The ASEAN region may also become a future market for the first-ever VW budget car which Europe's largest automaker has been striving to develop, Bratzel said.

Volkswagen will have to go back to the drawing board to meet the requirements for the budget car, Bangkok-based IHS Automotive analyst Jessada Thongpak said. "They will probably have to create an all-new platform," Thongpak said.

Separately, Renault aims to announce a new plant in Southeast Asia this year, a company source said.

The French carmaker and 43.4 percent-owned Nissan are "working on many projects", chief executive Carlos Ghosn said on Wednesday when asked about the plan during a trip to South Korea. "We announce only decisions, we don't announce projects."

French rival Peugeot Citroen and its Chinese joint venture partner Dongfeng Motor Group are discussing exporting Dongfeng's Fengshen brand to the region.

Ford kicked off production of the all-new EcoSport compact SUV in January at its $450 million assembly plant in Rayong, Thailand.

By comparison, Toyota makes about one-in-10 of its cars in Thailand and plans to invest around 20 billion baht to boost annual capacity by 200,000 vehicles over the next three or four years, to 1 million vehicles.

"There's huge potential in ASEAN markets for the Europeans, especially in low-cost vehicles," said Bratzel. "It's high time for them to stand up to the Japanese."

GM's recall includes imported Buick Enclaves in China	GM to invest $11 billion in China