Thailand remains primary automobile producer in Southeast Asia

[webfact]

Thailand remains primary automobile producer in Southeast Asia
By Digital Content

BANGKOK, May 29 -- Thai automobile makers insist Thailand remains the biggest automobile producer in Southeast Asia as the expansion of the Indonesian automotive industry is aimed only at meeting local demand.

ASEAN Automotive Federation president Piengjai Keawsuwan said vehicles made in Thailand were available in more than 100 countries and their presence underlined the internationally recognized automotive industry of Thailand, the quality of the automobiles it made and the strongest support industries of the Thai automotive industry in Southeast Asia.

Last year Thailand produced 2.45 million automobiles.

The amount achieved a new high in 52 years and Thailand becomes the ninth biggest automobile producer worldwide. It is also the biggest one-ton pickup truck producer of the world.

The Ministry of Industry expects to increase Thailand's automotive production to 3 million units within three years or 2017.

Automotive production in Thailand this year is expected to fall 2.32 per cent to 2.40 million units from last year due to the economic slowdown.

Thai automotive exports still have bright prospects although Thai producers may lose Indonesia as a market because Indonesia is producing some kinds of automobiles in considerable volume and exporting them to Thailand.

Ms Piengjai said despite local political changes, automotive manufacturers would not move from Thailand to Indonesia because Thailand had developed its automobile-supply industries for as long as 50 years.

The ASEAN Automotive Federation president said neighboring countries demanded more Thai-made autos, so the country should secure its position as the biggest automobile producer in Southeast Asia. (MCOT online news)


-- TNA 2014-05-29

[Chang_paarp]

They are correct for now, BUT, how much investment is being made on new plant, upgrades, and expansion compared with other countries?

[davehowden]

"Indonesia set to overtake Thailand as Southeast Asia's biggest car market in 2014"

http://www.reuters.com/article/2014/04/10/southeastasia-autos-idUSL3N0N11ZE20140410

[bkkfaranguy]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

"Indonesia set to overtake Thailand as Southeast Asia's biggest car market in 2014"

http://www.reuters.com/article/2014/04/10/southeastasia-autos-idUSL3N0N11ZE20140410

The article was about production and not sales, but it is a fact that auto producers and all manufacturing will be looking elsewhere for future investments as Thailand continues to shoot itself in the foot with the ongoing political scene.

[Deez]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

"Indonesia set to overtake Thailand as Southeast Asia's biggest car market in 2014"

http://www.reuters.com/article/2014/04/10/southeastasia-autos-idUSL3N0N11ZE20140410

The article was about production and not sales, but it is a fact that auto producers and all manufacturing will be looking elsewhere for future investments as Thailand continues to shoot itself in the foot with the ongoing political scene.

"The article was about production and not sales"

The OP is about production not sales. More "white lies" by thai officials?

[bigbamboo]

Just as well seeing how many get wrecked here.

[UbonRatch]

Anyway, shouldn't that read:

Japan remains primary automobile producer in Southeast Asia

[Tomtomtom69]

I think for now, Thailand's position as leader of ASEAN manufacturing will continue to remain in place at least in the short to medium term, but given my knowledge of the regional automotive industry and what I take from the above report, I'd like to make the following comments/observations:

One of the reasons why Thailand may lose Indonesia as a market, although perhaps it was never very strong in Indonesia to begin with are different consumer preferences. For example, while Thailand is the world's largest one ton pickup truck producer (I always thought it was number 2 after the USA, but perhaps Thailand has recently overtaken the USA in the one ton category, while the USA is still the largest pickup truck market overall, however their pickups, like most other vehicle types are much larger than their Thai counterparts hence they aren't exactly in the same category), and Thais love their pickup trucks, Indonesians don't.

They [indonesians] seem to despise pickup trucks, because I can't remember seeing a single pickup truck anywhere in Jakarta when I traveled there a few years ago - by comparison, pickup trucks have gained popularity in Malaysia and Vietnam, two markets where they weren't common about a decade ago. This was a great surprise to me, I would have thought a country like Indonesia, with it's large rural agricultural population that is also middle income like Thailand (although lower middle income and thus a bit poorer than Thailand with a lower GDP per capita) would take to pickup trucks as they are convenient for hauling goods to/from their farms or businesses. Evidently not, because Indonesians seem to like MPVs such as small people movers like Toyota Innovas, which are produced locally and exported to the rest of the region, including Thailand. Innovas are present in Thailand in sizeable numbers but aren't that popular as Thais would rather jump from a sedan to an SUV or a pickup, depending on need rather than an MPV that is little more than a boxy sedan which is quite cramped with little more storage space than a large sedan when filled to capacity. Still, the automotive market is quite diverse in Thailand, which sees most types of vehicles well represented, except for large American style pickups, most of which are rarely seen in RHD markets like Thailand anyway.

Similarly, I believe the Indonesians are producing Corolla's and possibly Camry's (would have to check that info) that are equivalent to Thailand's own production therefore it makes little sense for Thailand to export the same vehicle makes and types that are already being produced locally and vice versa. It's for these reasons that I see Indonesia continuing to export MPVs to Thailand, but Thailand probably not being able to export anything to Indonesia, save for perhaps eco cars (that could also come out of Malaysia).

