Thailand's booming autos exports help plug gaping tourism hole

[webfact]

FILE PHOTO: Employees work at an assembly line in the Toyota manufacturing plant located in Chachoengsao province, east of Bangkok November 7, 2012. REUTERS/Chaiwat Subprasom/File Photo

 

By Orathai Sriring and Satawasin Staporncharnchai

 

BANGKOK (Reuters) - As tourism-reliant Thailand struggles with a collapse in foreign visitors, the country's auto sector is picking up some of the slack with the value of car exports tipped to surge to a record this year as the global economy reopens.

 

The Southeast Asian nation is Asia's second-most popular tourist destination but its famous beaches, street markets and pagodas have been starved of business over the past year due to pandemic restrictions that have crippled global travel.

 

While Thailand's central bank has downgraded its projections for this year's economic growth due to the hit to consumption and tourism, it last week raised its 2021 export growth forecast to an 11-year high of 17.1%, up from the 10.0% rise forecast in March.

 

Much of that is thanks to exports of cars, parts and accessories, Thailand's biggest shipment, which surged 170% year-on-year in May, the fastest pace in more than eight years, customs data showed.

 

"Exports are now a main engine driving the economy," Thai Commerce Minister Jurin Laksanawisit told reporters this month. "We have to admit that our tourism still can't get going."

 

Thailand is Asia's fourth-largest autos assembly and export hub for some of the world’s largest carmakers such as Toyota and Honda. The industry accounts for about 10% of Thailand's GDP and manufacturing jobs.

 

The sector has been able to shake off the disruptive impact of COVID-19 much faster than the tourism industry.

 

Auto parts maker AAPICO Hitech, which has 4,500 workers, is running at full capacity 24 hours a day, company president Yeap Swee Chuan told Reuters, a stark contrast to last year's factory slump when the pandemic hit.

 

"Last year was not good at all, but this year should be sunshine," he said, targeting sales growth of 20% and much higher profits this year.

 

"So far we haven't seen much impact from whatever situation in Thailand as the export market is still strong, and the local market, the demand seems to be still there up to this moment."

 

EXPORT-LED AUTO BOOM

Thailand's latest and biggest coronavirus outbreak so far, which started in April, has slowed domestic activity, dealing a deeper blow to the country's already fragile economic recovery.

 

But the fallout on auto car sales has been limited, while the auto sector boom has been driven by overseas demand.

 

The Federation of Thai Industries (FTI) said the country's exports of completely built cars could reach 800,000 to 850,000 units this year, beating its target of 750,000 and versus about 736,000 in 2020.

 

Surapong Paisitpattanapong, a spokesperson for FTI's automotive industry division, expects overall car shipments to reach a record 1 trillion baht ($31.4 billion) this year versus 786 billion baht in 2019 before the pandemic hit.

 

Thailand's auto exports hit $12.4 billion in January-May, more than half the $21.4 billion shipped for all of 2020, according to the commerce ministry.

 

In contrast, only half a million foreign tourists are expected this year, the state planning agency forecast, compared with a record of nearly 40 million in 2019.

 

Market leader Toyota Motor Thailand forecast an 18% rise in the company's completely built car exports to 254,000 units this year due to increased demand in Asia and Oceania.

 

So far, issues around the global supply of microchips have not yet disrupted Thai auto production significantly, although FTI warns it remains a risk.

 

Spokespeople for Toyota and Mazda said they had been able to secure enough chips for production. A Honda Thailand spokesperson told Reuters it had shut a plant in May because of chip shortages but has managed to limit the impact on clients.

 

KEY MARKETS

Nuntawat Srivaratachkul, acting vice president of the corporate planning division at Toyota Motor Thailand, told Reuters vaccination rollouts and government stimulus had helped demand in key markets.

 

Thai autos exports to top buyer Australia more than tripled in May while those to Vietnam soared almost tenfold and those to Japan rose 76% that month.

 

In Australia, where local car production ended in 2017, a return to pre-pandemic economic prosperity and government stimulus have underpinned business and consumer demand, helping business purchases of pickup trucks.

 

Vietnam's reduction of red tape around vehicle imports, meanwhile, has also facilitated trade flows.

 

FTI's Surapong said the strong appetite for pickup trucks was a sign pent-up global demand was returning.

"When the economy gets better and trade expands, you have to buy pick-up trucks," he said.

 

(Additional reporting by Chayut Setboonsarng in Bangkok and Eimi Yamamitsu in Tokyo; Editing by Sam Holmes and Ana Nicolaci da Costa)

 

-- © Copyright Reuters 2021-06-30

 

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[bwpage3]

Ridiculous!

 

Thailand does not own these cars, they are manufactured for Japan.

 

 

[smedly]

like I said, Japan is donating vaccine for a reason, it is not intended for the general population - it for their factories in Thailand

[smedly]

2 minutes ago, bwpage3 said:

Ridiculous!

 

Thailand does not own these cars, they are manufactured for Japan.

