Auto parts
Upcoming SlideShare
Loading in...5
×
 

Auto parts

on

  • 652 views

 

Statistics

Views

Total Views
652
Views on SlideShare
652
Embed Views
0

Actions

Likes
0
Downloads
12
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Auto parts Auto parts Document Transcript

    • Automotive Parts and accessories 2001 Automotive Parts and Accessories 1. Industry Overview Thailand has been the leading automotive manufacturer in Southeast Asia for more than 30 years. Stemming from the production of automobiles, Thailand also stands as a leading manufacturer and supplier of autoparts and components. Recent years have seen several new foreign joint venture companies set up operations in Thailand. Much of the production carried out by these new companies is to supply assembly lines operated by international manufacturers, however a purely indigenous industry has developed as well. The automotive industry in Thailand began in the early 1960s. It was initially very successful in attracting foreign automotive manufacturers from Japan, the United States and Europe to invest in Thailand either by setting up assembly plants or joint ventures with Thai companies. In recent years there has been a huge build-up of the automotive industry in Thailand, with Toyota, Isuzu, Mazda, Mitsubishi, Nissan, Honda, Ford, Chrysler, General Motors and Volvo amongst the international car makers with production lines in the country. Of all car manufacturers, Japanese automotive companies have by far the strongest hold in the Thai market, with 92 percent of the Thai automotive market. Foreign automotive manufacturers, especially Japanese firms, have laid down the foundations of the automotive parts industry, developing strong networks of parts suppliers, dealers and service centers. However, until very recently, the Thai government sought to protect local Thai automobile companies by imposing a 54 percent local content ratio for passenger cars, 70 percent for pick-up trucks and 62 percent for commercial vehicles. The automotive industry was liberalized in 1994 to encourage local parts manufacturers to improve their efficiency, technology as well as product quality. This was in preparation for the abolishment of local content requirement laws in the year 2000, in accordance with WTO agreement principles. This market liberalization has helped to attract foreign automobile assemblers as the policy of non-discrimination is extended to all automobiles manufactured in Thailand. Since Thailand has no national car, as is the case in countries such as Malaysia, there is no need for economic measures restricting the operations of foreign automotive manufacturers. Presently, the industry is going through a process of upgrading product quality. As quality is now a prime concern, especially given the competition with large international automobile manufacturers, ISO 9000 certification is currently becoming a necessary standard for the main producers. CSN & Associates Page 1
    • Automotive Parts and accessories 2001 However, the automotive parts industry has still been promoted by the government, represented by the Board of Investment (BOI). Full promotion packages, including tax incentives are offered to manufacturers of engine parts, transmissions, brakes, steering and suspension systems, radiators, fuel tanks, filters, wiring harnesses, gaskets and leaf springs. Moreover, the local manufacturers also have a comparative advantage in terms of raw materials, as Thailand is the world’s largest producer of rubber products. Over the past few years, the plastics and other petrochemical industries have played a dominant role in the industry as well. Consequently, it is a great benefit for local automotive parts manufacturers to utilize the abundance of these resources. 2. Production Locally, there are approximately 600 automotive parts manufacturers. Using foreign technology acquired through joint venture companies, these manufacturers are now capable of carrying out the complex blending process and synthetic rubber production required in the auto sector. These manufacturers are producing goods to serve the OEM (80%) and REM (12%) markets, while the rest is exported. The manufacturers can be classified by types and production ability as follows: Production Ability Type Product Pattern Tire and wheel, seat, Group A High rubber parts, internal Labor intensive accessories Glass, break and clutch Skilled workmanship and Group B Medium system, body parts, high technology electronic parts Gear, transmission and High skill mechanic and Group C Low shaft advanced technology Source: Bank of Thailand CSN & Associates Page 2
