Thailand’s Automotive Industry, Auto Parts and Accessories



Thailand is a regional manufacturing hub and supplier for many of the world’s largest auto makers.  For example, it is a central base for Ford’s Asia production, which in June 2010 announced it will build a $450 million car factory, its first wholly owned plant in Thailand.  Ford will manufacture Focus cars for the domestic and export market.

General Motors, Toyota,Mitsubishi, Nissan, Honda, and Mazda — through the Auto Alliance (Thailand), a joint venture with Ford — also have vehicle production facilities in Thailand, some of which serve both domestic and regional demand.  In addition, manufacturers such as Honda have made Thailand their center for automotive research and development for Asia and Oceania and for developing manufacturing tools and equipment for Association of Southeast Asian Nations (ASEAN) production facilities.

Kasikorn Research Center Co., a division of Kasikorn Bank, the nation’s third largest bank, predicts Thailand may produce 1.6 million vehicles in 2010, 60 percent more than last year.

Thailand’s auto industry is the largest in Southeast Asia, with a combined capacity to produce more than 1 million vehicles per year. Its auto industry infrastructure is the most developed in the region, according to Kasikorn Research, which makes Thailand attractive for new investments by auto manufacturers.

The motor vehicle and auto parts industry comprises 5.4 percent of the country’s overall industry, data from Thailand’s Fiscal Policy Office shows, and 55 percent of the automotive industry is focused on exports. Business-in-Asia.com says the industry represents one of the largest manufacturing sectors in the country and generates 12 percent of national GDP, an amazing change from 1961, when Thailand had only one automotive assembly plant.

Thailand’s emergence as an automotive powerhouse is due in part to the strong work ethic of its 67 million people, more than 300,000 of whom are employed in the industry, as well as steady investment and generous government incentives, according to Business-in-Asia.com.

In addition, demand by farmers and agribusiness for pickups has made Thailand the world’s second largest pickup market after the United States.

Thailand is a production base for manufacturing eco-cars that meet the most stringent European emissions standards and run on fuel with a 20 percent ethanol component.

In 2007, the Thai government announced tax breaks to encourage automakers to produce fuel-efficient cars and to use as an incentive for consumers to buy them.  At that time, Thailand was the world’s number one maker of light pickups (900,000 one-ton trucks annually – about three-fourths of global output), and the government recognized that soaring oil prices and concerns about greenhouse gas emissions would drive consumers to more “green” vehicles.

Honda, Suzuki, Toyota, Nissan, Mitsubishi, and Tata (whose pickups are the first driven by compressed natural gas) have invested millions of dollars in eco-car assembly and production of engines and parts in Thailand, primarily for export.  The investments have provided jobs for Thais at eco-car assembly plants and auto part plants.

Thailand was the first ASEAN country to build hybrid vehicles, according to Toyota, which began producing hybrids there in 2009 in the first factory fueled by clean natural gas.

In May 2010, the new Nissan March demonstrated its fuel economy by traveling more than 1,000 kilometers on a single tank of gas, which Nissan said made it “Thailand’s first eco-car.”

The country also benefits from open trade with and ongoing growth in the auto markets of its neighbors in ASEAN, whose 10 members have a combined population of nearly 600 million people.  Thailand enjoys a tax exemption for automotive parts through the ASEAN Free Trade Area (AFTA) agreement.  Free trade agreements with Australia, New Zealand, China (another 1.3 billion consumers), and India also have created market opportunities for Thailand.

All of these factors are expected to result in the Thai auto and automotive parts industry experiencing a steep growth rate this year.

During the first five months of 2010, Thailand’s vehicle production and exports rose.  In May alone, Thailand’s automotive production and exports more than doubled from the previous year, thanks to stronger demand from both local and overseas markets, according to the Federation of Thai Industries (FTI).  The significant increase partially may be attributed to last year’s low numbers, when the global economy was in a recession.  In the first five months, vehicle production surged 97.3 percent, to 620,116 units.

The federation forecasts vehicle production in Thailand from June to August will be 373,088 units, 59.5 percent higher than a year ago.  For all of 2010, FTI expects production will increase from 1.4 million vehicles to between 1.5 and 1.6 million.

To meet demand, Thai manufacturers are preparing to acquire raw materials and hire additional workers.  Production volume in April 2010 increased by 83 percent over the previous year, after a seasonal decrease of .06 percent in March.

This jump likely will heighten the need for additional raw materials.  Currently, Thailand imports 0.47 megatons (470,000 tons) of metal from Japan annually under a quota through the Japan-Thailand Economic Partnership Agreement (JTEPA).  If this amount is inadequate to meet demand for the remainder of the year, manufacturers will be forced to import more expensive raw material outside the quota support, which could raise the cost of goods between 5 and 10 percent.

FTI figures show Thailand’s May 2010 vehicle output was 132,165 units, up from 61,752 units a year earlier, according to FTI.  The number of units exported in May was 75,075, up from 31,913 units from a year earlier, with increased shipments to every market.

The value of car, truck and bus exports — including detached engines and automotive parts — totaled THB49.78 billion (US$1.54 billion) in May, more than double the THB24.46 billion recorded in May 2009.  With motorcycles and motorcycle parts also included, the value of automotive industry exports was THB53.05 billion, up 96.3 percent from 2009.

Companies interested in working with Thailand’s automotive manufacturing and parts industry may obtain information from Thai Trade Center North America and private sector organizations and by attending international automotive expos in which Thai firms are participating.

More than 20 Thai companies will participate in the annual Automotive Aftermarket Parts Expo (AAPEX) in Las Vegas, Nevada, October 31-November 4.  The Thai companies are part of the $395 billion global motor vehicle aftermarket and will include a range of manufacturers and suppliers of post-original sale products for light and heavy duty vehicles, such as replacement parts, accessories, lubricants, appearance products, tires, and vehicle repair tools and equipment.

The Thailand Auto Parts and Accessories Show (TAPA), held every spring in Bangkok with support from the Ministry of Commerce Department of Export Promotion, is an ideal place for locating manufacturing sources for auto parts and accessories from ASEAN. TAPA brings buyers from around the world together with Thai and other ASEAN manufacturers, both OEMs and REMs of vehicles, automotive parts, spare parts, and accessories.

FTI’s Automotive Industry Club promotes the advancement of Thailand’s automobile industry on an international scale, while the Thai Automotive Institute (TAI) supports the country’s spare parts manufacturers in developing their production technology to compete internationally.

Created with the support of the Ministry of Commerce in 1978, the Thai Auto-Parts Manufacturers Association (TAPMA) represents auto parts industrialists in developing the industry in Thailand, improving production technology efficiencies, addressing raw material import issues, and attracting and educating skilled laborers and engineers. TAPMA’s 400 plus members produce a wide range of automotive parts, including air bags, air filters, batteries, brake parts, plastic injection molds, body parts, electrical components, farm machinery, tractors, and trailers.

Other private sector groups representing Thailand’s motor vehicle industry include the Thai Automotive Industry Association (TAIA) and Tool and Die Association.

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