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Roger Moser: Thailand 2022
 

Roger Moser: Thailand 2022

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Overview on the Thailand 2022 Automotive Delphi Study.

Overview on the Thailand 2022 Automotive Delphi Study.

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  • That's one of most interesting report I've ever seen.Thanks so much for the sharing. It must be really a FUN there to see or participating the debates. I personally like so much the reasons for the possibility low. Obviously they have a very clear understanding about the Thai Automotive industry and a keen observation on the Thai society. Hope next time I would have the chance to witness/ participate your discussion. Thank you again for the fabulous work!
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    Roger Moser: Thailand 2022 Roger Moser: Thailand 2022 Presentation Transcript

    • The THAILAND Automotive Industry 2022A Preliminary Report on the Thailand Automotive 2022 StudyA collaboration between the ASIA CONNECT Center, University of St.Gallen, the Thai AutomotiveFocus Group and the Thai-European Business Association.Dr. Roger Moser Uli KaiserDirector ASIA CONNECT Center PresidentUniversity of St.Gallen Automotive Focus GroupSt.Gallen/Bangkok, 2012
    • 1 Setting the Stage: Why a Thailand Automotive 2022 Study?2 The Industry Intelligence Approach applied for Thailand 20223 Summary and Outlook
    • STARTING POINT: Local as well as Expat and Western managers in Asiancountries face uncertainty and ambiguity regarding future institutional change. Uncertainty & Ambiguity as Challenges The dynamics of institutions in emerging markets can cause frequent changes in governmental regulations, tax laws, foreign direct investment (FDI) regulations, business practices, competition, or market conditions, etc.. Yet, changes in environmental conditions are difficult to identify and interpret and, subsequently, the complexity of their development and interrelatedness are difficult to understand for local as well as foreign senior executives.Insights on the Future Industry Context toImprove Strategic FlexibilityIn order to successfully deal with the increasedcomplexity, interdependencies and dynamics that areinherent in emerging markets’ institutional context,senior executives require not only an accurate pictureof today’s market situation but also information aboutthe potential future business environment(s).
    • PROPOSAL: We have developed an INDUSTRY INTELLIGENCE APPROACH tobetter understand potential changes in the industry environment of Asianmarkets. Industry Intelligence Approach 抛砖引玉 / Tossing out a brick to get a jade gem The Industry Intelligence approach of the ASIA CONNECT Center-HSG can be used to serve local as well as Expat and Western managers to better understand the dynamic context of their focal industry. The approach enables decision-makers to reduce uncertainty about impactful future developments as well as ambiguity about the institutional context based on a structured, practice- oriented research methodology. The approach also allows to transform insights on potential futures into functional consequences today.
    • APPROACH: The INDUSTRY INTELLIGENCE APPROACH builds on quantitativeand qualitative data from a diverse range of local industry experts as well asonsite discussions (analysis workshops). Looking into the Minds of Local Experts (Online Delphi Study) First, we evaluate projections about future industry developments or strategic group behavior with respect to their probability of occurrence as well as impact on the industry/competitors and evaluate consensus among the participating industry experts (e.g. online and real-time). Moreover, participating experts are encouraged to explain the reasons for a high/low assessment of a projection. This approach allows for a unique understanding based on the different perspectives and opinions of a wide range of local industry experts  a unique combination of qualitative and quantitative data!Exchanging Viewpoints in (Workshops)Onsite expert workshops on the campus of business schools orin collaboration with industry associations allow for even moredetailed insights on the consequences of the evaluatedprojections and scenarios for industry stakeholders as wellas the institutional interdependencies in the focal industry.
    • OVERALL OBJECTIVE OF THE APPROACH : Uncertainty and ambiguityreduction for senior executives . UNDERSTANDING YOUR INDUSTRYChallenge 1: ENVIRONMENT Challenge 2:Uncertainty Ambiguity aboutabout future institutional developments institutional interdependencesWhich changes might occur in the How changes might interrelate andinstitutional environment? what does it mean for a firm? STEP 1: Real-time Delphi Online study with local industry experts to gather distinct perspectives on ‘hot topics’ (e.g. PEST, Value Chain, Markets) . STEP 2: Workshop to develop scenarios of the future political, socio-cultural, value chain and infrastructure environment for your focal industry, (e.g. for the year 2022).
