Take, for example, the OMV of the cheapest Thai-made Toyota Vios at about $12,300.

Currently, it is priced at $57,488 (with COE). A Hyundai Avante with comparable equipment has a lower OMV of about $10,500 and a list price of $53,299. But, the Avante is bigger than the Vios and in the same class as the Toyota Corolla Altis - also from Thailand - with a price of $67,488.

'The current tax structure penalises forex fluctuations, and magnifies the difference in declared values,' said the manager.

Some Japanese cars assembled in Thailand also face a cost disadvantage because of the limited parts supply.

For example, complicated components such as electronic control modules for the engine management system and anti-lock braking system still have to be imported, thus raising costs.

By contrast, the Koreans self-manufacture such advanced componentry. The parts supply issue also depends on economies of scale, said Chin Kee Min, senior manager of Cycle & Carriage Kia.

'Volume is very important because the parts suppliers will only set up shop with the manufacturer when the latter has the volume,' said Mr Chin. 'Otherwise, there is logistic cost involved and it may be more expensive to manufacture outside your home base.'

Kia also showed how good price and design can combine to achieve great success. The Kia Cerato Forte shot up to become the fourth most popular model in Singapore (among authorised distributors) in its debut year last year. The Cerato Forte 1.6 SX with auto transmission has an OMV of about $14,500 and a list price of $57,999.

'Kia also benefited from the exchange rate because the Japanese yen is high,' said Mr Chin. 'But it helps that Kia has a volume strategy, so it is pushing for affordable prices worldwide.'

This article was first published in The Business Times.