Thailand: production expected to fall by 11% to 2.2 million units in 2014
Domestic demand shrinks due to end of incentives and political turmoil
Political stability restored after military coup
Following the military coup on May 22, 2014, an interim military government was established in Thailand. As the rulers outlined plans for holding elections to set up a civilian government in the fall of 2015, political stability has been restored in the country for the time being. It is also considered that an economic recession may be averted.
2014 outlook for production and domestic sales to drop; exports projected to increase
According to the Federation of Thai Industries (FTI), the 2014 outlook for auto production will be 2.2 million units, which will be a 10.5% decline year-on-year (y/y). Toyota Motor Thailand (TMT) projects that sales in Thailand will plunge by 30.9% y/y to 920,000 units due to the market balancing after the end of the Thai government's "first car purchase scheme" along with the shrinking demand because of the political unrest. On the other hand, exports are expected to grow by 6.4% y/y.
According to LMC Automotive's forecast in the second quarter of 2014, Thai light vehicle sales (excluding medium- and heavy-duty commercial vehicles) in 2014 will fall to 940,000 units, which will be a 27.0% decrease y/y. Sales will recover gradually from 2015, and are estimated to reach 1.24 million units in 2017.
Ten OEMs apply for second phase of eco-car project
Application for the second phase of the eco-car project was closed at the end of March 2014. A total of ten OEMs have applied; in addition to the five Japanese OEMs, which have participated in the first phase of the project, five new automakers applied. With the eco-car project, the Thai government intends to achieve its target of producing 3 million vehicles per year by 2017.
Some OEMs expand their production capacities and R&D functions; others rethink investments
Since Thailand is considered to be an important production and export hub in the medium and long term, some OEMs continue to expand their production capacities in the country. Nissan started operations at its new 150,000-unit plant in July 2014. SAIC Motor-CP, which is a Chinese-Thai joint venture, opened a new 50,000-unit plant in June. VW reportedly plans to build a new plant to produce eco-cars by 2019. Mitsubishi Motors and Isuzu enhanced their development units in Thailand. On the other hand, due to the slow demand, it is assumed that Honda will postpone the start-up of a new plant, which was slated to come online in 2015.
Japanese suppliers in Thailand continue to expand production and R&D capacities (Sep. 2014)