    • INDUSTRY SEGMENT STUDY EXAMPLE from CHINA – There is moderateconsensus and probability that the majority of Chinese car buyers prefer greenpower train technologies in 2020. Industry Stakeholder Projection: Customers Probability * Impact* Desirability* Consensus** “Green Focus”: In 2020, more than 90% of China’s car buyers 53% 4.1 3.9 20 prefer cars that utilize the most environment-friendly power Very Moderate train technologies available. Likely High High Consensus Probability Low Probability High …China is too far away to prioritize environment and health …running costs will compensate the high tag price in the long run. considerations. …be careful what is regarded as green energies…all OEMs will …price sensitivity of the end user offer low-energy consumption vehicles. …large vehicles will remain more popular …pollution and restrictions in urban areas drive this development. Impact Low Impact High … all cars will be complying with emission requirements … pushes the industry towards more R&D investments. Desirability Low Desirability High …this will drive up costs … continuous improvement of technologies. * Probability (0-100%); Impact on Chinese automotive industry (low (1) –(5) high); Desirability for Chinese automotive industry (low (1) – (5) high) * * Consensus (Level of agreement between 80 Delphi study participants measured as Interquartile Distance)
    • INDUSTRY SEGMENT STUDY EXAMPLE from China – Distinctcharacteristics, implications for the industrysstakeholders and probability of occurrence. SP2: “Status Symbols” SP1: Private Transportation
    • INDUSTRY SEGMENT STUDY EXAMPLE from China – Understanding the“institutional dynamics” (reducing ambiguity).
    • EXTENSION OF THE APPROACH: Identifying future market and value chaininvestment behaviors of strategic groups. Understanding the Future Behavior ofQuestion 1: STRATEGIC GROUPS Question 2:Future Geographical Future Value ChainMarket Focus InvestmentsWhich geographical markets do the Where do the strategic groups focus theirstrategic groups focus on? investments along the value chain? STEP 1: Real-time Delphi Online real-time Delphi study with local industry experts to gather distinct perspectives on ‘hot topics’. STEP 2: Expert Interviews to further investigate differences within strategic groups and differentiate more specifically the interrelations between single resource investments
    • STRATEGIC GROUP STUDY EXAMPLE from China – Dependent & IndependentChinese OEMs:. Projections * Probability vs. Impact 1 Chinese OEMs reach 40% market share Impact Chinese 1-5 2 Indep. OEMs grow stronger than dep. OEMs Market 4.0 3 Consolidation takes place 11 Government 4 Government support will be reduced 3.9 1 Intervention 5 Enforcement of IPR1 will improve 3.8 13 21 6 Dep. OEMs heavily depend on tech. transfer 7 Indep. OEMs are successful innovators 7 3.7 8 9 R&D 8 Indep. OEMs invest 10% of revenues in R&D 3 5 19 4 16 9 10% of indep. OEMs‘ hires are “experienced“ 3.6 12 15 14 10 Dep. OEMs produce their brands only in China Pro- 3.5 11 Quality gap of dep. OEMs has been narrowed 18 duc- 20 VC Evolution tion 12 Indep. OEMs follow multi-location strategy 3.4 13 Quality gap of indep. OEMs has been narrowed 17 14 Dep. OEMs will double marketing spending 3.3 6 Mar- ke- 15 3 indep. OEMs among most valuable brands 2 3.2 ting 16 Indep. OEMs will double marketing spending 10 17 Dep. OEMs sell 98% of own brands in China 3.1 Dis- tribu- 18 3 indep. OEMs sell 5% of cars in dev. markets 3.0 tion 19 Indep. OEMs positioned as budget brands in EU 35 40 45 50 55 60 65 70 Sour- 20 Indep. OEMs invest heavily in local suppliers * Dependent = e.g. SAIC, FAW; Probability cing 21 Sourcing engineering services will be critical Independent = e.g. Chery, Geely; in %
    • STRATEGIC GROUP STUDY EXAMPLE from China: Dependent OEMs likely toincrease the marketing spending for their own brands significantly. Value Chain Evolution – Marketing/Branding In 2020, dependent Chinese OEMs will have at least doubled the marketing spending for their own brands, 14 compared to the level in 2011. Key Insights Results (Statistical Group) • During the past few years, the Chinese government has Probability Con- Desi- been pushing dependent Chinese OEMs to develop in % sensus Impact rability their own brands, independent of the activities with their JV partners 68 20 3,6 3,7 • So far the success of these initiatives has been Moderate limited, with notable first achievements only by SAIC and Likely High High Consensus FAW • One of the reasons for the slow development of own Probability (Detailed) brands is the limited focus on marketing Share of expert panel • Dependent Chinese OEMs have simply given much more in % attention to the development of technological 59 60 capabilities than to the development of marketing and 50 branding know-how 40 • There is moderate consensus among the panel that this situation is going to change. The experts rate the 30 19 probability that dependent Chinese OEMs will at least 20 13 9 double the marketing spending for their own brands within 10 0 the next decade as 68% 0 • 2 out of 3 respondents actually estimate the probability 0-20 21-40 41-60 61-80 81-100 above 60% Probability, in %
    • 1 Setting the Stage: Why a Thailand Automotive 2022 Study?2 The Industry Intelligence Approach applied3 Summary and Outlook
    • THAILAND 2022: Development of projections for Thailand’s automotive industryand their assessment through online survey with local industry experts. Online Delphi Study with experts for Thailand’s automotive industry Definition of Initial assessment of Reconsideration of initial relevant projections projections assessment • Development of • Industry experts assess • After the first round, projections for Thailand’s projections on Delphi each expert is able to 2022 vision based on online platform see assessment and extensive desktop arguments of the other • Every expert gives research and interviews participants quantitative estimates with industry experts for each projections with • Experts are able to • Finalization of regard to reconsider their own projections in major  Probability assessment based on categories: • In addition experts can the reasoning of the rest  PEST add qualitative of the group  Markets arguments for their • Iterative process until  Value chain probability ratings each participant has evolution reached his final assessment