As for Indonesia becoming ASEAN's largest automotive market, this shouldn't be a surprise given that Indonesia's population is almost 4 times the size of Thailand's and with expanding GDP growth, that country will continue to widen the lead in vehicle sales if Thailand's political and associated economic situation continue.

I think that the Reuters report is right in that continued economic woes due to the political situation (and uncertainty related to the political situation) will continue to be closely monitored by the automakers, which could, in the event of continued instability decide to forego further investment or even pull out of Thailand and relocate, but given previous instability and recovery which took place in the aftermath, not to mention the favourable infrastructure and investment policies of the various Thai administrations (and continuing lack of these things in competitor markets like Indonesia), most automotive manufacturers in Thailand are likely to stay put for now. I see this possibly changing should the situation continue to remain unstable, or potentially even getting worse over the next year or so.

However, I wouldn't place my bets on the manufacturers definitely keeping to their commitments (based on historical pickups in demand, after previous coups, political conflicts etc.), given changing circumstances. Although the circumstances were very different, in Australia's case Holden had originally promised to keep on manufacturing through 2022 as they had stated only a couple of years ago. Now that has been revised back to 2017 after they decided to pull out of Australia altogether, announcing the move last year. A tough decision despite a 60+ year manufacturing history in the country and the same can be said for Toyota, with it's 50-odd year history of manufacturing in Australia when they decided to follow in Holden's footsteps by making a similar announcement earlier this year.

Still, I think it will take a significant competitor in ASEAN to shift away from Thailand with comparable (or better) investment policies and infrastructure to take over Thailand's helm, especially in the area of pickup truck manufacturing, which represents around half of all vehicles manufactured. That's because while Myanmar, Laos and Cambodia are all large users of pickups (i.e. pickups make up a large market share of overall vehicles in those markets), they are very small automotive markets with little or no local manufacturing of automobiles at this stage, not to mention poor infrastructure and policies to attract automakers (although a couple of automakers such as Ford and Hyundai have moved into Cambodia for CKD manufacturing). I also believe Vietnam's very poor automotive policies (including astronomical taxes that have caused auto prices to become the third highest in the world) may contribute towards the manufacturers that are currently assembling passenger vehicles there and only assemble a total of a laughably low 40,000 units on average per year may move out of the country altogether, especially by the time AEC 2015 takes hold as it's more efficient to just import from Thailand, with it's large economies of scale, similar vehicle types being driven by consumers in both countries (albeit Vietnamese consumers only purchase about 1/12 the number of cars per year as Thailand does). Indonesia, India, China and others that are currently exporting to Vietnam will continue to export the vehicle types that Thailand does not produce to Vietnam (such as small eco cars like the Hyundai i-10 from India and the Toyota Innova from Indonesia).

Edited May 29, 2014 by Tomtomtom69

[wilcopops]

Anyway, shouldn't that read:

Japan remains primary automobile producer in Southeast Asia

No...Japan is not in S.E.Asia.

[Sheppo]

They are correct for now, BUT, how much investment is being made on new plant, upgrades, and expansion compared with other countries?

General Motors (Holden Australia) are committing $US135 million as a start to update their Thai assembly line and closing in Australia in 3 years. Ford too!

[rebelplatoon]

Good. Although nothing is forever. They should keep on working hard to keep things interesting here.

[Halion]

Propaganda, nothing more ,nothing less.

[bkkfaranguy]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

They are correct for now, BUT, how much investment is being made on new plant, upgrades, and expansion compared with other countries?

General Motors (Holden Australia) are committing $US135 million as a start to update their Thai assembly line and closing in Australia in 3 years. Ford too!

Was just in Australia and there was an article where they are reconsidering and looking elsewhere because of the ongoing politicle turmoil here.

[thaicookingchef]

But new Benz C-class 2014/2015 is not made in Thailand anymore, so I wonder if other series will be made here ?

C-class w205 will be made only in Germany, South Africa, China and USA.

Does it mean that Benz is leaving the country ?

[Tomtomtom69]

But new Benz C-class 2014/2015 is not made in Thailand anymore, so I wonder if other series will be made here ?

C-class w205 will be made only in Germany, South Africa, China and USA.

Does it mean that Benz is leaving the country ?

I'm not sure, haven't heard any specific news, but you could be right. However, my understanding is that Benz's made in Thailand so far was always a case of CKD manufacturing, basically local assembly using imported parts. The Thai government's incentives greatly favour assembling cars in Thailand using locally produced parts as they receive the most subsidies and attract a far low rate of taxation.

Germany, China and the USA are indeed major markets for Benz; although Thailand has a sizeable fleet of Mercedes vehicles, it might make sense for them to refocus on one country producing for each region of the world - especially due to larger economies of scale in these other countries plus (possibly) the use of local parts, rather than the imported parts that Thailand has been using. South Africa being for African exports (and maybe Oceania), China for Asia (and also Oceania unless South Africa covers that region), USA for North (and possibly South) America, Germany for Europe.

