Thailand, carmaker of the East

THAI REVIVAL: An assembly line at a Honda plant in Ayuthaya, north of Bangkok. Since thousands of cars were submerged in flood waters in 2011, the Thai car industry has made a remarkable recovery.


    Sep 09, 2013

    Thailand, carmaker of the East

    AT A high-tech factory in the world's fastest-growing vehicle-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. With major carmakers hit by a global economic downturn, the South-east Asian nation has emerged as a rare bright spot in recent years.

    Thailand's production surged 70 per cent last year from the previous year, to 2.48 million vehicles, according to the International Organization of Motor Vehicle Manufacturers.

    In contrast, China and India saw only single-digit gains.

    Thanks to major investments 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.

    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.

    At a Honda factory on the outskirts of Bangkok, it takes three days to fully assemble a new car. Over 1,100 drive off the production line every day.

    The Japanese maker is aiming to churn out 420,000 vehicles a year in Thailand by 2015, when a new US$644-million (S$820-million) 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 that car-making behemoths could move their operations.

    "We were severely affected... if we were a small company we would have gone bankrupt," Mr Pitak Pruittisarikorn, executive vice-president of Honda Automobile Thailand, said. "But from the company that was affected most, we came back to be the company that has the highest growth."

    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 company says it will eventually make 770,000 vehicles - from passenger cars to vans - on Thai soil each year.

    Meanwhile, Nissan 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 nation's 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.

    The "Golden Year" of 2012 was followed by a record first half, but sales have since waned as fears over household debt mount and banks tighten credit lines, prompting many orders under the scheme to be cancelled.

    Even so, analysts see a bright future for the Thai car market, predicting 10 per cent annual growth in the coming years.