    • THAILAND 2022 – STEP 1: Conducting an online study with local industryexperts. Terminology Online Delphi platform • Measures the expected probability of each projection Probability to come true • Metric scale (0-100%) • Measured using the interquartile range (IQR) Degree of • The IQR is the measure of Consensus dispersion for the median and consists of the middle 50% of the observations
    • THAILAND 2022: Research Frame Overview
    • THAILAND 2022: Research Frame Overview
    • Politics: There is strong consensus for a 50/50 probability that the Thaigovernment will have given up local standards and implemented internationalUNECE-based standards in 2022. Projection for political environment Probability * Consensus** 53% 10“UNECE-based standards”: In 2022, the Thai government has given up localstandards and implemented international UNECE-based standards. Likely Strong ConsensusProbability Low Probability High…It depends on OEM’s whether they are ready or not, not only on …Thai government basically follows OEMs intention and the government policy. investment plans, whereby if Thailand becomes more export…The Thai automotive industry will not be able to meet the oriented, it must implement international standards within 10 requirements of the international UNECE-based standards in years. terms of quality. …All car makers in key part suppliers are strongly pushing. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Politics: There is moderate dissent at a low average probability that CO2emission regulations in Thailand will be the same as in Europe in 2022. Projection for political environment Probability * Consensus** 41% 25“CO2 emission regulations”: In 2022, CO2 emission regulations in Thailand arethe same as in Europe. Unlikely Moderate DissentProbability Low Probability High…Regulation process in Thailand is not as proactive as in Europe and still moving slowly. Therefore it’s hard to catch up the same …It‘s an environmental requirement. level as Europe. …The new national automotive master plan aims to become a…Too many costs would result. green production hub in the next decade. Therefore the...Thailand will always lag somehow behind. adaptation of European emission regulations is likely. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Politics: There is moderate dissent at a relatively high probability that FreeTrade Agreements will be in place between Thailand / AEC and Europe / EC in2022. Projection for political environment Probability * Consensus** 58% 25“Free trade Agreements”: In 2022, Free Trade Agreements are in place betweenThailand / AEC and Europe / EC. Likely Moderate DissentProbability Low Probability High …Pressure from Europe and at the same time benefits for Thailand. …in capitalistic perspective, it will be a MUST happening case but...No one can answer this question. not fully in 2022. It needs to be more effective for ASEAN first. …Thailand’s government and private sector are aiming to settle a FTA Thai-EU in quick if EU will keep sensitive list to work in second stage FTA. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Supplier: There is strong dissent at a high average probabilitythat local manufacturers will supply more than 85% of the parts used in localassemblies of OEM’s for passenger cars in 2022. Projection for (economic) value chain environment / Supplier: Probability * Consensus** 63% 30“Local value creation”: In 2022, local manufacturers supply more than 85% of theparts used in local assemblies of OEM’s for passenger cars. Very Likely Strong DissentProbability Low Probability High…ASEAN has allowed for free trade in between all member countries; localization in Thailand will not be driven by …Increasing foreign demand for auto parts and components from government incentives but by scale effects and TOCO Thailand will strengthen the local industry. considerations of the OEM when sourcing. …There is already a trend to have more local supply for significant…Free trade will be facilitated through the introduction of AEC. As components. a result Thailand will as well import some auto parts instead of producing most of them. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Supplier: There is strong dissent at a 50/50 probability whetherall major global automotive suppliers will have set up production plants inThailand in 2022. Projection for (economic) value chain environment / Supplier: Probability * Consensus** 53% 30“Global automotive suppliers”: In 2022, all major global automotive suppliershave set up production plants in Thailand. Likely Strong DissentProbability Low Probability High ...Automotive Know How will be concentrated in Thailand and will…Many alternatives. Why cluster in Thailand? Costs rising. Labor play a major factor for automotive OEMs in location decisions; short. Engineering schools sub-par. however, this does not necessarily mean that TIER1/2 will have…related to FTA effectiveness, but most will rely on India and plants only in Thailand and not in other ASEAN countries. Other export to Thailand. strategies come into play here. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / R&D: There is strong dissent at a low average probability thatThailand will be the only relevant R&D hub in South-East Asia in 2022. Projection for (economic) value chain environment / R&D: Probability * Consensus** 41% 30“Automotive R&D hub”: In 2022, the only relevant automotive R&D hub in South-East Asia is Thailand. Unlikely Strong DissentProbability Low Probability High…Only if Singapore, Malaysia and Indonesia disappear from the map.…Japan will still be strong in R&D. …It should have developed by then.…still difficult to have good solid R&D center in SE Asia, more in …Investors will chose Thailand as R&D center because of its India and China, then SEA is used for production. relatively cheap but well educated engineers.…Malaysia has the same industrial attitude as Thailand. * Probability (0-100%); * * Consensus (Level of agreement between X Delphi study participants measured as Interquartile Distance)