[thaicookingchef]

https://www.google.com/search?q=benz+w205+production+plants

http://en.wikipedia.org/wiki/Mercedes-Benz_C-Class

Assembly Bremen, Germany
East London, South Africa
Beijing, China (Beijing Benz)
Tuscaloosa Alabama USA
Pekan, Malaysia (DRB-HICOM)

(never heard about Malysia actually, it might be wrong)

[wilcopops]

I'm going to make a view observations - not in detail - but I think a lot of this is perhaps not ugly taken into account by the Thai industry .....

It's not that "Indonesians like one thing and Thais like another" - The difference in car markets is due to many different factors - price - influenced by taxes - infrastructure and simply the models available will have an impact. The Thai market is severely restricted and pickups are given a huge advantage by govt regs at home.

They are also designed to be built in labour intensive factories - minimum use of robotics. This is changing - you will notice a lot more small sedans on Thai roads than 10 years ago. These require different manufacturing methods and skills, different demographics and different roads even.

ASEAN may also have an effect as it may reduce the tariffs between those countries.

It is fair bet that the companies already invested in Thailand will remain but they may look elsewhere for future projects.

Indonesia may be "bigger" but it has massive infrastructure an geographical setbacks.

Malaysia however does not suffer from this.

Training a workforce could be a factor but as new models are produced the Thai workforce will need to be upgraded and probably reduced in size.

There is also the "aussie factor" - tree has to be a bonus here for any country that takes up the slack as companies move production out of there.

It also doesn't help to draw conclusions by just looking at the home market. Thailand is already producing model versions that never see the light of day on Thai roads and it is exports both inside and outside ASEAN that will determine the future for Thailand.

Thailand at present has a head start....but the political situation is not conducive to smooth running of mega factories....and the last coup government proved that by bringing about a market crash with un-thought-out domestic-based financial policies.

in short my take would be that Thailand is well positioned but shouldn't count their chickens at present. there is a lot that can go wrong.

[wilcopops]

https://www.google.com/search?q=benz+w205+production+plants

http://en.wikipedia.org/wiki/Mercedes-Benz_C-Class

Assembly Bremen, Germany

East London, South Africa

Beijing, China (Beijing Benz)

Tuscaloosa Alabama USA

Pekan, Malaysia (DRB-HICOM)

(never heard about Malysia actually, it might be wrong)

Mercedes have a (CKD?) assembly plant in Samut Prakhan - they avoid some import duties this way. One would assume they will continue to make some models there?

Edited May 29, 2014 by wilcopops

[wilcopops]

Propaganda, nothing more ,nothing less.

What do you mean? Do you think it is wholly inaccurate or a distortion of the truth? "Propaganda" is strong language you are implying there is an ulterior motive - to bolster the industry by telling lies? That the industry is in fact doomed?

I would like to hear what you are basing your statement on here.

Edited May 29, 2014 by wilcopops

[PhilipCook]

Thailand is a great place to make automobiles and this is why MG(Shanghai Automotive and CP) are setting up and several other brands are considering to set up ie VW. Once the politics are smoothed out, we can expect a roaring 2015 onwards for the programs that are scheduled and for newcomers as well.

[Tomtomtom69]

I'm going to make a view observations - not in detail - but I think a lot of this is perhaps not ugly taken into account by the Thai industry .....

It's not that "Indonesians like one thing and Thais like another" - The difference in car markets is due to many different factors - price - influenced by taxes - infrastructure and simply the models available will have an impact. The Thai market is severely restricted and pickups are given a huge advantage by govt regs at home.

They are also designed to be built in labour intensive factories - minimum use of robotics. This is changing - you will notice a lot more small sedans on Thai roads than 10 years ago. These require different manufacturing methods and skills, different demographics and different roads even.

ASEAN may also have an effect as it may reduce the tariffs between those countries.

It is fair bet that the companies already invested in Thailand will remain but they may look elsewhere for future projects.

Indonesia may be "bigger" but it has massive infrastructure an geographical setbacks.

Malaysia however does not suffer from this.

Training a workforce could be a factor but as new models are produced the Thai workforce will need to be upgraded and probably reduced in size.

There is also the "aussie factor" - tree has to be a bonus here for any country that takes up the slack as companies move production out of there.

It also doesn't help to draw conclusions by just looking at the home market. Thailand is already producing model versions that never see the light of day on Thai roads and it is exports both inside and outside ASEAN that will determine the future for Thailand.

Thailand at present has a head start....but the political situation is not conducive to smooth running of mega factories....and the last coup government proved that by bringing about a market crash with un-thought-out domestic-based financial policies.

in short my take would be that Thailand is well positioned but shouldn't count their chickens at present. there is a lot that can go wrong.

I agree with you for the most part but I do think consumer preferences (which may have started as the result of government policy) are responsible for the differences in the types of vehicles you see on the roads in different countries. Pickup trucks have benefited from Thai government policy, but back in the day I don't think the Thai government randomly chose them as a vehicle type to manufacture, but instead Thai consumers developed a liking for them due to their usefulness and the government decided to give them tax incentives. Similarly, if Indonesians liked pickup trucks then surely you would see more of them on their roads, especially since the ASEAN FTA would allow the Thais to export them to Indo just as the Indonesians are able to export their moderately popular MPVs to Thailand.

