India’s Tata Faces Challenge in Burma’s Japan-Dominated Car Market
By Kyaw Hsu Mon 17 January 2014
RANGOON — Tata Motors is facing a challenge in the Burmese auto market, which is currently dominated by second hand Japanese imports, the local distributor of India’s largest car maker said.
Tata is looking to build a presence as the auto market in Burma opens up with relaxed import restrictions, and in 2010 it established a truck assembly factory in Magwe Division. The company put its investment for the plant at US$20 million and said it plans to manufacture 1,000 vehicles per year increasing to 5,000 vehicles in the future.
Local company Apex Greatest Industrial (AGI) Co Ltd is selling those trucks, as well as new India-made Tata cars like the Nano, which can be used as a private taxi.
Speaking to The Irrawaddy at an Indian trade exhibition at Rangoon’s Tatmadaw Hall on Thursday, AGI managing director Sein Lwin said it was still necessary to import the cars.
“Although we have a plant in Magwe region, we are just manufacturing heavy trucks there, and importing private passenger cars for the local market,” he said. “Manufacturing costs and import costs are similar, so if we produced private cars here, it would more cost for us.”
Since a civilian government took power in 2011 and embarked upon liberalizing economic reforms, including of the autos sector, more than 100,000 cars have been imported. But a quick look at the taxis and private cars on the streets of Burma’s biggest city, Rangoon, reveals they are almost all not from India, but from Japan, and to a lesser extent South Korea.
“In the current market situation, Tata can’t compete with the well-known Japanese used car market, although we are importing brand new cars,” said Sein Lwin. “But more people will get to know about our brand within a few years.”
He said used Japanese Hondas, for example, could be bought for about 10 million kyats, about $10,000, cheaper than the Tata pickup truck, the Xenon.
“We just sell the Tata Xenon for 18 million kyats. People like cheap prices and the Japanese brands, even though they are second hand,” Sein Lwin said.
The market is overwhelmingly dominated by Japanese brands, for which there is high demand, according to Rangoon car dealers. Popular models are Toyota’s Harrier, Mark II, Mark X, Hilux Surf, Probox, Belta and Landcruiser, as well as Nissan vans, Suzuki vehicles, the Honda Fit, the Honda Vitz and the Nissan March.
Maung Shwe, managing director of the Bandoola group of companies said Burmese people like Japanese used cars right now due to the low prices, but in the long term brand new cars will grow in popularity.
“The difference between used cars and brand new is the long term benefits. If you are using a brand new car, you don’t need to repair it for at least five years, but for used cars, you will have to have it fixed after a year. Also, it’s hard to find accessories,” Maung Shwe said.
“But in Burma, people have liked the Japanese brands for decades, so India’s Tata will find it difficult to expand its local market.”