amid varying demands and fragmented customs processes.

The growing production and distribution changes are putting strain on the existing logistics infrastructure in the region. The rising volume of vehicles and the specific needs of EV transportation are testing port capacities, customs procedures, and inland transport networks. To address these challenges, governments and private sector entities are investing in EV-ready logistics infrastructure, including electrified ports, upgraded warehouses, and specialized zones for battery handling and recycling. Simultaneously, logistics providers are under pressure to enhance their digital capabilities, incorporating features like real-time tracking, visibility, and emissions tracking into their operations. OEMs are also exploring integrated digital systems to manage supply chain variability and enhance cross-border transparency as they expand their suppliers and assembly operations across ASEAN. Overall, the automotive industry in the ASEAN region is undergoing a transformation, adapting to the evolving market trends, and preparing for a more sustainable and electric-focused future.