Thailand Set For Record Auto Production

[webfact]

Thailand set for record auto production

Kanittha Panthong

The Nation

Aims to become one of the world's permanent Top 10 producers by next year

BANGKOK: -- Thailand's goal of becoming one of the world's permanent Top 10 auto-makers with annual production of 2.5 million vehicles may come sooner than expected.

Thai Automotive Industry Association (TAIA) president Piengjai Kaewsuwan told The Nation that during the first six months of the year, Thailand had already broken into the world's top 10.

However, this is mainly due to the European financial crisis that has resulted in a dramatic drop in automobile production and sales.

In June, Thai auto production reached a record of 205,600 vehicles, while from January to June 2012 a total of 1,057,638 vehicles were produced, up 30.47 per cent compared to the corresponding period last year.

This leap is result of the full recovery in the Thai automotive industry from last year's massive flooding, along with production increases by both assemblers and parts-makers.

Starting from the first quarter of the year, the demand generated by the First Car Buyer Programme, as well as the large number of back orders from the flooded months, was gigantic.

In June, auto sales in the country jumped to an all-time record of 123,471 vehicles, up 75.7 per cent compared to the same month last year, which enabled Thailand to secure the world's No 10 position in terms of auto production.

"This is like an opportunity within a crisis. The crisis that the Thai auto industry faced since last year was the lack of automotive parts. This had not only caused Thailand to lose 300,000 vehicles in production but the global auto industry was also affected since much of the parts from Thailand were to be exported, particularly for pickup trucks. However, the Euro crisis since late last year that we feared would affect our vehicle exports and our production has also generated something positive. Europe is heavily affected this time, even in the UK and France," she pointed out.

According to Piengjai, Thailand can retain the world's No 10 position until the end of the year as long as the Euro crisis is not resolved and the Kingdom is not flooded like last year.

"Even if we don't, we'd still be No 11, up from the forecasted No 12," she said.

She went on to say that the TAIA needs to help the Thai auto industry achieve more challenging targets along with strengthening the industry as a whole.

This includes the parts industry and most importantly developing the capability and the number of personnel. She said Thailand would need a much larger workforce as production jumps to 2.5 million-3 million vehicles in the near future.

"Soon we will witness another wave of investment in the Thai automobile sector due to the much higher demand. If investments are not made now to expand production capability, the opportunity for growth could be lost. You can see that many auto companies are coming out to speak about the world's Top 10 issue. Japan and the parent company of every brand all see the potential of the Thai auto industry and are answering the government's policies in achieving this goal," Piengjai said.

2.5 MILLION VEHICLES NEXT YEAR

The Automotive Industry Group, Federation of Thai Industries (FTI), reported that the First Car scheme has drawn in continued demand for automobiles, and the fact that the Thai government has extended the delivery deadline to next year has significantly served as a major boost for the industry to grow further next year.

Auto production in 2013 is expected to reach 2.4 million-2.5 million vehicles (1.4 million-1.5 million for the domestic market, 800,000-900,000 for export markets) as major auto-makers have already started expandingproduction to cater to increased domestic and overseas demand.

As much as 200,000-300,000 vehicles under the First Car Buyer Programme could be assembled next year, while the government's easing of loan and credit policies will give consumers better liquidity.

The economic stimulus programme which is injecting huge amounts of money is also believed to help stimulate auto sales in 2013, especially for 1-tonne pickup trucks and eco-cars.

Exports in 2013 are not expected to face many problems yet, although a number of countries are affected by the Euro crisis. Orders for Thai-made vehicles are still increasing, especially from Asean countries as well as the Middle East, Australia, Africa and South America.

The FTI is confident the positive factors will enable Thailand to become the world's Top 10 auto producer, with annual production of 2.7 million vehicles per year. Meanwhile, production for 2012 is forecasted at 2.2 million-2.3 million vehicles.

During the first seven months of this year, Thailand produced 1.27 million vehicles, up 32 per cent compared to the same period last year.

The growth trend for the Thai auto industry is expected to remain for another 3-5 years. The automobile ownership ratio in Thailand is presently 10 people per vehicle.

-- The Nation 2012-09-21

[asiawatcher]

Well deserved reputation as the Detroit of the East.

[mikebell]

So why have I to wait 5 months for my new Honda?

[hellodolly]

Seems to me the credit goes to back orders resulting from last years flood and the ability of the parts industry to supply more parts. This coupled with the economy in the rest of the world being slow and Thailand giving breaks to first time buyers is bound to create a bubble but it will burst. The world economy will recover and all the back orders will be filled. At this point Thailand will have to come up with more incentives.

