So the automotive industry in Thailand is dying?

Well the largest automotive car maker in Europe, Volkswagen, has recently applied to set up its first plant in Thailnd under the government scheme that requires car makers to invest at least THB 6.5 bn and that annual production must reach 100,000 cars in the fourth year (not later than 2019) once operations commence.

The simple fact remains that Thailand has a domestic appetite for cars of 1 million cars per year, that could comfortably grow over the next decade to 2 million cars/year and despite all this political rubbish, it would be crazy for any automanufacturer to miss out on this market.

Following on from this the shipment of car parts for Thailand last year grew by +6% to USD 12 bn and is still expected to grow by another 10% this year.

Now in all of ASEAN, there were 4.4 million cars produced in 2013, Thailand represents just over 50% with 2.4 million cars manufactured last year

The Eco-Car Phase II attracted a helluva lot of interest, there were 10 car makers (5 existing ones) that applied for this and that equates to THB 139 bn worth of potential investments.

As of Feb ’14, the 5 existing eco car manufacturers produced 800,000 eco-cars, of which only 20,000 units were for domestic sale and the rest export, this second phase will result in an additional 500,000 vehicles manufactured in the next few years (because as with Volkwagens case, the BOI requires automakers to produce 100,000 units/year by the fourth year of operations)

So who benefits from all this?

Manufacturers: SAT, STANLY, TRU, AH

Others: IHL, NYT

Industrial real estate: TICON, WHA, HEMRAJ, AMATA, RJANA

I’m sure I’ve forgotten one or two others, as there are several other businesses that gain from the continued growth in automanufacturers ranging from petrochemical suppliers, plastic suppliers, utility providers and so forth. And again, the fact remains that Thailand has a large domestic demand for autos, thanks to the Japanese there is already a massive automotive cluster (from manufacturers to suppliers) that exist in Thailand today that car makers can plug into. I’m not worried about the automotive sector for Thailand for the next 5 years at all.

Article Sources:

http://www.bangkokpost.com/business/news/403136/shipments-of-car-parts-expected-to-grow-by-10

http://www.bangkokpost.com/business/marketing/403131/volkswagen-seeks-to-set-up-first-plant-in-thailand

http://www.bangkokpost.com/auto/autoscoop/402952/10-companies-sign-up-for-eco-car-plan