Thailand is Southeast Asia’s most prolific carmaker, streets ahead of nearest-rival Indonesia

Boom times for the ‘Detroit of Southeast Asia’

Published: 2013/09/09

BANGKOK: At a high-tech factory in the world’s fastest growing auto production hub, industrial robots and white-suited workers put the finishing touches to hundreds of cars rolling off the assembly line each day. It could be a scene from Toyota City or Detroit, but this is Thailand, a country better known for its beaches and rice paddies. With major carmakers hit by a global economic downturn, the Southeast Asian nation has emerged as a rare bright spot in recent years. Thailand’s auto production surged 70 per cent in 2012 from the previous year, to 2.48 million vehicles, according to the Paris-based International Organisation of Motor Vehicle Manufacturers. In contrast, China and India saw only single-digit gains.

Thanks to major investment by Japanese producers as well as US giant Ford, Thailand is Southeast Asia’s most prolific carmaker, streets ahead of nearest-rival Indonesia.
Last year it exported about one million vehicles. Domestic sales continued to surge in the first six months of 2013, although they have since slowed as the number of first time buyers lured into the market by tax breaks tails off.
It is a general growth trend across much of the region as people switch to cars from motorcycles.
Despite worries about Thailand’s wider economic fortunes, carmakers remain bullish about the kingdom’s long-term prospects and have pumped hundreds of millions of dollars into high-tech new plants to prove it.
“There might be black clouds and there might be problems, but overall the car industry is driven by people… people with two wheels who want to get four wheels,” says Uli Kaiser, president of industry analysts the Automotive Focus Group Thailand.
“I don’t see that desire to stop, and I see Southeast Asia as the strongest growth territory in the world.”
As the battle for market share intensifies, big carmakers – many from Japan – are ploughing cash into new plants determined to sell more vehicles to Thailand’s burgeoning consumer classes and take advantage of its location in the heart of Southeast Asia’s export markets.
At a Honda factory on the outskirts of Bangkok, it takes three days to assemble a car. Over 1,100 drive off the production line every day.
The Japanese maker aims to churn out 420,000 vehicles a year in Thailand by 2015, when a new US$644 million (RM2.1 billion) car plant is expected to open outside Bangkok.
It is a far cry from 2011 when floods swamped much of the country and shuttered the industry for weeks, raising fears automaking behemoths could shift their operations.
Last month, rival Toyota started production at a sprawling US$340 million assembly plant, its fifth in a country where it sold more than half a million vehicles last year.
The group, which employs 13,500 people in Thailand and whose pickup trucks are ever-present on its motorways, is determined to stay in pole position.
Nissan, meanwhile, has pledged to open a second factory costing US$360 million next year, which will eventually produce 150,000 vehicles annually.
Thailand’s car boom has been in part steered by the government which gave the sector a shot-in-the-arm after the floods with its “first car” policy, garnering around 1.25 million orders for new cars qualifying for a tax rebate of up to US$2,500. AFP