Thailand Set For Record Auto Production

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

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.