Thai auto companies see production drop

Automakers in Thailand estimate the cutback in overtime begun two weeks ago in the wake of the Japanese disaster has cost them 10,000 vehicles to date, but normal production is expected to resume after April’s Songkran holiday.

Suparat Sirisuwanangkura, president of the Federation of Thai Industries' automotive industry club, said the number of vehicles lost through the downtime would eventually number in the tens of thousands as manufacturers ensure they have enough parts to serve production.

Overtime shifts have been halted at many Thai car factories since March 14, three days after a devastating earthquake and tsunami struck northeastern Japan, resulting in production losses of 5,000 vehicles a week in the Thai facilities, he said.

Mr. Suparat, said 50 of his company's more than 100 suppliers had been affected by the disasters in Japan.

Panasonic, which supplies electronic components and batteries to Toyota, has stopped production at up to eight of its factories located in Japan.

Four of Toyota's 12 plants in Japan also shut down but will resume production this week. Toyota, the market leader in Thailand, is maintaining this year's local production target of 685,000 vehicles, half of which will be exported, said Mr. Suparat.

He said deliveries of some models including the Prius hybrid may be delayed, as some high-tech components are imported from Japan.

"But we do expect sales to catch up after Songkran, enabling us to reach this year's overall target," said Mr. Suparat.

He also expects the overall industry's production target of 1.8 million vehicles will be achieved - 800,000 for domestic sales and 1 million for export.

Factors that may affect the industry's forecast include the southern flooding, which has already dented vehicle sales, said Mr. Suparat. High oil prices and the upcoming general election are also important.

Mr. Suparat said the catastrophe in Japan could persuade Japanese car makers to consider moving more of their production to Thailand.

This would involve mainly passenger cars, as Thailand is already a manufacturing hub for pickup trucks.

However, he believes a healthy future for the Thai automotive industry still hinges on a supportive tax structure and energy policy.

The excise tax revamp now being proposed should be fair and offer an appropriate lead time for all manufacturers, he said.

Isuzu, the Japanese pickup truck giant, said rising farm prices in Thailand will boost local vehicle sales for years to come.

Phaibool Poocharoen, a senior vice-president of Thailand's Tri Petch Isuzu Sales Co, said the global pickup market was projected to reach 4.6 million units in 2030, from 1.7 million in 2009. Of those, 2.5 million would be made in Thailand, he said.