As mentioned, unless it was something to do with the implementation of the ASEAN FTA or AFTA, both Vietnamese and Malaysian consumers have started to warm to pickup trucks. Previously Malaysia was an almost 100% sedan market, whilst the few cars on Vietnamese roads were either sedans, MPVs or SUVs of some sort. Now that is changing.

[Thai at Heart]

I think for now, Thailand's position as leader of ASEAN manufacturing will continue to remain in place at least in the short to medium term, but given my knowledge of the regional automotive industry and what I take from the above report, I'd like to make the following comments/observations:

One of the reasons why Thailand may lose Indonesia as a market, although perhaps it was never very strong in Indonesia to begin with are different consumer preferences. For example, while Thailand is the world's largest one ton pickup truck producer (I always thought it was number 2 after the USA, but perhaps Thailand has recently overtaken the USA in the one ton category, while the USA is still the largest pickup truck market overall, however their pickups, like most other vehicle types are much larger than their Thai counterparts hence they aren't exactly in the same category), and Thais love their pickup trucks, Indonesians don't.

They [indonesians] seem to despise pickup trucks, because I can't remember seeing a single pickup truck anywhere in Jakarta when I traveled there a few years ago - by comparison, pickup trucks have gained popularity in Malaysia and Vietnam, two markets where they weren't common about a decade ago. This was a great surprise to me, I would have thought a country like Indonesia, with it's large rural agricultural population that is also middle income like Thailand (although lower middle income and thus a bit poorer than Thailand with a lower GDP per capita) would take to pickup trucks as they are convenient for hauling goods to/from their farms or businesses. Evidently not, because Indonesians seem to like MPVs such as small people movers like Toyota Innovas, which are produced locally and exported to the rest of the region, including Thailand. Innovas are present in Thailand in sizeable numbers but aren't that popular as Thais would rather jump from a sedan to an SUV or a pickup, depending on need rather than an MPV that is little more than a boxy sedan which is quite cramped with little more storage space than a large sedan when filled to capacity. Still, the automotive market is quite diverse in Thailand, which sees most types of vehicles well represented, except for large American style pickups, most of which are rarely seen in RHD markets like Thailand anyway.

Similarly, I believe the Indonesians are producing Corolla's and possibly Camry's (would have to check that info) that are equivalent to Thailand's own production therefore it makes little sense for Thailand to export the same vehicle makes and types that are already being produced locally and vice versa. It's for these reasons that I see Indonesia continuing to export MPVs to Thailand, but Thailand probably not being able to export anything to Indonesia, save for perhaps eco cars (that could also come out of Malaysia).

As for Indonesia becoming ASEAN's largest automotive market, this shouldn't be a surprise given that Indonesia's population is almost 4 times the size of Thailand's and with expanding GDP growth, that country will continue to widen the lead in vehicle sales if Thailand's political and associated economic situation continue.

I think that the Reuters report is right in that continued economic woes due to the political situation (and uncertainty related to the political situation) will continue to be closely monitored by the automakers, which could, in the event of continued instability decide to forego further investment or even pull out of Thailand and relocate, but given previous instability and recovery which took place in the aftermath, not to mention the favourable infrastructure and investment policies of the various Thai administrations (and continuing lack of these things in competitor markets like Indonesia), most automotive manufacturers in Thailand are likely to stay put for now. I see this possibly changing should the situation continue to remain unstable, or potentially even getting worse over the next year or so.

However, I wouldn't place my bets on the manufacturers definitely keeping to their commitments (based on historical pickups in demand, after previous coups, political conflicts etc.), given changing circumstances. Although the circumstances were very different, in Australia's case Holden had originally promised to keep on manufacturing through 2022 as they had stated only a couple of years ago. Now that has been revised back to 2017 after they decided to pull out of Australia altogether, announcing the move last year. A tough decision despite a 60+ year manufacturing history in the country and the same can be said for Toyota, with it's 50-odd year history of manufacturing in Australia when they decided to follow in Holden's footsteps by making a similar announcement earlier this year.

Still, I think it will take a significant competitor in ASEAN to shift away from Thailand with comparable (or better) investment policies and infrastructure to take over Thailand's helm, especially in the area of pickup truck manufacturing, which represents around half of all vehicles manufactured. That's because while Myanmar, Laos and Cambodia are all large users of pickups (i.e. pickups make up a large market share of overall vehicles in those markets), they are very small automotive markets with little or no local manufacturing of automobiles at this stage, not to mention poor infrastructure and policies to attract automakers (although a couple of automakers such as Ford and Hyundai have moved into Cambodia for CKD manufacturing). I also believe Vietnam's very poor automotive policies (including astronomical taxes that have caused auto prices to become the third highest in the world) may contribute towards the manufacturers that are currently assembling passenger vehicles there and only assemble a total of a laughably low 40,000 units on average per year may move out of the country altogether, especially by the time AEC 2015 takes hold as it's more efficient to just import from Thailand, with it's large economies of scale, similar vehicle types being driven by consumers in both countries (albeit Vietnamese consumers only purchase about 1/12 the number of cars per year as Thailand does). Indonesia, India, China and others that are currently exporting to Vietnam will continue to export the vehicle types that Thailand does not produce to Vietnam (such as small eco cars like the Hyundai i-10 from India and the Toyota Innova from Indonesia).

