Featured Image

Automotive Production Trends Post-COVID-19: Thailand

The message to car manufacturers and energy suppliers is to grab this opportunity to invest in the necessary infrastructure to support electric vehicles, as the number of drivers using such cars is expected to rise significantly.
Jul 30, 2021

While the Thai automotive industry has always had reliable domestic production, this trend seems like it will most likely continue in the future with similar – if not less – dependence on foreign automotive production. For instance, the Thai automotive industry is predicted to contract between 2% and 5% in the coming years. As the market is expected to shrink, and because automobile production is so ingrained in the Thai economy, it is unlikely that the well-established exporting nation will follow the global trend of higher global integration or shift toward importing. While Thailand continues to focus on domestic automobile production, there have been multiple shifts in the industry’s supply chain heading into the future. Most importantly, sales competition has become more competitive in Thailand since the automotive industry was liberalized in the early 1990s. In order for each industry competitor to streamline costs and offer the best prices, automotive manufacturers have made every effort to reduce costs and increase market competitiveness. 

According to a Nikkei report in May 2021, the Thai government has ambitious plans to turn the kingdom into a Southeast Asian hub for the manufacture of electric vehicles. Nikkei Asia reports that big companies in Thailand are preparing to invest substantially in a greener mode of transport after the National Electric Vehicle Policy Committee suggested a new manufacturing target could mean half of Thailand’s auto production would be made up of electric vehicles by 2030.

The message to car manufacturers and energy suppliers is to grab this opportunity to invest in the necessary infrastructure to support electric vehicles, as the number of drivers using such cars is expected to rise significantly. The Thailand Board of Investment says that between 2017 and 2019, investment in EV production and its infrastructure reached 79 billion baht. That figure is expected to rise at a much quicker rate over the next three years.

According to the Nikkei Asia report, Toyota was the first car manufacturer to make EVs in the kingdom. The number of EV manufacturers in Thailand is also growing, but Surapong Phaisitpattanapong from the Federation of Thai Industries’ Automotive Industry Club says they still need to overcome serious supply chain challenges. He says manufacturers of the traditional internal combustion engine now find themselves trying to supply parts for electric vehicles, including batteries, motors, and converters:

“It’s all about the economy of scale. If the number of EV users goes up substantially, it would be worth investing, and everyone, including auto parts makers, would be ready to switch to producing EV parts, and that would create supply chains that are ready for the development of EVs, but it will take time.”

 Supply Chain Operational Shifts

Since automotive components are challenging to transport, the shift to producing these parts locally cuts steps in the supply chain. As a result of the shift, both transportation costs and the time to deliver products are reduced. With the Local Content Requirement banned, companies within Thailand are shifting locally due to the saved resources from eliminating steps in the supply chain. Furthermore, an additional shift in the Thai automotive industry is its increased scale of production; once a certain level of local output is reached, local manufacturing becomes more efficient than importing from overseas. In Thailand, this shift in the supply chain has been apparent; in short, the supply chain in the Thai automotive industry has undoubtedly been streamlined and made more efficient in recent years.

The information provided in this article is based on research and report provided by George Washington University – CIBER Bootcamp and commissioned by IBDGi on behalf of AMT for the publication of the white paper Views on the Manufacturing Technology Supply Chain and International Trade: Changes in the Global Supply Chain, the International Manufacturing Industry, and the Demand of MT Equipment. To access the full white paper, click here.

Recent intelligence News
The Mexican car market is equally as large as it is varied. Forty-two different makers have representation in the market, having produced over 400 models, making Mexico one of the most diverse automobile markets in the world.
According to the International Energy Agency (IEA), about 3 million new electric cars were registered in 2020. For the first time, Europe beat out China with 1.4 million new registrations. China had 1.2 million, and the United States had 295,000.
Despite the challenges raised by COVID-19, South Korea's excellent human capital, adoption of high-value manufacturing, and exceptional ports are well positioned to stabilize the industry and allow the country to maintain a prominent position in the ...
According to IHS Markit, the Italian automotive industry will recover much faster than other sectors of Italy’s economy, which can be demonstrated by the fact that Italy will reach pre-COVID-19 growth in manufacturing as early as 2022. 
While Vietnam currently features a low automobile ownership rate, Vietnam's growing middle class is expected to increase demand. COVID-19 may have stunted growth of the market in the short term; however, the continued development of the country's middle...
Similar News
By Vanesa Powers | Sep 16, 2021

In the age of digital manufacturing, data systems have become more critical. The migration to these services from physical or existing digital systems requires thorough planning and a solid connection to business processes.

7 min
By Edward Christopher | Sep 14, 2021

The market potential for manufacturing technology in Southeast Asia led to an AMT initiative to develop services to build and expand its members' market share there.

5 min
By Stephen LaMarca | Sep 10, 2021

Octopus-inspired robots can do the twist. Graphics engines powering digital twins. 3D printing defects? There’s an app for that! Rethinking the supply chain. TÜV-certified AM.

5 min