    • Value Chain / R&D: There is strong consensus at a low probability that allmajor international Tier 1 suppliers have serious R&D facilities in Thailand in2022. Projection for (economic) value chain environment / R&D: Probability * Consensus** 44% 10“Serious R&D facilities”: In 2022, all major international Tier 1 suppliers haveserious R&D facilities in Thailand. Unlikely Strong ConsensusProbability Low Probability High…What would the rationale be? Application engineering yes, but not R&D. Also, look at how Thai universities rate in the global context; maybe one in the top 200. …They will need to have a base in Thailand.…In India and China, not much in Thailand. …With the introduction of the AEC high skilled labour can migrate…This will be the last bastion to fall. Although Thailand will lead to Thailand and compensate the shortfall. automotive R&D in the region, many Tier 1 suppliers will keep their R&D in their own countries - close to the OEM R&D. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Sourcing: There is strong dissent at a relatively high probabilitywhether Japanese suppliers in OEM’s and car parts in Thailand have a marketshare less than 65% in 2022. Projection for (economic) value chain environment / Sourcing: Probability * Consensus** 56% 35“Japanese suppliers market share”: In 2022, the market share of Japanesesuppliers in OEM’s and car parts in Thailand is less than 65%. Likely Strong DissentProbability Low Probability High …More mix with Korean, Chinese and others. More strong suppliers develop similar level of quality to support non-…Hard to be possible when Japanese is fully dominated and able Japanese OEM as well, which helps good bland in market. to control this market. Other change ranger such as US and …It is possibility that more Europe brands will set production European car makers are very much far behind. bases in Thailand to survive in the buying power shift of the…Cannot see the major investment Japan has diminishing. world. …Suppliers will avoid cluster risk. …VW, Ford and GM will increase presence. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Sourcing: There is strong dissent at a 50/50 probability whetherthe quality of suppliers in Thailand is comparable to those in EU and Japan in2022. Projection for (economic) value chain environment / Sourcing: Probability * Consensus** 54% 30“Quality of suppliers ”: In 2022, the quality of suppliers in Thailand is comparableto those in EU and Japan. Likely Strong DissentProbability Low Probability High…This is related to peoples mentality. Thai need more flexibility of quality in terms of delivery and time R&D management, which …Most multi nationals will be present in Thailand. will be still critical. …Most of mechanical parts will be very competitive except for…Culturally based, the tendency for compromises, not clearly electronically part where part makers in Thailand still have no addressing and not sustainably solving issues as well as not competitive technology. executing consistency in management practices is relatively …Already Thai production quality is nearly the same as in Japan. higher pronounced than in European countries and will hinder …It must to meet market demand. the overall quality level. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Production: There is strong dissent at very high averageprobability that Thailand is the largest automotive production base in South-EastAsia in 2022. Projection for (economic) value chain environment / Production: Probability * Consensus** 69% 38“Largest automotive production base”: In 2022, Thailand is the largestautomotive production base in South-East Asia. Likely Strong DissentProbability Low Probability High …Diversification will take place, low cost cars will be produced in Indonesia, while higher priced cars will be produced in Thailand...Indonesia will overtake Thailand. and Thailand will emerge as the clear winner.…As a consequence of the Thai flood crisis several companies …Auto infrastructure needs some time to establish, in Thailand it are diversifying their operations to other countries and thereby is already built up. weaken Thailand’s current leader position. …Automotive OEMs need component parts, and Thailand is the biggest parts production cluster, new OEMs will move in and then bring more part suppliers. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Production: There is strong dissent at a 50/50 probability thatthe total car production volume in Thailand is more than 5 million units per yearin 2022. Projection for (economic) value chain environment / Production: Probability * Consensus** 46% 30%“5 million units production”: In 2022, the total car production volume in Thailandis more than 5 million units per year. Unlikely Strong DissentProbability Low Probability High …Thailand will export more vehicles.…If the world economic do not return back to normal within 5 …Most of Japanese car makers are under process to transfer years we might be unable to achieve that number. capacity from Japan to Thailand and Indonesia.It will make…OEM’s have choice of production site in other countries always, Thailand become major exporting hub of Japanese. and speed of increase is not that high in my smell. …An adjusted gi = annual growth rate (2013 to 2022) = 0.03, 0.1,…Thailand has high costs compared to Indonesia. 0.09, 0.07, 0.05, 0.03, .01, 0.2, 0.1, 0.1 (with 2 economic downturns) could bring the 2022 volume up to 5 Mio. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Production: There is strong dissent at a 50/50 probability thatlabour costs in the automotive industry are lower in Thailand than in China in2022. Projection for (economic) value chain environment / Production: Probability * Consensus** 50% 36“Labour costs”: In 2022, labour costs in the automotive industry are lower inThailand than in China. Likely / Unlikely Strong dissentProbability Low Probability High…China is a big country which doesnt use all of it’s labor yet, but Thailand is going to reach the maximum level of labor use …They are lower now and costs in China will rise stronger than already. Thai cost.…Thailand does everything to impede migration of labor from …Labor cost in China is increasing rapidly due to high inflation neighboring countries while at the same time forcing increases and fast growth in the automotive industry. It will pass Thailand in labor cost. very soon.…Costs are continuing to increase in Thailand, inflation will hinder …Could come down from AEC. the industry. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Production: There is strong dissent at a 50/50 probability thatcar and component production in Thailand is mostly automated in 2022. Projection for (economic) value chain environment / Production: Probability * Consensus** 52% 35“Automated production”: In 2022, car and component production is mostlyautomated. Likely Strong DissentProbability Low Probability High…Not much of a pay-back. If investment in automation is required, other countries like Malaysia with better skill base will be more attractive. ...Labour shortage will drive automation.…More customers are adding robots today. …Cost of labor will drive this.…Already some level of automation has been successful in …Its already mostly automated. Thailand. In process, it will be more automated but not as significant as you would imagine.…Automation will increase, but not to that extent. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Marketing: There is VERY strong dissent at relatively highprobability that the most important marketing channel for the automotive industryin Thailand in 2022 is Social Media. Projection for (economic) value chain environment / Marketing: Probability * Consensus** 56% 51“Social Media”: In 2022, the most important marketing channel for the automotiveindustry in Thailand is Social Media. Likely Strong dissentProbability Low Probability High...Social media is just a hype and not a long term trend. …Communication is becoming more and more digitalized.…There will always be a need for the conventional. Therefore social media is highly relevant in the future.…Social Media is growing up its importance, but it might not reach …Some influence but more from actual hearing from peers. Thai rural area and not cover to all ones who have power of …As everywhere in the world – unfortunately. buying cars. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Marketing: There is moderate consensus at 50/50 probabilitythat Thailand’s motor shows in 2022 are as significant for global automotiveOEM’s as the shows in Europe, US and Japan. Projection for (economic) value chain environment / Marketing: Probability * Consensus** 46% 15“Motor Shows”: In 2022, Thailand’s motor shows are as significant for globalautomotive OEM’s as the shows in Europe, US and Japan. Moderate Unlikely ConsensusProbability Low Probability High…Two current shows need to merge into one to be able to hold the most relevant show in 2022 as Jakarta will be catching up very fast. …Thailand as the automotive hub in ASEAN provides access to a…Thailand‘s relevance in the automotive industry is as a sourcing market of about 600 Million people. Therefore Thai motor and production market rather an end-consumer market. shows gain relevance. Therefore its motor shows will not become globally relevant.…In Thailand all is related to R&D and trend impact rather than selling shows. * Probability (0-100%); * * Consensus (Level of agreement between X Delphi study participants measured as Interquartile Distance)
    • Value Chain / Distribution: There is strong dissent at a 50/50 probability that75% of all vehicles manufactured in Thailand are exported in 2022. Projection for (economic) value chain environment / Distribution: Probability * Consensus** 54% 30“Export ratio”: In 2022, 75% of all vehicles manufactured in Thailand are exported. Likely Strong DissentProbability Low Probability High…Investors will derisk and hedge export bases. …The realization of the DAWEI deep seaport project reduces…May be 50%. logistic cost for exporting Thai made vehicles and therefore…There will be growth of the local market as more eco cars are boosts Thai automotive exports. produced here. …That is the direction that I can see considering investment and…The realization of the DAWEI deep seaport project reduces market domestic demand. logistic cost for exporting Thai made vehicles and therefore boosts Thai automotive exports. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Consumers: There is strong dissent at a 50/50 probability thatcar density in Thailand is 200 cars per 1000 people in 2022. Projection for (economic) value chain environment / Consumers: Probability * Consensus** 47% 35“Car density”: In 2022, car density in Thailand is 200 cars per 1000 people. Unlikely Strong DissentProbability Low Probability High... Macroeconomics dont support this number. Plus infrastructure …Its already at >160. will collapse at that level. …Average personal income will grow accordingly.…Too many cars to imagine, no infrastructure to support. …More developed road infrastructure will lead to higher car…Only in BKK area, others still primitive. density. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Consumers: There is moderate consensus at a very lowprobability that the motorcycle has replaced small cars for personal transportand is only be used for recreational transport in 2022. Projection for (economic) value chain environment / Consumers: Probability * Consensus**“Motorbikes for recreational transport”: In 2022, the motorcycle has been 28% 20replaced by small cars for personal transport and is only used for recreational Moderatetransport. Unlikely ConsensusProbability Low Probability High…Motor cycles will remain a flexible low cost means of transportation. The importance of low cost cars however has increased. …As cars get cheaper and salaries go up this will happen. It has…Still act as one of major transporting method, all related to city already happened to a significant extent. development and rail / road infrastructure but there is not much …GDP in Thailand grows fast and therefore gives people more improvement in last 10 years. purchasing power. If affordable Thai people will always prefer a…Small cars flopped even in India. car over a motorbike.... Motor cycles will be used in rural areas. