Impact of Economic Crises on the Thai Automobile Industry

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This paper analyzes impacts of economic crises on the Thai automobile industry at both demand and supply sides. On the demand side, this study will offer descriptive and statistical analysis on demand for automobile at micro and macro levels. At the micro level, based on questionnaire survey, we analyze the determinant of consumers demand for a car. At the macro level, we estimate determinants of automobile demand, using data from1970s to 2009. We found that demand for automobiles drop during economic crises in 1997-1998 and 2008-2009. However, the impact of the crisis in 2008 was not as serious as in 1997. This is because car manufacturers in Thailand had undergone business restructure and increased their activities in Thailand since 2000. Thus, on the supply side, this study discusses evolution of the Thai government policies to shed light on how the industry been transformed to be a global production network of one-ton pickup trucks and, recently, a production hub for eco-friendly vehicles of several assemblers. We found that industrial policies were crucial in making Thailand's specialization in automobile production, of which has slightly shifted from one-ton pickup trucks to more small passenger cars.