 

 

100% correct, Thailand doesn't have any brand of anything they can call their own - cars - electronics etc, they are quite disfunctional when it comes to innovation, they shouldn't be but they are - they are the hub of nothing 

[Eric Loh]

Prayut should send a thank you note to Thaksin for his business acumen in developing the  “Detroit of the East” and concentrate the auto industry development in certain cluster areas, mainly in eastern Bangkok but also in Rayong, Chachoengsao, Chonburi and Ayutthaya. Maybe he should recall him back to help him in this inept government. 

[mtls2005]

"Gaping tourism hole"

 

"Plugged" no less.

 

 

 

 

[mfd101]

Several points:

 

Still better than the environment-destroying tourist industry.

 

The fact that the companies are Japanese-owned doesn't stop Thailand enjoying much of the profits (workers' salaries, increasing local technical know-how ...).

 

The stats would be more useful if they compared 2021 production with 2019 (ie pre-covid)! Every government in the world is of course improving appearances by doing the same inappropriate comparison with 2020.

 

 

[Mr Meeseeks]

I too am doing my best for the local economy by plugging some gaping holes. 

[JonnyF]

This is good news, although as others have said - comparing to 2020 is a bit misleading seeing as 2020 was so dismal.

 

Given the impending failure of the Phuket sandbox, maybe all those vaccines sent there could have been used to vaccinate the factory workers? Because if it gets hold in the factories they'll lose exports AND tourism.

 

[trainman34014]

All good until Covid gets in the Factories !    Why else would Japan be donating Vaccines when they can see the risks now looming, as the Thai Authorities would wait until it was too late as usual .

[Cake Monster]

5 hours ago, trainman34014 said:

All good until Covid gets in the Factories !    Why else would Japan be donating Vaccines when they can see the risks now looming, as the Thai Authorities would wait until it was too late as usual .

I could not agree with you more.

Japan has a Covid issue of their own, so Vaccines are a premium. But I still think Thailand has seen and experienced nothing yet with the Covid outbreak, and that Factories with all types of manufactured goods are going to get hit really hard.

Its already started with Staff running away from their Factories ( not just Migrants ), forcing the Factories to close, and as the Outbreak takes a firmer hold, then issues such as this will become a major issue for the Government.

Supply Chains will be broken, factories will be unable to fore fill orders Etc due to staff reductions, and the GDP is going to take a hammering.

[mrfill]

6 hours ago, smedly said:

100% correct, Thailand doesn't have any brand of anything they can call their own - cars - electronics etc, they are quite disfunctional when it comes to innovation, they shouldn't be but they are - they are the hub of nothing 

 

Australia is not exactly renowned for its <insert famous Aus product> and they make no cars at all. As for innovation, the rotary washing line was an Australian idea as is the hats with corks. But they don't seem to be doing too badly in the grand scheme of things.

 

If innovation was that important, Scotland would be the super hub...

 

[CLW]

What cars are exported? Crappy Isuzu pickups with ten year old engine technology. No wonder they are no longer manufactured elsewhere and need to exported now.

There is a reason why all western car manufacturers are not based in Thailand but rather went to China....

[spidermike007]

This may be boosting the sagging economy somewhat, but it is not helping the new car dealers here. They are hurting. Along with tens of thousands of other businesses, and the woefully sabataged tourism industry. 

 

Woe are the Thai people, subjected to the IDA (incompetent dinosaur army). 

Edited June 30, 2021 by spidermike007

[Farmerkev]

If it is "booming" why not use a photo from now instead of one from 9 years ago

[poskat]

hopefully the tourists will be back soon so those gaping holes can be plugged

[bwpage3]

18 hours ago, mfd101 said:

Several points:

 

Still better than the environment-destroying tourist industry.

 

The fact that the companies are Japanese-owned doesn't stop Thailand enjoying much of the profits (workers' salaries, increasing local technical know-how ...).

 

The stats would be more useful if they compared 2021 production with 2019 (ie pre-covid)! Every government in the world is of course improving appearances by doing the same inappropriate comparison with 2020.

 

 

Several Points.

 

None of your points have anything to do with export profits.

[herfiehandbag]

I am no economist, but if auto manufacturing is 10% of GDP, and tourism is 21% of GDP, (and has totally ceased for the last 18 months, with no real prospect of returning in the near future) that still leaves a very big gap!

[jacko45k]

22 hours ago, smedly said:

100% correct, Thailand doesn't have any brand of anything they can call their own -

Red Bull?

[Fex Bluse]

Thailand's booming autos exports help plug gaping tourism hole

Nomination for Title of the Year Award

[clivebaxter]

12 minutes ago, jacko45k said:

Red Bull?

from wikipedia

Red Bull is an energy drink sold by Red Bull GmbH, an Austrian company created in 1987. Red Bull has the highest market share of any energy drink in the world, 

[Chongalulu]

23 hours ago, bwpage3 said:

Ridiculous!

 

Thailand does not own these cars, they are manufactured for Japan.

 

 

Not the point - there are few major auto manufacturers and WHERE they build factories to assemble them is vitally important to the economy of that country. UK was very worried it might lose Nissan factory post brexit.