Thais only love pick up trucks because of the way taxes are slanted in their favour.

[wilcopops]

Thailand is a great place to make automobiles and this is why MG(Shanghai Automotive and CP) are setting up and several other brands are considering to set up ie VW. Once the politics are smoothed out, we can expect a roaring 2015 onwards for the programs that are scheduled and for newcomers as well.

"Once the politics are smoothed out" - now there's a thing.

I think it is more a case of "despite the politics"

[wilcopops]

I think for now, Thailand's position as leader of ASEAN manufacturing will continue to remain in place at least in the short to medium term, but given my knowledge of the regional automotive industry and what I take from the above report, I'd like to make the following comments/observations:

One of the reasons why Thailand may lose Indonesia as a market, although perhaps it was never very strong in Indonesia to begin with are different consumer preferences. For example, while Thailand is the world's largest one ton pickup truck producer (I always thought it was number 2 after the USA, but perhaps Thailand has recently overtaken the USA in the one ton category, while the USA is still the largest pickup truck market overall, however their pickups, like most other vehicle types are much larger than their Thai counterparts hence they aren't exactly in the same category), and Thais love their pickup trucks, Indonesians don't.

They [indonesians] seem to despise pickup trucks, because I can't remember seeing a single pickup truck anywhere in Jakarta when I traveled there a few years ago - by comparison, pickup trucks have gained popularity in Malaysia and Vietnam, two markets where they weren't common about a decade ago. This was a great surprise to me, I would have thought a country like Indonesia, with it's large rural agricultural population that is also middle income like Thailand (although lower middle income and thus a bit poorer than Thailand with a lower GDP per capita) would take to pickup trucks as they are convenient for hauling goods to/from their farms or businesses. Evidently not, because Indonesians seem to like MPVs such as small people movers like Toyota Innovas, which are produced locally and exported to the rest of the region, including Thailand. Innovas are present in Thailand in sizeable numbers but aren't that popular as Thais would rather jump from a sedan to an SUV or a pickup, depending on need rather than an MPV that is little more than a boxy sedan which is quite cramped with little more storage space than a large sedan when filled to capacity. Still, the automotive market is quite diverse in Thailand, which sees most types of vehicles well represented, except for large American style pickups, most of which are rarely seen in RHD markets like Thailand anyway.

Similarly, I believe the Indonesians are producing Corolla's and possibly Camry's (would have to check that info) that are equivalent to Thailand's own production therefore it makes little sense for Thailand to export the same vehicle makes and types that are already being produced locally and vice versa. It's for these reasons that I see Indonesia continuing to export MPVs to Thailand, but Thailand probably not being able to export anything to Indonesia, save for perhaps eco cars (that could also come out of Malaysia).

As for Indonesia becoming ASEAN's largest automotive market, this shouldn't be a surprise given that Indonesia's population is almost 4 times the size of Thailand's and with expanding GDP growth, that country will continue to widen the lead in vehicle sales if Thailand's political and associated economic situation continue.

I think that the Reuters report is right in that continued economic woes due to the political situation (and uncertainty related to the political situation) will continue to be closely monitored by the automakers, which could, in the event of continued instability decide to forego further investment or even pull out of Thailand and relocate, but given previous instability and recovery which took place in the aftermath, not to mention the favourable infrastructure and investment policies of the various Thai administrations (and continuing lack of these things in competitor markets like Indonesia), most automotive manufacturers in Thailand are likely to stay put for now. I see this possibly changing should the situation continue to remain unstable, or potentially even getting worse over the next year or so.

However, I wouldn't place my bets on the manufacturers definitely keeping to their commitments (based on historical pickups in demand, after previous coups, political conflicts etc.), given changing circumstances. Although the circumstances were very different, in Australia's case Holden had originally promised to keep on manufacturing through 2022 as they had stated only a couple of years ago. Now that has been revised back to 2017 after they decided to pull out of Australia altogether, announcing the move last year. A tough decision despite a 60+ year manufacturing history in the country and the same can be said for Toyota, with it's 50-odd year history of manufacturing in Australia when they decided to follow in Holden's footsteps by making a similar announcement earlier this year.

