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The Automobile, The Most Important Automotive Industries in Thailand

The automobile industry has become one of the most important businesses for Thailand's economic development since the Asia economic recession in the late 90's. During 1997 to 2004, Thailand's yearly automobile production has increased 81.2% with 225,000 employees, and 1,270,100 cars were made at that time. The automotive industry is 20% of total manufacturing business of the whole Thailand.

Thailand, the largest automobile parts maker, exporter in Asia.

Due to the hot weather, pick-up trucks are popular for rice farmers to carry their products; therefore, the pick-up truck occupied 65% of the entire automobile market (443,595 in 2006). Thailand has become the 2nd largest pick-up truck consumer after the U.S.

Freedom for Investors in Automotive Industries

Instead of utilizing protectionist policy, the Thailand government implements open and free policies to foreign investors so that they are willing to invest. In 2006, there are 15 automobile companies and 5 motorcycle manufacturers, and most of them have already developed their own production systems.

automobile industry in Thailand, the 28th and 29th International Motor Show in Bangkok
The 28th and the 29th International Motor Show in Bangkok

Thailand auto parts investment area introduction

Based on Thailand's investment plan, there are three various areas with different tax policies that are favorable to investment.

  • Area1 : Bangkok, Samut Prakan,Samut Sakhon, Nakhon Pathom, Nonhtaburi and Pathum Thani (Bangkok and 5 other provinces)
  • Area2 : Ang Thong, Ayutthaya, Chachoengsao, Chon Buri, Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi and Suphanburi(Total 12 provinces)
  • Area3 : Chai Nat, Chanthaburi, Chiang Mai, Chiang Rai, Chumphon, Kamphaeng Phet, Khon Kaen, Krabi, Lamphang, Lamphun, Loei, Lop Buri, Mae Hong Son, Mukdahan, Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, Phangnga, Phattalung, Phetchabun, Phetchaburi, Phitsanulok, Pichit, Prachin Buri, Prachuab Khiri Khan, Ranong, Sa Kaew, Sing Buri, Songkhla, Sukhothai, Surat Thani, Tak, Trang, Trat, Uthai Thani, Uttaradit , Amnat Charoen, Buri Ram, Chaiyaphum, Kalasin, Maha Sarakham, Nakhon Phanom, Nan, Narathiwat, Nong Bualamphu, Nong Khai, Pattani, Phayao, Phrae, Roi Et, Sakhon Nakhon, Sathun, Si Sa Ket, Surin, Udon Thani, Ubon Ratchathani, Yasothon and Yala

Thailand automobile parts industry introduction

A combination between local suppliers and international entrepreneurs, even though each of them is different, overall a completed production line is created.

OEM Automobile Parts Manufacturers

In Thailand, there are 709 OEM's with various production models- 287 foreign companies, 68 Thai-owned corporations, 354 local companies with total 100,000 employees.

Japanese owns a huge market in Thailand; 80% of OEM's are owned by Keiretsu, a Japanese group that provides services to their clients and the group is divided into three categories.

Japanese family business, corporate business with Japan's technical support, or a company that is authorized by Japanese with their technical support. In recent years, GM and Ford's entry in Thailand had brought higher-end automobile parts companies, even though Europeans got into the market earlier but with smaller sales, their purchasing amount is relatively small. In Thailand, most of the 2nd or 3rd level automobile parts suppliers are local businesses. So far, 80% pick-up truck accessory, 55% car auto parts and 100% motorcycle auto parts purchasing is done in Thailand. OEM suppliers fabricate engines, controllers, springs, car bearings, wheels, axis of rotations, breaks, clutches, controlling systems, car parts, electronic components, air adjusting components, tires, wheel covers, window glasses, etc. In the Japanese auto part association's ratings, Thailand's auto parts quality is rated at the top level in Asia and most of the manufacturers are also ISO9000 certified.

Non-OEM automobile parts manufacturers

In Thailand, there are 1,100 non-OEM suppliers providing auto parts, and they occupy a big portion of auto part market.

Mould Industry in Thailand

In 1980, Thailand started to expend their direct investment in the electrical machinery, automotive accessory and auto parts industry, hence the requirement for moulds increased quickly. Since 2000, mould production techniques in Thailand have become more sophisticated as the automotive industry market grows.

From 1993 to 2003, there are 895 molding manufacturers registered at the automotive industry bureau. If they are divided into different sizes, there are 727 small sized, 101 medium sized and 29 large manufacturers. Based on BOI's calculations on foreign investors, there are 65 from Japan, 9 from Taiwan, 8 from Korea, 7 from Singapore and 14 from others, and 52% are involved in plastic injection molding, 44% on metal stamping die, 16% on die-casting mould. The usages of those moulds are: 70% on automotive accessory, 30% on home appliances.

automobile industry in Thailand

Import and Export Analysis

In general, mould import and exports are divided into two categories: moulds and dies

70% of dies are imported from Japan, 13% from Korea and 7.5% from China. For molds, 50% of them are imported from Japan, 13.9% from China, 11.1% from Taiwan and 9.3% from Korea. Because of that, Japan is the biggest exporter to Thailand, accounting for 40% of the total. In 2006, India and Malaysia have become Thailand’s 6th and 7th top die mould export destinations, and this is because those countries import their moulds from the main automotive accessory manufacturers in Thailand that use the same production model. 30% of molds are exported to Japan, as well as to the U.S., China, etc. Even though the mold export rate reached 20.6% in 2006. it has slowly decreased since Chinese companies have started to purchase from local suppliers.

Thailand's mold making skill has transformed to a higher level after importing new equipment allowed it to achieve that standard. Despite that, the mold makers in Thailand still lack the seasoned skills and management compared to advanced countries. Hence, strengthening the quality of moulds, shortening employee's over time and overcoming language barriers would be the challenges for mold makers, and how they overcome them would influence the number of orders they receive.

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