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Tag: car factory

  • Auto industry revs up industrial real estate in Vietnam

    Auto industry revs up industrial real estate in Vietnam

    Industrial real estate developers have been reaping the benefits of the investment surge into Vietnam’s automobile industry. Over the past three years, auto producers from Europe, the U.S. and Asia have been increasingly renting out industrial space and manufacturing facilities in Vietnam, giving real estate developers a significant boost.

    This is the conclusion drawn by a recent report by real estate service firm CBRE Vietnam which evaluates the impact of growth of the Vietnamese automobile industry on the industrial real estate market.

    The report notes that Camoplast Solideal from Luxembourg has rented 70,000 square meters of land to open a tire factory, and Schaeffler from Germany, 55,000 square meters to develop production facilities.

    Mercedes from Germany has rented 5,500 square meters of land to open a distribution center, while Bentley from the United Kingdom has rented 5,000 square meters for a showroom and service center.

    Yazaki of Japan has rented 39,000 square meters for electric car cable production, and Mogul Federal from the U.S. 5,000 square meters to make seats.

    The CBRE report says that although Vietnam’s car manufacturing sector may be behind some other ASEAN countries, the consolidation of cleared land allocated for automobile production is increasing.

    For both foreign and domestic producers, manufacturing facilities are mainly clustered in the north. Auto producers tend to choose this area to rent industrial land, the CBRE report says.

    Due to higher demand for industrial land, rentals have increased, recently.

    At an industrial park in southern province of Dong Nai, the price to rent industrial land for long-term leases of up to 50 years reached $90 per square meter last month, up from $60 to $70 last year.

    The average rent of industrial land in northern Vietnam hit $82 per square meter per lease term in Q3, an increase of nearly 9 percent compared to Q1, according to a report by real estate service firm Jones Lang LaSalle (JLL).

    Hanoi’s average rents increased significantly to $137 per square meter per lease term, the highest in the north, driven by limited supply.

    There are only 358 businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade, and observers have said that the potential for growth is high.

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  • Why did Dyson pick S’pore for electric car?

    Why did Dyson pick S’pore for electric car?

    When James Dyson, the billionaire British inventor of the bagless vacuum cleaner, unveiled a plan to build an electric car plant in Singapore, it raised a few eyebrows.

    Not only does the land-starved city state have some of the highest average salaries in the world, but it has been nearly 40 years since Ford closed its factory in Singapore, effectively ending car production there.

    “It is a bit of a surprise because of the cost base and no other car manufacturing plant being here,” said Shantanu Majumdar, a regional director at consultancy JD Power.

    Dyson said on Tuesday the decision was based on supply chains, access to markets and the availability of expertise, which offset the cost factor.

    But what other factors could have influenced the decision?

    Why not head straight to the biggest electric vehicle market in the world, China, like rival Tesla?

    Here’s a look at some of the less obvious pros and cons:

    1. High Costs vs Generous Incentives
    Compared with other global cities, Singapore has some of the highest average salaries in the world after tax, according to studies by Deutsche Bank. Land available for industrial use is scarce and expensive, and it ranks highly in general cost-of-living indexes.

    But aside from its skilled engineers and scientists, for a high-tech firm like Dyson, Singapore offers generous incentive schemes. Some schemes include tax breaks for five years, which can be extended, and grants that can cover up to 30% of the cost of projects to improve business efficiency.
    Singapore declined to comment on whether Dyson benefited from any such schemes.

    To shore up productivity in its manufacturing sector, which makes up less than quarter of its output, Singapore has focused efforts on attracting high-end manufacturers and those who adopt automated production processes.

    2. Small Market vs China Gateway
    Dyson may have decided to make electric cars in Singapore, but few are likely to be driven here or anywhere in Southeast Asia for that matter.

    The number of privately owned electric vehicles in Singapore is in single digits, and Tesla CEO Elon Musk has criticised Singapore for not being supportive of electric vehicles.

    Singapore is one of the world’s most expensive places to own a car because the government strictly controls the vehicle population by charging owners a variable rate for the right to own and use a vehicle for a limited number of years.

    In Southeast Asia, only 142 electric vehicles are forecast to be sold this year, data from consultant LMC Automotive shows. By contrast, sales in China are forecast to almost reach 700,000 vehicles this year, more than double the combined sales from the United States and Europe.

    But with one of the world’s busiest ports on its doorstep, Dyson can roll a car off the production line in Singapore and within the hour it can be on its way to China or other sizeable electric vehicle markets like South Korea or Japan.

    Dyson products – which include bladeless fans, air purifiers and hair dryers – are becoming a premium brand in China and other Asian markets. Asia accounted for over 70% of its growth last year, the firm said.

    3. Familiarity vs New Frontier
    Dyson’s history with Singapore probably also played a role. It already employs 1,100 people in Singapore, making 21 million digital electric motors a year. It also has manufacturing hubs in Malaysia – connected to Singapore via two road bridges – and the Philippines.

    “This is obviously a surprise but since Singapore is at the heart of Southeast Asia, Dyson would be best placed to source many components from neighbouring countries and, locally, assemble and manufacture the high-tech car here,” said a corporate banker who deals with multinational firms in the region.