My geography is bad are floods not threatening the areas the plants are in once again this year?

[jchfriis]

So why have I to wait 5 months for my new Honda?

Because of:

1 - The floods last year

2 - The governments policy of giving a 100,000 baht rebate to first time car buyers.

[Payboy]

They better start producing more cars. Just to keep up with the rate at which they seem to be crashing them.

[kartman]

So why have I to wait 5 months for my new Honda?

Because of:

1 - The floods last year

2 - The governments policy of giving a 100,000 baht rebate to first time car buyers.

3- You live in Thailand

[Tanaka]

Well it is not quite correct. When talking about car producing countries, the topic concerns countries that actually produce cars of their own brands. Not that you have factories that build foreign cars. How many Thai car manufacturers are there? Many Japanese car brands have factories here but that does not make Thailand an auto-maker. Twits.

Edited September 21, 2012 by Tanaka

[FarangTalk]

It's a double edged sword as the infrastructure is crumbling and not enough new roads are being built.

[GentlemanJim]

So why have I to wait 5 months for my new Honda?

Almost a year for a new Toyota Fortuna down here!

Its all very good about the manufacturing information, but can someone in the know please confirm this :- I understand that cars made here are not made of the same grade steel as in europe, ie no where near as strong when you are involved in a smash. Is this rumour a truth?

[15Peter20]

So why are even those cars that are made in Thailand so expensive? Is it tax on imported parts or what? Something is definitely odd to a farang's eyes when the cost of a mid range new car comes in at around half the cost of an average house. So maybe house prices are low, but still, compare car prices here to those in Europe (don't know about the US), and its hardly any less.

And as for the second hand market, prices there are an even bigger mystery.

[IsaanAussie]

So why have I to wait 5 months for my new Honda?

Almost a year for a new Toyota Fortuna down here!

Its all very good about the manufacturing information, but can someone in the know please confirm this :- I understand that cars made here are not made of the same grade steel as in europe, ie no where near as strong when you are involved in a smash. Is this rumour a truth?

This comment contains the key elements. Firstly the floods built up the order books not only because of factory shut downs here but also the difficulties in logistic supply for imported ASEAN components. The waiting list and now increased markets both here and in other countries complicates the scheduling of model variations on the assembly line and the ability of component manufacturers to supply "just-in-time" to those lines. The Fortuna is one lower volume variant of the Hilux and most are exported, delays here will be longer than higher volume domestic models.

Steel grades used may vary to suit market requirements, crash testing is one issue, so is corrosion resistance and a number of other things. To be competitive a car maker must firstly produce a vehicle that is compliant to homologation in each market, but be built at a minimum cost. Thai vehicles are not fitted with heaters but have airconditioners and electric systems strong enough for local conditions. The electric system differences to suit markets are significant.

As time goes on, the differences in climate and usage in each market will remain but hopefully the legal requirements will be brought more into alignment.

One comment on exchange rate effects. Export vehicles are traded with overseas sister companies and orders are placed on market projections more so than customer orders as here. These companies are independant of each other and the link is the brand name and the common parent. So should a currency shift to produce a higher profit for the Thai manufacturer as well as a lower cost to the importer, guess which car I would build first.

Finally Tanaka commented that since there are no global brand owners based here, Thailand is not a vehicle maker. I must disagree, in todays global industry Thailand is very much a player. The industry has evolved into an extremely complex global chess game and the expertise developing here is world class.

[Bagwan]

I side with Tanaka on this. To produce more cars all you have to do is speed up the production line and ensure that the suppliers of components raise their pace. too. Computer controlled machine tools (designed and probably built overseas) build cars not people. I don't see any reason for Thai people, especially Government Ministers, to preen themselves over increased output.

Any credit due should probably be laid at the door of the Japanese management.

[philw]

"........In June, Thai auto production reached a record of 205,600 vehicles, while from January to June 2012 a total of 1,057,638 vehicles were produced, up 30.47 per cent compared to the corresponding period last year.

This leap is result of the full recovery in the Thai automotive industry from last year's massive flooding, along with production increases by both assemblers and parts-makers.

Starting from the first quarter of the year, the demand generated by the First Car Buyer Programme, as well as the large number of back orders from the flooded months, was gigantic..........."

Rather contradicts all the ThaiVisa experts of a few weeks / months ago does it not ???

"Investors gone, government useless, floods catastrophic, PM idiot, no chance recovery, water too deep, too many dams, not enough dams, crocodiles ate Japanese production manager.........."

Well done Thailand, for going forwards in adversity.