It is early days for American car company Ford in Myanmar as it works to expand its sales in the country.
Speaking in response to a question by Mizzima at a press conference last week in Yangon, Ford’s ASEAN Region Chairman Mark Kaufman said Ford would make a full investment when the demand in Myanmar significantly rises.
Mr Kaufman was speaking at the opening ceremony the Ford Car Showroom in Yangon on July 21.
“Currently only 4,000 brand new vehicles are sold each year in the Myanmar car market. In Vietnam this figure is 300,000,” he said, referring to the more developed markets in certain other countries in the ASEAN region.
The brand new cars refer to both complete knockdown imported cars and domestically assembled cars.
Ford’s total revenue for 2016 was US$151 billion.
Myanmar Motor Vehicles Manufacturers and Dealers Association Chairman Dr. Soe Tun said: “Domestically assembled cars are sold more than fully imported cars as they can get Yangon license (registration) and they are cheaper.”
Dr. Soe Tun added that many companies including Nissan, Suzuki, KIA, Lifeng, Grand, Tiger and Ford have assembly plants in Myanmar and are manufacturing brand new vehicles in the country.
He also said other foreign car companies which have sent proposals for assembling cars in Myanmar to the Myanmar Investment Commission (MIC).
Ford on track
Ford entered the Myanmar market through the Thailand-based investment company RMA Group as the first MNC Car Company in 2013 when President Thein Sein was in power and while the country was under sanctions.
Ford is doing manufacturing and assembling of their vehicles only in Myanmar and sales, distribution works are being done by Capital Automotive Limited (CAL), the subsidiary of Capital Diamond Star Group (CDSG) owned by a domestic businessman Dr. Ko Ko Gyi as sole agent of Ford in the country.
After working as sole agent of Ford, CAL sent its proposal to the MIC for assembling of Ford cars in Myanmar and this was granted on January 19, 2016.
This assembling plant operates under the name of Capital Motors Limited.
The assembly plant started its car production in East Dagon Industrial Zone, Yangon Region in March 2017 with an initial investment of US$10 million and is currently producing Ford Everest and Ford Ranger cars with a domestic labour force of 85.
Partners in this business said that this was their first phase of investment in their partnership and they could start this Ford car assembly plant for four years after the beginning of official distribution of Ford commercial and passenger vehicles in October 2013 in the Myanmar market.
Chairman of domestic partner company in this business, Capital Automotive Limited (CAL), Khin Tun said that they took this decision of establishing an assembly plant of Ford only after Parliament enacted and promulgated the Myanmar Motor Vehicle Law in September 2015.
“After the Motor Vehicle Law was enacted, we mulled over establishing a Ford assembly plant in Myanmar. Ford spent two years to make this decision of investing in Myanmar,” CAL Chairman Khin Tun said.
CAL Chairman Khin Tun added that their company would focus only on the domestic market and their production target from this assembly plant is currently 2,000-3,000 cars per year.
“But the market depends on the economy of the country so that we can’t forecast the exact figure of our sales and production,” Khin Tun added.
The factory price of a Ford Everest and a Ford Ranger assembled in Yangon starts at US$ 30,400 (equivalent to over 40 million kyat).
Ford expresses optimism
Ford’s ASEAN Region Chairman Kaufman said in his optimistic view that the current brand new car demand in Myanmar of about 4,000 per year was appropriate for them and this is their first step of doing business in Myanmar and the domestic brand new car market would flourish more when other car manufacturers entered the Myanmar market.
“And then we will take further steps in our investments,” he said.
Over 90% of the car parts required for the Myanmar-Ford assembly plant is supplied by Ford manufacturing plants in Thailand and Vietnam.
Partner companies said that they would increase their investment based on the market situation.
Chairman of domestic partner company CAL Khin Thu said: “Any company, any brand cannot manufacture more than 6,000 vehicles per year with a manual production line. If the demand is more than 6,000 vehicles per year, it must be changed to a semi-auto production line.”
Chairman Khin Tun said that a semi-auto production line could manufacture up to 30,000-40,000 vehicles per year.
“When the market situation demand in Myanmar to be the hub of vehicle production for the international and global market, Ford will be the investing company in its own name in Myanmar,” Khin Tun added.
Mostly used cars
Showrooms for brand new imported cars started in Yangon following the post-2010 economic reform and economic liberalization but the used car market dominates.
Given the situation of an unstable car import policy and tax rates, about 150,000 vehicles imported into Myanmar are used cars and this number is about 50 times the size of the brand new car market.
Myanmar Motor Vehicle Manufacturers and Dealers Association Chairman Dr. Soe Tun said, “The people cannot buy a brand new car in the market unless their income is high. Myanmar’s economy needs to be good. The income of the people is still low.”
MIC Director Soe Myint Aung told Mizzima that Ford Company would increase their investment year by year depending on the domestic production and market situation and also they would increase the number of cars assembled here by using modern technology and machinery.
“Ford will install semi-auto manufacturing facilities based on the car market situation and they will expand their business here by installing a fully automated assembly line later based on the size of domestic and foreign markets,” he said.