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What’s in store for the future of Thai auto industry?

Since 2010, the value of passenger car exports from Thailand grew only 8% per year. During the same period, Indonesia’s passenger car exports expanded at an annual rate of 17%

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Over the past decade, tier 2 production countries1 have played an important role in the global auto industry.

The share of cars made within this group jumped from 9% of global production in 2005 to 14% in 2016, with the growth rate being as high as 8% annually. Among these tier 2 production countries, Mexico and India stand out as they had a combined production level of over 8 million units in 2016, more than half of the production within the group.

Other countries like Indonesia, Czech Republic, and Slovakia have also increased their production levels rapidly, growing 8%, 8%, and 15% per year, respectively.

Additionally, South Africa has transformed from being a net importer of cars to becoming a major exporter, with 9% of total car production being exported in 2016.

On the other hand, the Thai auto industry, which was once in the lead, is now in decline, with the growth rate of only 5% annually.

The Thai auto industry has also lost market shares to competitors like Indonesia and South Africa.

Highlight
  • Aside from the emergence of new competitors that costs Thailand’s share in key markets, the Thai auto industry is surrounded by many other obstacles such as reliance on new advanced technology and declining foreign direct investment. EIC assesses that expansion of domestic demand will be key to recovery for the industry in the short-to-medium term.
  • EIC suggests that Thai business operators in the industry form partnerships with others to increase technological competitiveness to respond to increasingly more complex manufacturing processes. Targeting high potential markets such as India, Indonesia, Mexico and South Africa will also help strengthen potential for strong and sustainable growth.

 

Since 2010, the value of passenger car exports from Thailand grew only 8% per year. During the same period, Indonesia’s passenger car exports expanded at an annual rate of 17%, taking away from Thailand’s market share in Japan, Saudi Arabia, and the Philippines.

In addition, Thailand is losing market share of pick-up trucks in the UK to South Africa. In 2016, South Africa was able to increase its car export value to the UK by more than 10 times; while Thai exports to the same market has stabilized since 2015. Overall, Thai exports of cars grew only 5% in 2016, down from 12% in 2015.

In the future, the Thai auto industry will face many other challenges especially the increasing use and complexity of electronics parts in car production.

The use of electronics parts in a car has not only been increasing, but also becoming more complicated. For example, new cars now use advanced sensors and cameras as a part of an automatic brake system and lane-keeping system.

Today, however, Thai players still lack the technology needed to produce such parts and can only handle a simpler system such as airbag and anti-lock braking system. Furthermore, a modular platform that allows different models of cars to share parts and structure is being pursued by several major auto makers to create economies of scale. This trend will dictate the future of part distribution across the globe.

For instance, the Toyota New Global Architecture (TNGA) project has begun manufacturing New Prius (2015) and CH-R (2016) that share common powertrain, chassis, and transmission parts. In the past, these parts were only produced in Japan. But, Toyota has expanded production to Turkey; while the Prius production base in Thailand was shut down in 2015, causing Thailand to lose an opportunity to be a part of the TNGA production bases.

Furthermore, FDI in the Thai auto industry may barely expand compared to competitors like Indonesia and Mexico. Major car makers, such as Mitsubishi and Nissan, who are Thailand’s key exporters, are forming strategic partnership to share basic car parts production.

This collaboration leads to zoning of passenger car and pick-up truck production lines by country. More specifically, Indonesia is likely to become a production hub for passenger cars; while Thailand will only be left with…

Author: Sopit Aimpichaimongkol , Nantapong Pantaweesak

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Economics

Thai fruit exports to FTA markets up 107 percent

China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.

National News Bureau of Thailand

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BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.

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50:50 campaign may not get immediate extension

National News Bureau of Thailand

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BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.

The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.

Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.

The campaign has already been extended once, with the current end date set for 31st March.

The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.

The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.

Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.

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