Thai government approves nine OEMs’ investment projects for electrified vehicles
2019 exports to fall due to US-China trade war; domestic sales picking up
2019/07/08
- Summary
- Thai government approves nine OEMs’ investment projects for electrified vehicles
- Exports in 2019 projected to fall due to impact of US-China trade friction
- Thai auto market: sales of pickup trucks grow 20.6%; SUVs increase 43.8%
- SUBARU starts local production with Tan Chong; CV manufacturers to build new facilities
- Recent activities of Toyota, Honda, Mitsubishi, Nissan, Suzuki, GM, Mercedes-Benz and BMW
- (Appendix) Major OEMs' plants in Thailand
- Production forecast by LMC Automotive: Thai light vehicle production to increase to 2.32 million units in 2022
Summary
In 2018, Thai vehicle production increased to 2.16 million units, up 8.7% from the previous year. By vehicle type, production of passenger cars grew 7.0% year-over-year (y/y) while output of commercial vehicles rose 9.9% y/y. Among passenger cars, production of “eco-cars,” fuel-efficient compact cars that comply with the government’s eco-car regulations, grew 6.5% y/y. Out of all the commercial vehicles built, output of 1-ton pickup trucks excluding passenger pickup vehicles (PPV) increased 11.2% y/y and accounted for 49.4% of total production. Sales volume in Thailand in 2018 grew for the second consecutive year and reached 1.04 million units, a 19.5% increase from the previous year. While domestic vehicle sales climbed owing to economic growth, exports from Thailand were 1.14 million units, up by only 0.1% from the previous year. Although exports to Asia expanded, shipments to the Middle East, Europe, and North America dropped.
The Federation of Thai Industries (FTI) forecasts that, in 2019, vehicle production will decrease 0.6% y/y to 2.15 million units. Production for domestic sales is expected to increase 0.8% y/y to 1.05 million units backed by Thailand’s GDP growth outlook of 3.5-3.8%. Meanwhile, production for exports is projected to fall 3.6% y/y to 1.1 million units (51.2% of total production) with some of destination countries impacted by the US-China trade war (forecast as of January 2019).
In Thailand, the military has controlled the government ever since the coup in 2014. In March 2019, a general election (for the lower house) was held, and the pro-junta Palang Pracharet party, which came second in the election, formed a coalition with 18 other parties. As a result, the junta leader Prayuth, who assumed office as the new prime minister on June 11, will stay in power. After the coalition forms a new cabinet, the country will restore civilian rule.
Following the military coup, the Thai economy has gradually improved under the junta, while foreign investment from advanced countries stagnated due to concerns about a regression of democratization. After the civil government is established, foreign investment is expected to grow. However, political instability may affect the Thai economy and automotive industry as the civilian administration will not have the same ability to execute measures as the military junta and there will be a lack of concerted action among the members of the 19-party coalition.
In March 2017, the Thai government set up an incentive program for investment to build electrified vehicles to make the country a hub for production of such vehicles. The Bureau of Investment (BOI) of Thailand has approved four OEMs each for hybrid vehicle (HV) and plug-in hybrid vehicle (PHV) production and one OEM for electric vehicle (EV) production to offer investment privileges as of May 2019. In addition, another OEM applied to the BOI for HV production, four other OEMs for PHV production and 19 other OEMs for EV production, and are still waiting for approvals.
Regarding production facilities, SUBARU and Malaysia’s Tan Chong group built a joint venture assembly plant with an annual production capacity of 100,000 units and started operations in April 2019. Besides, commercial vehicle manufacturers are active in building new facilities in Thailand: Scania and Mitsubishi Fuso independently opened new plants in 2019; Hino Motors plans to establish a new center to develop and produce vehicles optimized for the ASEAN countries and start its operations in 2021.
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| Thai automobile production by vehicle type (Created by MarkLines based on FTI's data) |
All-New Honda Accord launched in May 2019 (Bangkok International Motor Show 2019) |
Related reports:
Bangkok International Motor Show 2019: diversification of local lineups (Apr. 2019)
ASEAN: Thailand accelerates EV production; new plants to be built in Malaysia and Vietnam (Mar. 2019)
Thailand International Motor Expo 2018: Nissan Leaf and other EV models (Dec. 2018)
Thai vehicle production expected to grow to 2 million units in 2018 (Apr. 2018)
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