Industry

Driving Force

Auto Sector

Thailand boasts a decades-long reputation for being a key Southeast Asian production hub for leading US, European and Japanese carmakers. According to Thailand’s Board of Investment (BOI), the industry accounts […]

Thailand boasts a decades-long reputation for being a key Southeast Asian production hub for leading US, European and Japanese carmakers. According to Thailand’s Board of Investment (BOI), the industry accounts for approximately 12% of the country’s GDP, employing over half a million people. This has helped position the Kingdom as the world’s ninth-largest automotive producer, ahead of France, Russia, Turkey, and indeed all of its ASEAN neighbours.

Gross output figures suggest that the sector is currently enjoying a period of slight growth with 1.95 million to 2 million units expected to be manufactured in Thailand this year—compared to 1.85 million cars produced in 2015. Worth mentioning is that over half of all vehicles made in Thailand are one-tonne pickup trucks—a segment in which the country leads the global market share. However, when broken down, the figures point out to certain downward trends that are preventing the industry from nearing its potential production capacity of approximately 3 million units. Namely, the slight growth in output is being dragged down by weak domestic consumption; of the 2 million units expected to be produced in 2016, only 750,000 will be sold in the local market. This represents a 6.2% drop on 2015 and, more worryingly, a fourth consecutive annual decline.
In 2012, faced with the aftermath of the global recession and dire international trade levels, the then-government turned to the domestic market to alleviate the industry by running a one-year incentive scheme, offering tax rebates of up to USD3,000 for first-time cars buyers. Predictably, domestic consumption became the backbone of the auto industry with nearly 1.5 million out of the total 2.5 million produced for the local market—a staggering 80% YoY increase. Due to this unnatural spike, however, the market has been struggling to correct itself ever since. Moreover, with the global recovery proving to be slower than anticipated, Thailand’s government and leading auto manufacturers are being forced to act innovatively if production levels are to return to their heyday. In March 2016, Thailand’s Prime Minister Gen. Prayut Chan-o-cha sat with the heads of four major Japanese carmakers—Nissan, Honda, Toyota, and Isuzu—who combined have a 58% market share of Thailand’s exports, in a bid to promote investment into “cars of the future.“

Utilising the abundance of leading auto innovators operating in Thailand, the government has appointed the Ministry of Industry to develop a long-term strategy on how to transform the country into a hub for “future car“ production. According to government sources, Toyota and Isuzu have agreed to manufacture hybrid cars and trucks in Thailand, while Nissan and Honda have turned their attention to exports and R&D of electric vehicles.

The slight growth in production levels expected for 2016 is a sign that the country’s automotive industry has finally recovered from the distorted marketplace created by the 2012 incentives. Nonetheless, with fresh investments and revolutionary technology expected to rain in over the coming years, a new era for Thailand’s carmakers is on the horizon—one that looks far into the future.

You may also be interested in...

Agriculture

Cannabis in Thailand

Southeast Asia Looking Forward

View More
Smiling,Asian,Businessman,In,Suit,Working,With,Laptop

Economy

Suit & Thai

Doing Business

View More
Ball,With,Leicester,City,Fc,Football,Club,Logo,Hits,Football

Tourism

Back of The Net

Leicester City

View More
Many Brains to Gain

Health & Education

Many Brains to Gain

Education

View More
First Choice

Health & Education

First Choice

Medical Tourism

View More
A Drop At a Time

Agriculture

A Drop At a Time

Water Shortage

View More
Room to Grow

Real Estate & Construction

Room to Grow

Office Space

View More
New Corridors

Real Estate & Construction

New Corridors

The Eastern Seaboard

View More
View All Articles