Still, I think it will take a significant competitor in ASEAN to shift away from Thailand with comparable (or better) investment policies and infrastructure to take over Thailand's helm, especially in the area of pickup truck manufacturing, which represents around half of all vehicles manufactured. That's because while Myanmar, Laos and Cambodia are all large users of pickups (i.e. pickups make up a large market share of overall vehicles in those markets), they are very small automotive markets with little or no local manufacturing of automobiles at this stage, not to mention poor infrastructure and policies to attract automakers (although a couple of automakers such as Ford and Hyundai have moved into Cambodia for CKD manufacturing). I also believe Vietnam's very poor automotive policies (including astronomical taxes that have caused auto prices to become the third highest in the world) may contribute towards the manufacturers that are currently assembling passenger vehicles there and only assemble a total of a laughably low 40,000 units on average per year may move out of the country altogether, especially by the time AEC 2015 takes hold as it's more efficient to just import from Thailand, with it's large economies of scale, similar vehicle types being driven by consumers in both countries (albeit Vietnamese consumers only purchase about 1/12 the number of cars per year as Thailand does). Indonesia, India, China and others that are currently exporting to Vietnam will continue to export the vehicle types that Thailand does not produce to Vietnam (such as small eco cars like the Hyundai i-10 from India and the Toyota Innova from Indonesia).

Thais only love pick up trucks because of the way taxes are slanted in their favour.

I think looking at the Thai industry in terms of one single perception is incredibly naive.......... pick ups and why they are made here in a highly protected environment has a lot more than just taxes and in turn they are only part of the picture....as is the home market.

[wilcopops]

I'm going to make a view observations - not in detail - but I think a lot of this is perhaps not ugly taken into account by the Thai industry .....

It's not that "Indonesians like one thing and Thais like another" - The difference in car markets is due to many different factors - price - influenced by taxes - infrastructure and simply the models available will have an impact. The Thai market is severely restricted and pickups are given a huge advantage by govt regs at home.

They are also designed to be built in labour intensive factories - minimum use of robotics. This is changing - you will notice a lot more small sedans on Thai roads than 10 years ago. These require different manufacturing methods and skills, different demographics and different roads even.

ASEAN may also have an effect as it may reduce the tariffs between those countries.

It is fair bet that the companies already invested in Thailand will remain but they may look elsewhere for future projects.

Indonesia may be "bigger" but it has massive infrastructure an geographical setbacks.

Malaysia however does not suffer from this.

Training a workforce could be a factor but as new models are produced the Thai workforce will need to be upgraded and probably reduced in size.

There is also the "aussie factor" - tree has to be a bonus here for any country that takes up the slack as companies move production out of there.

It also doesn't help to draw conclusions by just looking at the home market. Thailand is already producing model versions that never see the light of day on Thai roads and it is exports both inside and outside ASEAN that will determine the future for Thailand.

Thailand at present has a head start....but the political situation is not conducive to smooth running of mega factories....and the last coup government proved that by bringing about a market crash with un-thought-out domestic-based financial policies.

in short my take would be that Thailand is well positioned but shouldn't count their chickens at present. there is a lot that can go wrong.

I agree with you for the most part but I do think consumer preferences (which may have started as the result of government policy) are responsible for the differences in the types of vehicles you see on the roads in different countries. Pickup trucks have benefited from Thai government policy, but back in the day I don't think the Thai government randomly chose them as a vehicle type to manufacture, but instead Thai consumers developed a liking for them due to their usefulness and the government decided to give them tax incentives. Similarly, if Indonesians liked pickup trucks then surely you would see more of them on their roads, especially since the ASEAN FTA would allow the Thais to export them to Indo just as the Indonesians are able to export their moderately popular MPVs to Thailand.

As mentioned, unless it was something to do with the implementation of the ASEAN FTA or AFTA, both Vietnamese and Malaysian consumers have started to warm to pickup trucks. Previously Malaysia was an almost 100% sedan market, whilst the few cars on Vietnamese roads were either sedans, MPVs or SUVs of some sort. Now that is changing.

Pickups were chosen at least in part because they ae a simply vehicle design and relatively labour intensive to produce. The resulting price and tax benefits (e.g. 800 baht tax and insurance on "commercial vehicles) has lead to a pom in the market - if the price went on to a par with say Europe where a Navara can set you back over 1.2 million baht - then insurance tax and fuel costs, you'd see a sudden unpopularity in that type of vehicle. Remember the Thai government even subsidises diesel to the tune of 25%.

[Tomtomtom69]

I'm going to make a view observations - not in detail - but I think a lot of this is perhaps not ugly taken into account by the Thai industry .....

It's not that "Indonesians like one thing and Thais like another" - The difference in car markets is due to many different factors - price - influenced by taxes - infrastructure and simply the models available will have an impact. The Thai market is severely restricted and pickups are given a huge advantage by govt regs at home.

They are also designed to be built in labour intensive factories - minimum use of robotics. This is changing - you will notice a lot more small sedans on Thai roads than 10 years ago. These require different manufacturing methods and skills, different demographics and different roads even.

ASEAN may also have an effect as it may reduce the tariffs between those countries.

It is fair bet that the companies already invested in Thailand will remain but they may look elsewhere for future projects.

Indonesia may be "bigger" but it has massive infrastructure an geographical setbacks.

Malaysia however does not suffer from this.

Training a workforce could be a factor but as new models are produced the Thai workforce will need to be upgraded and probably reduced in size.

There is also the "aussie factor" - tree has to be a bonus here for any country that takes up the slack as companies move production out of there.

