The Future of automotive industry in Thailand

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Abstract:

Automotive industry in Thailand has been growing rapidly since early 2000s. Now, it has become to be called “Detroit of Asia”. This growth was mainly led by Japanese assemblers’ attempt to make their subsidiary in Thailand an export-oriented plant facing sharp decrease of domestic automobile market caused by Asian Economic Crisis. Over half of automobile market in Thailand has been dominated by one-ton pick-up truck and its derived vehicles, so naturally most Japanese assemblers, excluding Honda Motor Thailand, tried to export such vehicles. Fortunately, there was certain amount of market for one-ton pick-up truck and its derived vehicle worldwide. There was large market in developing countries and Australia, mainly because of their bad condition of roads in countryside, while there was only very small market for one-ton pick-up truck and its derived vehicle in developed countries. Thus, this strategy turned out to be a great success.
Then, additional strategy was needed for further growth of automobile industry in Thailand. Thus, government of Thailand has implemented so-called “eco-car program” in 2007. (This decision was made in late 2006.) This program provides participating automobile assemblers several tax breaks to, if they assemble “small passenger cars (eco-cars)” in Thailand and invest a significant amount in their plant. Honda, Mitsubishi, Nissan, Suzuki, Tata Motor and Toyota have already applied and approved to this program. (Tata Motors retracted its application last year.) Nissan already relocated its March (It is called Micra outside of Japan.) production from Japan to Thailand last year. Other participating assemblers will start “eco-car” production in Thailand within a few years.
Market of small passenger cars is expected to grow rapidly not only in emerging economies but also in developed countries, following recent hikes in the price of crude oil. Thus naturally, they are manufactured worldwide including Japan, which is most Thai automobile assemblers’ home country. As automotive industry in Thailand is completely dependent on foreign assemblers, local assemblers will not always move as government of Thailand desire.
In this presentation, I will overlook the milestone of automotive industry in Thailand, first. Then, I will examine the strength and weakness of Thai automotive industry. Finally, I will point out the role of Thai automotive industry in the global automotive industry.