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AEC: what to expect for Thai Automotive industry in 2015

For the automotive industry, it will entail careful planning. For Thailand in particular, as the barriers come down, the automotive powerhouse will have to adapt to retain, let alone strengthen, its leading position.

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The arrival of the ASEAN Economic Community (AEC) in 2015 is expected to change the way the 10-member Association of Southeast Asian Nations does business especially for the automotive industry.

For Thailand in particular, as the barriers come down, the automotive powerhouse will have to adapt to retain, let alone strengthen, its leading position. Thailand’s auto makers and parts makers will have to adjust their game plans.

Thailand is a regional manufacturing hub and supplier for many of the world’s largest auto makers.  For example, it is a central base for Ford’s Asia production, which in June 2010 announced it will build a $450 million car factory, its first wholly owned plant in Thailand.  Ford will manufacture Focus cars for the domestic and export market.

General Motors, Toyota,Mitsubishi, Nissan, Honda, and Mazda — through the Auto Alliance (Thailand), a joint venture with Ford — also have vehicle production facilities in Thailand, some of which serve both domestic and regional demand.  In addition, manufacturers such as Honda have made Thailand their center for automotive research and development for Asia and Oceania and for developing manufacturing tools and equipment for Association of Southeast Asian Nations (ASEAN) production facilities.

Thailand’s auto industry is targeting production of 3 million vehicles annually by 2015, pushing the country into the top 10 from its present 12th ranking.

Atchaka Sibunruang, secretary-general of the Board of Investment (BoI), last Thursday said automobiles are a core local industry, as evidenced by the 1.65 million vehicles produced last year. She was speaking at the Automotive Summit 2011 hosted by Reed Tradex at the Bangkok International Trade and Exhibition Center on Bang Na-Trat Road.

The local auto industry employs 520,000 workers involved in everything from parts manufacture to final assembly. Dr Atchaka said 132 automotive projects worth a combined 34.5 billion baht applied for BoI privileges last year, mostly parts manufacturing.

The Federation of Thai Industries (FTI) Automotive Industry Club spokesman said he expected Thailand could reach production capacity of as many as 2.3 million cars this year.

Spokesman Surapong Paisitpattanapong said the government’s ‘first car scheme’ and the country’s rehabilitation after last year’s flood have resulted in the expanded car production. The first eight months saw vehicle manufacturing grow by 30 per cent with more than 100,000 units sold domestically every month on average.

The new target figure of 2.3 million units has increased from the recent previous auto production goal of 2.2 million, while car sales volume in the country is expected to rise to 200,000 units per month.

According to Mr Surapong, car exports have expanded 46 per cent, including Asia, the Middle East and Oceania, although exports to Europe have fallen, and are at minus 18 per cent.

The higher production trend was also partly due to eco-cars sales benefitting from the government’s promotion on tax measures under the ‘first car’ scheme.

Such sales have increased and count for 14 per cent of all car sales in the country.

Also according to the BOI, output could  reach 3 million units in 2015

Forecasts are for Thailand’s total automobile output in 2012 to hit or exceed 2.1 million units, up dramatically from 1.46 million units last year. Domestic sales projections for 2012 have been revised to a record 1.2 million units, or 553,900 passenger cars and 646,100 commercial vehicles. Whole-year exports are estimated at 1 million units.

The impressive momentum established in 2012 will likely carry the vibrant Thai automotive industry to further historic levels in 2013 and beyond. Boosting confidence in the upswing is the Ministry of Finance’s recent announcement that the first-car- buyer scheme, which offers a 100,000 baht excise tax rebate for customers, is to be extended to mid-March 2013.

Thailand is on track to break into the top 10 of the world’s biggest auto producing countries when output climbs to 3 million units in 2015 as opportunities increase with the advent of the AEC. Steady growth will be fueled by continued government support of this core industry that employs 350,000 workers and anticipated further investment from makers.

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