    • Automotive Parts and accessories 2001 3. Domestic Markets The domestic demand for the automotive parts industry reached a peak in 1996, when automobiles recorded their highest level of production and sales. However, the economic crisis has caused a major contraction in this sector. In 1998, the domestic sales of automobiles dropped drastically, by 60.3% from the totals recorded in 1997. Consequently, this decrease in sales led to a diminishing demand for automotive parts, especially in OEM. The situation started to improve in 1999. Last year, the automotive industry enjoyed a favorable growth of 20.1%, with domestic sales reaching 262,250 units. As expected, this year’s sales will probably reach 300,000 units or roughly a 15% increase from last year. This significant improvement in sales has stimulated demand for automotive parts. Domestic Sales and Production of Automobiles Units 800,000 600,000 400,000 200,000 0 1996 1997 1998 1999 2000 Sales 588,867 363,242 144,065 218,330 262,250 Production 547,321 360,303 158,130 327,233 411,721 Source: The Federation of Thai Industries To reduce the effect of the crisis, automotive parts manufacturers turned their focus to overseas markets, as the operating costs in Thailand are relatively cheaper than in other countries. In recent years, there has been a massive investment in the automotive industry from companies such as Toyota, Isuzu, Mazda, Mitsubishi, Nissan, Honda, Ford, Chrysler and General Motors. This kind of investment enhances the possibility of Thailand becoming the automotive hub for this region. CSN & Associates Page 3
    • Automotive Parts and accessories 2001 4. Export Markets Parts and Accessories of Motor Vehicles The export of motor vehicle Export Value (Million US $) by Destinations 2001 parts and accessories has (Jan.-Aug.) become an increasingly important part of the Thai economy. In 1997, the total AUSTRALIA value of exports in this 1.64% sector was US $165.7 BELGIUM 1.66% OTHERS JAP AN million, while in 1998 the P AKISTAN 17.34% 21.13% total climbed to $242.7 1.71% million. In 1999, the total INDONESIA MALAYSIA level reached $352.3 15.84% 4.72% million and peaked in 2000 P HILIP P INES 4.90% at $561.9 million. This SWEDEN SOUTH AFRICA upward trend appears to 6.16% U.S.A. 14.08% have continued into 2001, 10.82% with figures for the first half of the year showing a further increase in total exports; US $416.3 million Source: Department of Business Economics versus $362.3 million for the same period the previous year. Thailand’s largest export market for parts and accessories of motor vehicles is Japan, which accounts for 21.1% of the total export market. In the first half of this year, Japan imported just under US $88 million in vehicle parts and accessories. Japan is followed by Malaysia, which makes up 15.8% of the total export market, importing almost $66 million in the first half of 2001. The third largest export market is South Africa, which imported $58.6 million in the first half of this year. Most of Thailand’s top ten importing countries have shown a positive trend in terms of increase in import levels for the first half of this year. Moreover, Thailand’s top ten export markets are located in very diverse areas, meaning that an economic slowdown in one region will not likely dissolve Thailand’s entire industrial sector of automotive parts and accessories. Despite a current slowdown in the global economy, automobiles are a necessary means of transport for many in both developing and developed nations. For this reason, the demand for motor vehicle parts and accessories will most certainly remain steady in the future. Thus the export of motor vehicle parts and accessories will continue to form an important part of the Thai economy. CSN & Associates Page 4
    • Automotive Parts and accessories 2001 Parts and Accessories of Motor Vehicles Export Value (Million US $) Classified by Countries 1997-2001 (Jan.-Aug.) Export Value (Million US $) % Change Countries 2000 2001 2001 1997 1998 1999 2000 1998 1999 2000 (Jan.-Aug.) (Jan.-Aug.) (Jan.-Aug.) 1. JAPAN 39.74 75.77 108.55 135.22 93.95 87.96 90.68% 43.26% 24.57% -6.38% 2. MALAYSIA 23.28 2.07 20.66 61.12 34.21 65.96 -91.09% 896.41% 195.81% 92.83% 3. SOUTH AFRICA 0.36 12 17.68 70.37 41.41 58.62 3275.86% 47.38% 298.03% 41.58% 4. U.S.A. 36.49 45.82 64.66 64.44 44.38 45.05 25.57% 41.11% -0.34% 1.50% 5. SWEDEN 1.26 14.68 33.77 41.98 26.86 25.65 1064.81% 130.00% 24.30% -4.49% 6. PHILIPPINES 10.58 7.83 12.95 25.32 16.06 20.4 -26.02% 65.43% 95.57% 27.04% 7. INDONESIA 4.91 1.71 3.52 29.21 17.61 19.66 -65.27% 106.33% 729.85% 11.63% 8. PAKISTAN 1.26 3.35 2.4 6.67 4.74 7.1 165.65% -28.44% 178.06% 49.82% 9. BELGIUM 11.07 13.83 15.92 20.29 14.78 6.93 24.98% 15.10% 27.51% -53.11% 10. AUSTRALIA 2.6 3.62 8.61 10.31 6.38 6.82 38.94% 137.88% 19.81% 6.84% Total 10 item 131.55 180.68 288.71 464.94 300.36 344.14 37.35% 59.80% 61.04% 14.58% Other 34.16 62.03 63.56 96.99 61.93 72.17 81.59% 2.47% 52.60% 16.54% Grand Total 165.7 242.7 352.27 561.94 362.29 416.32 46.47% 45.15% 59.52% 14.91% Source: Department of Business Economics Parts and Accessories of Motor Vehicles Export Value (Million US $) Classified by Countries 1997-2001 (Jan.-Aug.) Value (Million US $) 600 Total 500 JAPAN 400 MALAYSIA SOUTH AFRICA 300 U.S.A. SWEDEN 200 Others 100 0 1997 1998 1999 2000 2000 (Jan.-Aug.) 2001 (Jan.-Aug.) Year Source: Department of Business Economics CSN & Associates Page 5
    • Automotive Parts and accessories 2001 5. Future Trends The future looks strong for Thailand’s automobile industry. Sales are projected to rise to their pre-crisis level of 600,000 units by 2004. Export earnings of the industry have doubled since 1995, and saw a 45 percent jump in 1999 over the previous year. If the ASEAN trade pact is fully implemented, Thai auto assemblers would have access to a potential market of 511 million consumers at tariff rates lower than those enjoyed by non-ASEAN countries like Korea. With car factories in Thailand having the capacity to produce 1 million units a year, the country is positioned to make significant gains in its export of CBU units. CSN & Associates Page 6