Towards an ASEAN–Japan Next-Generation Vehicle Industry Masterplan Aligning Industrial Transformation, Decarbonisation, and Regional Competitiveness

ASEAN’s automotive industry is entering a critical transition phase as electrification, digitalisation, and decarbonisation reshape global vehicle markets. While electric vehicle (EV) adoption is accelerating across ASEAN, the region faces structural challenges: policy uncertainty, prolonged market stagnation, and fragmented industrial competitiveness. At the same time, ASEAN remains a vital production base in the global automotive value chain, particularly for internal combustion engine (ICE) and hybrid electric vehicles (HEVs).

This policy brief draws on ERIA’s ongoing work under the ASEAN–Japan Co-Creation Initiative and the proposed ASEAN–Japan Next-Generation Vehicle Industry Masterplan. It argues that ASEAN’s transition should follow varied, differentiated pathways rather than a single, linear electrification trajectory. A phased and diversified approach – combining ICE, HEV, x EV, sustainable fuels, and mobility services – is essential to preserve industrial competitiveness while advancing climate objectives.

The brief outlines a strategic framework built around three pillars: (i) technology and market transition pathways; (ii) industrial transformation through decarbonisation, digitalisation, and servitisation; and (iii) strengthened regional and ASEAN–Japan collaboration. It concludes with policy recommendations to enhance policy predictability, mobilise investment, and position ASEAN as a resilient and competitive hub in the global next-generation vehicle ecosystem.