It also doesn't help to draw conclusions by just looking at the home market. Thailand is already producing model versions that never see the light of day on Thai roads and it is exports both inside and outside ASEAN that will determine the future for Thailand.

Thailand at present has a head start....but the political situation is not conducive to smooth running of mega factories....and the last coup government proved that by bringing about a market crash with un-thought-out domestic-based financial policies.

in short my take would be that Thailand is well positioned but shouldn't count their chickens at present. there is a lot that can go wrong.

I agree with you for the most part but I do think consumer preferences (which may have started as the result of government policy) are responsible for the differences in the types of vehicles you see on the roads in different countries. Pickup trucks have benefited from Thai government policy, but back in the day I don't think the Thai government randomly chose them as a vehicle type to manufacture, but instead Thai consumers developed a liking for them due to their usefulness and the government decided to give them tax incentives. Similarly, if Indonesians liked pickup trucks then surely you would see more of them on their roads, especially since the ASEAN FTA would allow the Thais to export them to Indo just as the Indonesians are able to export their moderately popular MPVs to Thailand.

As mentioned, unless it was something to do with the implementation of the ASEAN FTA or AFTA, both Vietnamese and Malaysian consumers have started to warm to pickup trucks. Previously Malaysia was an almost 100% sedan market, whilst the few cars on Vietnamese roads were either sedans, MPVs or SUVs of some sort. Now that is changing.

Pickups were chosen at least in part because they ae a simply vehicle design and relatively labour intensive to produce. The resulting price and tax benefits (e.g. 800 baht tax and insurance on "commercial vehicles) has lead to a pom in the market - if the price went on to a par with say Europe where a Navara can set you back over 1.2 million baht - then insurance tax and fuel costs, you'd see a sudden unpopularity in that type of vehicle. Remember the Thai government even subsidises diesel to the tune of 25%.

Sure - I actually only covered half the picture while you covered the rest. I remember back in mid-2008 when diesel prices were at a record high in Thailand (all the way up to 47 Baht a litre) and it was then that selling my 1.5 year old pickup was quite difficult (I was leaving the country for a while and still had a large debt on the vehicle so couldn't justify making payments on vehicle I wasn't going to see for at least a year and even then, only for a month or two if that before I would leave again for another 6 months or year or so). I got quite a few lowball offers before settling for a reasonable price, but it was still much lower than I had anticipated given that normally Thai vehicles hold their value much better.

But of course back then nobody wanted to drive a diesel, whether it was a pickup or SUV as fuel prices were way over the top.

In terms of why the pickup was chosen originally, I do remember reading about it's versatility for farmers and small business owners, but yes relatively simple design, that allows for many skilled labourers to assemble the vehicle, provide local employment and boost economic growth also played a major part.

[SOTIRIOS]

....big sh*t....

...other countries are beginning to limit or even reduce the number of cars allowed on the road....

...in this psycho scenario.....that is unthinkable.....

...which would be better in the long run....

[Chris Lawrence]

'Toyota Motor Corp may reconsider investing up to 20 billion baht ($609 million) in Thailand, and could even cut production, if political unrest drags on, the head of the Japanese automaker's local unit said on Monday.

Toyota produced around 850,000 cars in Thailand in 2013, selling 445,000 domestically and exporting some 430,000 vehicles. This year, it aims to sell 400,000 cars domestically and export 445,000, Tanada said.

Overall auto industry sales in Thailand are expected to fall 13.6 percent to 1.15 million vehicles in 2014, mainly due to weaker consumption and slow economic growth, data from Toyota's Thai unit shows.

This will be the second consecutive year of decline after an 80 percent surge in 2012 fuelled by government subsidies for first-time car buyers and pent-up demand after severe flooding in late 2011.

Domestic auto sales fell 7.7 percent to 1.33 million vehicles in 2013, according to the Federation of Thai Industries (FTI).'Jan 20 (Reuters)

Honda Motor has slashed production at its Ayutthaya factory, in Thailand, to 60% of capacity and has deferred the startup of a $530m plant amid weak domestic demand following months of political turmoil.

Honda's move comes after rival Japanese automaker Toyota Motor warned earlier in the year it could kill its Thai investment plans if the political crisis lingered.

Honda's Ayutthaya plant has an annual capacity of 300,000 vehicles, while the upcoming facility in Prachinburi will be able to build 120,000 vehicles a year, said Pitak Pruittisarikorn, executive vice president at Honda Automobile (Thailand).

The startup of the upcoming plant has been postponed by between six months and a year. It was to commence production in April 2015, Pitak added.

Domestic auto sales dropped 33.2% on an annual basis in April, according to the Federation of Thai Industries (FTI). International Business Times May 23 2014

Thailand is the no.9 in the world China is no.1, Japan no.3, India no. 6. Indonesia is a dark horse along with Malaysia for the region.

The other big money industry is car parts supplier.

Although companies will be saying how good their investment is in Thailand, their actions at the moment are the opposite. Maybe it is just a ploy to extract money/concessions form a very inexperienced junta in the world economy.

[wilcopops]

....big sh*t....

...other countries are beginning to limit or even reduce the number of cars allowed on the road....

