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Mission Impossible
Thailand Automotive Industry:
 
The 25th Bangkok Motor Show in 2005, was a real crowd puller.
Later editions of the annual show-cum-sales event in the following
years did not come close to attracting as many viewers or buyers.

Thailand’s ‘Mission: Detroit of East Asia’ sounds not only ambitious but is also looking increasingly impossible, thanks to the economic slowdown and the financial crisis hitting its traditional markets overseas and the protracted domestic political impasse which has severely dented confidence among investors and consumers alike, plus the rising fuel costs and higher loan rates that keep buyers off the showrooms.

For more than four decades, the Thai automotive industry had been developed with the focus on substituting imports. Scores of large auto manufacturers established themselves in the kingdom primarily to boost their domestic sales. Exports were a secondary target. But things began to turn abruptly in 1997 in the wake of the financial crisis in 1997 that drastically cut domestic demand for cars.

That’s a blessing in disguise for the industry, though. Car manufacturers, facing the problem of excess capacity, resorted to exports. As a result, Thailand’s automotive shipments soared from 14,020 units in 1996 to 332,053 units in 2004 – a phenomenal growth in a period of eight years.

Thailand vehicle exports

(in units)
     
2004
2005 2006 2007
2008* 2009*
332,053
442,963
619,157
770,000
710,000
*projected
 
Vehicle sales in Asea's Top-5
Market
2007
%change
2008*
%change
Thailand
631,250
-7.46%
656,771
9.7%
Malaysia
487,176
-0.7%
510,000
4.7%
Indonesia
434,449
36.2%
520,000
-
Philippines
117,903
18.4%
125,500
6%
Vietnam 80,392
97%
-
-
*projected
Sources: Indonesia players, associations, research firms

The success led to the government to come up with the “Automotive Industry Master Plan” which aims at rolling out 1.8 million units by 2010 (1.3 million pickup trucks and 500,000 passenger cars) of which 800,000 units are to be exported.

 

If the lofty target is met Thailand will be the world’s 9th largest and Asia’s 5th biggest car maker (after China, Japan, Korea and India) but there have arisen doubts since 2006 when political uncertainty began to take the local economy hostage and scare investors.

Yet, despite the expected decline in exports, and slowdown in local sales, the government remained upbeat as it planned to boost annual vehicle production to 2 million units in 2011 under the second-phase industry master plan (2007-2011).

Fortunately, the momentum in Thai vehicle exports has been maintained, providing a silver lining as local sales have been on a decline since 2006. Sales shrunk by 4 percent to 650,000 units in 2006, but shipments rose by about 100,000 units from 440,000 units in 2005 to more than 540,000 units in 2006.

 

 

 

 

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