...in this psycho scenario.....that is unthinkable.....

...which would be better in the long run....

If I can make out through the hype, yes, Thailand has gone down the private vehicle ownership road in a big way and is paying for not only environmental damage but in road deaths too..... among the reasons for this are a lethal combination of corruption and shortsightedness.

BUT - as the OP points out it is not concerned just with the home market, the Thai industry's future is intrinsically tied to exports.

[wilcopops]

I'm going to make a view observations - not in detail - but I think a lot of this is perhaps not ugly taken into account by the Thai industry .....

It's not that "Indonesians like one thing and Thais like another" - The difference in car markets is due to many different factors - price - influenced by taxes - infrastructure and simply the models available will have an impact. The Thai market is severely restricted and pickups are given a huge advantage by govt regs at home.

They are also designed to be built in labour intensive factories - minimum use of robotics. This is changing - you will notice a lot more small sedans on Thai roads than 10 years ago. These require different manufacturing methods and skills, different demographics and different roads even.

ASEAN may also have an effect as it may reduce the tariffs between those countries.

It is fair bet that the companies already invested in Thailand will remain but they may look elsewhere for future projects.

Indonesia may be "bigger" but it has massive infrastructure an geographical setbacks.

Malaysia however does not suffer from this.

Training a workforce could be a factor but as new models are produced the Thai workforce will need to be upgraded and probably reduced in size.

There is also the "aussie factor" - tree has to be a bonus here for any country that takes up the slack as companies move production out of there.

It also doesn't help to draw conclusions by just looking at the home market. Thailand is already producing model versions that never see the light of day on Thai roads and it is exports both inside and outside ASEAN that will determine the future for Thailand.

Thailand at present has a head start....but the political situation is not conducive to smooth running of mega factories....and the last coup government proved that by bringing about a market crash with un-thought-out domestic-based financial policies.

in short my take would be that Thailand is well positioned but shouldn't count their chickens at present. there is a lot that can go wrong.

I agree with you for the most part but I do think consumer preferences (which may have started as the result of government policy) are responsible for the differences in the types of vehicles you see on the roads in different countries. Pickup trucks have benefited from Thai government policy, but back in the day I don't think the Thai government randomly chose them as a vehicle type to manufacture, but instead Thai consumers developed a liking for them due to their usefulness and the government decided to give them tax incentives. Similarly, if Indonesians liked pickup trucks then surely you would see more of them on their roads, especially since the ASEAN FTA would allow the Thais to export them to Indo just as the Indonesians are able to export their moderately popular MPVs to Thailand.

As mentioned, unless it was something to do with the implementation of the ASEAN FTA or AFTA, both Vietnamese and Malaysian consumers have started to warm to pickup trucks. Previously Malaysia was an almost 100% sedan market, whilst the few cars on Vietnamese roads were either sedans, MPVs or SUVs of some sort. Now that is changing.

Pickups were chosen at least in part because they ae a simply vehicle design and relatively labour intensive to produce. The resulting price and tax benefits (e.g. 800 baht tax and insurance on "commercial vehicles) has lead to a pom in the market - if the price went on to a par with say Europe where a Navara can set you back over 1.2 million baht - then insurance tax and fuel costs, you'd see a sudden unpopularity in that type of vehicle. Remember the Thai government even subsidises diesel to the tune of 25%.

Sure - I actually only covered half the picture while you covered the rest. I remember back in mid-2008 when diesel prices were at a record high in Thailand (all the way up to 47 Baht a litre) and it was then that selling my 1.5 year old pickup was quite difficult (I was leaving the country for a while and still had a large debt on the vehicle so couldn't justify making payments on vehicle I wasn't going to see for at least a year and even then, only for a month or two if that before I would leave again for another 6 months or year or so). I got quite a few lowball offers before settling for a reasonable price, but it was still much lower than I had anticipated given that normally Thai vehicles hold their value much better.

But of course back then nobody wanted to drive a diesel, whether it was a pickup or SUV as fuel prices were way over the top.

In terms of why the pickup was chosen originally, I do remember reading about it's versatility for farmers and small business owners, but yes relatively simple design, that allows for many skilled labourers to assemble the vehicle, provide local employment and boost economic growth also played a major part.

The pickup as a workhorse in ALL S.E. Asian countries would have an appeal, but you can see how it has developed into a substitute for the family sedan in Thailand and part of this has to be government subsidies in all aspects from production to consumption.

For example - If you check out the Fortuna, Vigo, Innova range you will find it was SPECIFICALLY developed by Toyota for production and sale in "developing" countries.

I think the days of high-priced second-hand cars in Thailand are numbered anyhow - there are a lot of factors here too.

one will be reduced protectionism with the advent of ASEAN and various FTAs with Japan and other countries in the region.

Also the home market is changing from one of equipment to replacement - i.e. first-time buyers to those who are replacing vehicles....this coupled with other government encouragements - is leading to an increase in the number of second-hand vehicles valuable. You can tell this by looking at the number of secondhand car lots that have sprung up in the last 5 years, with companies like Toyota even having there own dealers adjoined to their new car salerooms.