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Consumers: There is moderate dissent at a rather highprobability that public transportation is the only efficient mode of transportationthroughout the metropolis in 2022. Projection for (economic) value chain environment / Consumers: Probability * Consensus** 58% 25“Public transportation”: In 2022, public transportation is the only efficient mode oftransportation throughout the metropolis. Likely Moderate DissentProbability Low Probability High …If emphasis is on "efficient" then yes, all other means of…Thai likes to drive and private feeling among friends. transportation will not be providing adequate ratios of…Since cars will remain a very important status symbol in 1) Resources per person per kilometer Thailand, public transportation will never be the most preferred 2) Time per person per kilometer means of transportation. …The transport system will be improved.…It already is. …It is already. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Value Chain / Consumers: There is strong dissent at a very low probability thatBangkok has introduced car-sharing (i.e. fractional car ownership / pay per usevehicles) throughout the metropolis in 2022. Projection for (economic) value chain environment / Consumers: Probability * Consensus** 27% 30“Car-sharing”: In 2022, Bangkok has introduced car-sharing (i.e. fractional carownership / pay per use vehicles) throughout the metropolis. Unlikely Strong DissentProbability Low Probability High …Additional rise in traffic volume will bock the metropolis seriously…Sharing a meal: yes. Sharing cars, no. and make parking space really expensive. Therefore people will…People want ownership consider car-sharing as a convenient alternative.…It’s too risky for cars being stolen and deceit. …Low vehicle-ownership rates due to low incomes will boost car- sharing in Bangkok. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Society: There is VERY strong dissent at a 50/50 probability that there is anannual demand for one million low-emission vehicles per year in Thailand in2022. Society Projection Probability * Consensus** 50% 45“Demand for low emission vehicles”: In 2022, there is an annual demand for onemillion low-emission vehicles per year in Thailand. Unlikely Strong dissentProbability Low Probability High…no incentives (government driven) in sight and unlikely to be …Thailand has a new green Automotive Master Plan. done unless government becomes more focused on the issue …there might be a chance when the Thai government sees and implements real policies rather than face saving, false possibilities to gain profit from it by implementing charges on compromises. car manufacturers which doesn’t provide low-emission vehicles.…Thai people will not relief on low-emission yet but price only. …Thailand has strong views on the environment.…cost of technology are too high. …trends will change due to pressure from ASEAN for low... In terms of capacity, there is obligation for OEM to produce in emission vehicles and overall pollution reductions. given years, but mainly it will be used for export base. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Society: There is very strong dissent at a 50/50 probability that total cost ofownership of a car is the most important factor for a purchase decision of anaverage Thai car buyer in 2022. Projection for social environment: Probability * Consensus** 51% 41“TCOO for purchase decision”: In 2022, total cost of ownership of a car is themost important factor for a purchase decision of an average Thai car buyer. Likely Strong DissentProbability Low Probability High …Total cost will be key criteria for purchasing intention when most…Status of "owning a car" is more important than TOCO; this is of people are the mid income and debt will be national issue to embedded in the national culture and requires significant control. external triggers to start shifting towards a more cost oriented …Small car segment is growing and these buyers are more view (e.g. fuel prices increase ten fold, taxes etc.) budget conscious.…One of the most important, yes, but the most important, no. …Another big financial crisis which forces Thais to reduce their Practicality for intended purpose (e.g. truck)and overall appeal cost and save for the future. (e.g. design)are likely to supersede cost of ownership. …Thais hire purchase and image is important so cost still…Thailand will have more disposable income by 2022 important but other factors too. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Society: There is VERY strong dissent at a low probability that 100% Biodieselis the most popular fuel in the rural areas of Thailand in 2022. Projection for social environment: Probability * Consensus** 38% 50“Biodiesel”: In 2022, 100% Biodiesel is the most popular fuel in the rural areas ofThailand. Unlikely Strong DissentProbability Low Probability High…Hard to be possible when palm oil shall supply to food sector too. ...When the price of the world diesel oil is too high, people in rural…Not in the next 10 years. The government has given so much area will do save their cost by using more Biodiesel. program to promote investors to come based on usual fuel, …Thailand can produce Biodiesel locally. adapting Biodiesel requires additional structure change for …Biodiesel is economical and environmentally friendly. OEM, which is being studied but not in next 10 years.…It is a profit maximizing question. Therefore the government plays an important role in this question. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Technology: There is VERY strong dissent and at a relatively high probabilitythat roads are the only relevant mass transportation infrastructure in Thailand in2022. Projection for (soft/hard technological) infrastructure environment: Probability * Consensus** 56% 50“Roads for mass transportation”: In 2022, roads are the only relevant masstransportation infrastructure in Thailand. Likely Strong DissentProbability Low Probability High …Inaptitude to manage large mass-transport projects.…True for upcountry while Bangkok will see a significant improve …Thailand seems to lack vision and will to develop a in mass transportation in order to prevent a total collapse of the comprehensive rail network for example. infrastructure. …Yes, still if you say only in next 10 years, however, in the longer…Thailand will have a developed high speed train system by then term Rail transport and Vessel transport will be examined because the government planes to spend more than 1 trillion effectively. THB to develop rail infrastructure. …Though many new sky train lines will have been finished before…Thai government provides more and better infrastructure on 2022 but that for Bangkok Metropolitan, Thailand is not merely rails since the traffic on the roads will increase dramatically and Bangkok. is not controllable anymore. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Technology: There is strong consensus at a relatively high probability thatThailand has a significant shortfall of unskilled and semi-skilled labour in theautomotive industry in 2022. Projection for (soft/hard technological) infrastructure environment: Probability * Consensus** 57% 10“Labour shortfall”: In 2022, Thailand has a significant shortfall of unskilled andsemi-skilled labour in the automotive industry. Likely Strong ConsensusProbability Low Probability High …The demand will rise stronger than the supply.…0%, if labor can move freely within AEC. …100%, if current system of protected profession, and exclusion…Significant shortfall is already immanent and existing; clauses remains in place. Government will ease immigration policies to neighboring …Even if government relaxes it’s policy of protection it wont be countries which will have reduced the pressure on labor by sufficient to address the growth because the process to 2022. restructure education system is still moving too slow.…The government increase the possibility of education also in the …It will take decades for the complete mind-set change needed country side and could promote more upcountry people to move to view a vocational/technical skills-based education as equally to the industrial area, or might use foreign labor effectively. important and attractive as an academic education. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Technology: There is strong dissent at 50/50 probability that most high skilledautomotive engineers from ASEAN area are working in Thailand in 2022. Projection for (soft/hard technological) infrastructure environment: Probability * Consensus** 53% 36“ASEAN’s engineers in Thailand”: In 2022, most high skilled automotiveengineers from ASEAN area are working in Thailand. Likely Strong DissentProbability Low Probability High …Thailand is the center of SE Asia and have the biggest automotive parts production cluster in the region with a good rate…Thailand has faced a “brain drain” in recent years, with its skilled of growing up. students and workers migrating in search of better opportunities …Especially, Chinese and Indian will be present with experienced and pay. skills to fulfill the gap since skilled Thai workers will be still short.…Indo and others are not far behind. …Thailand will maintain its status as Automotive hub.…Indonesia is catching up, with macroeconomics and ……Competition with neighboring countries such as Indonesia and demographics in their favor. Malaysia is significant. However, Thailand will come up as the manufacturing hub for ASEAN. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • THAILAND 2022: Research Frame Overview
    • Malaysia: There is moderate consensus at a low probability that Malaysia hasfound a JV Partner for Proton and has become a serious player with more than1’000’000 vehicles produced per year and 30% export ratio in 2022. Projection for ASEAN environment: Probability * Consensus**“Malaysia”: In 2022, Malaysia has found a JV Partner for Proton and becomes a 42% 20serious player with more than 1’000’000 vehicles produced per year and 30% export Moderateratio. Unlikely ConsensusProbability Low Probability High…Quality and design is still not that shiny, additionally they have their own management problem. …Local value creation requirements in Malaysia boost its exports.…So many engagements, but never a wedding. …Chines brands will enter the Malaysian market and therefore…Proton will vanish. help the industry growing.…Proton always has difficulty on improving technology in order to …Looks like Honda is the enabler, if one can trust the newspaper match the world standard. reports.…Unlikely. Many have looked, but few have continued with Proton. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Indonesia: There is moderate consensus at a low probability that Indonesia hasincreased its automotive export to 50% and has overtaken Thailand as theleading automotive production hub in South-East Asia in 2022. Projection for ASEAN environment: Probability * Consensus**“Indonesia”: In 2022, Indonesia has increased their automotive export to 50% and 41% 20has overtaken Thailand as the leading automotive production hub in South-East ModerateAsia. Unlikely ConsensusProbability Low Probability High…Indonesia supports mainly domestic demand.…Indonesia cannot build up a component parts cluster within 10 years and labour cost are the same as in Thailand. …Macroeconomics and demographics favour Indonesia.…Indonesia is politically too unstable. …Many companies will continue to invest in Indonesia and by this…It is depending on car makers policy from which base they help bringing it to the top in South-East Asia. export, but from Japanese point of view Thailand will be main exporting base because Thailand’s supply chain is more competitive. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Myanmar: There is strong dissent at a low probability that Myanmar has anautomotive industry with more than 1’000’000 car capacity per annum stronglydominated by Chinese manufacturers in 2022. Projection for ASEAN environment: Probability * Consensus**“Chinese Domination in Myanmar”: In 2022, Myanmar has an automotive 38% 40industry with more than 1’000’000 car capacity per annum strongly dominated byChinese manufacturers. Unlikely Strong DissentProbability Low Probability High... Automotive industry will be set up in Myanmar but development in all aspects need more than 10 years.…Maybe 500’000 but not dominated by Chinese. …China is developing Myanmar as logistics gateway and…Myanmar needs more time to develop the infrastructure. production will follow.…Hard for such fast capacity building unless the market grows .. Yes, some chance and Chinese will be major player followed by significantly. Japanese.…Myanmar is still far from being en enticing market for industrial investment. In order to get to that scale, projects would have to be starting now. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • Myanmar: There is moderate dissent at a 50/50 probability that the DAWEIdeep seaport is the biggest deep sea port in South East Asia in 2022. Projection for ASEAN environment: Probability * Consensus** 52% 27“DAWEI deep seaport”: In 2022, the DAWEI deep seaport has taken over to bethe biggest deep sea port in South East Asia. Likely Moderate DissentProbability Low Probability High…Other ports that are well established will remain highly utilized and relevant.…Chinas Western Seaboard. …A lot of investment is going into this project.…Oversized ambition will meet reality. …Successful completion of the project by 2022.…Still Thailand or Singapore act as major player but DAWEI has potential for sure. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • THAILAND 2022: Research Frame Overview
    • China: There is moderate dissent at low probability that Thai automotive exportsto China account for 30 per cent of the Thai automotive exports to globalmarkets in 2022. Projection for global environment: Probability * Consensus** 32% 25“Exports to China”: In 2022, the Thai automotive exports to China account for 30per cent of the Thai automotive exports to global markets. Unlikely Moderate DissentProbability Low Probability High…China will not import but produce domestically.…Chinese still consider automotive as sensitive list. So they will block them out.…China will still have their own OEM’s domestically, no need to …Only Thailand can produce the luxury class cars. rely on other countries much (except high end).…Unlikely, as OEM will build in China for local market and in Thailand for the rest of the world. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • China / Japan: There is strong dissent at a rather low probability that China isthe second largest foreign automotive investor in Thailand after Japan in 2022. Projection for global environment: Probability * Consensus** 44% 30“Investments from China and Japan”: In 2022, China is the second largestforeign automotive investor in Thailand after Japan. Unlikely Strong DissentProbability Low Probability High... Myanmar is the target for China.…Chinese investments will go to Indonesia because it’s a larger market. …China will strongly engage in ASEAN.…It’s hard for Chinese car to find acceptance in Thailand or in …Chinese OEM and suppliers need other place like Thailand to ASEAN by culture whereas US cars are still competitive and invest in order to support not much Yuan appreciation as well as more accepted. duty exemption in importing countries.…China will increase investment in Thailand but not within next 10 years. * Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)
    • China / Japan: There is strong dissent at a rather low probability that in 2022many Western and Japanese automotive companies have shifted newinvestments to Thailand for exports to China and India. Projection for global environment: Probability * Consensus**“Investments from China and Japan”: In 2022, many Western and Japanese 43% 30automotive companies have shifted new investments to Thailand for export to Chinaand India. Low Strong DissentProbability Low Probability High…Companies will build where they sell. Why would a relatively …Japanese part makers are moving to Thailand to follow car high cost location export to low cost countries? makers that transfer capacity to Thailand. And sooner European…Japanese would shift more to India or other non-explored car and part maker will follow when it is the only room to maintain country, Thailand, they would monitor labor wage increase. their competitiveness in global market.…If they shift it will be to India. …Thailand is the perfect low cost base to produce for export.…India and China will continue to grow to support their domestic …Only Thailand can produce high technology or luxury cars. markets rather than exports. * Probability (0-100%); * * Consensus (Level of agreement between 23Delphi study participants measured as Interquartile Distance)
    • 1 Setting the Stage: Why a Thailand Automotive 2022 Study2 The Industry Intelligence Approach applied3 Summary and Outlook
    • THAILAND 2022 – (Outlook): Conducting a “scenario development” workshop(reducing uncertainty).
    • THAILAND 2022 – (Outlook): Turning scenario insights into functionalconsequences today through the “Institutions-Resource Matrix” (Example).
    • Scenario Development Industry Environment P-S-T Probability Projection 1 Impact Roadmap Projection 2 Desirability Political Value Chain Institutional Industry Value Chain Dynamics Probability Projection 1Socio-cultural Technological Impact Projection … Infrastructure Desirability Effects on Departments Strategic Plans Physical Human Technological Organizational Relationships (Plants, Machinery etc.) (Executives, Employees (IP Rights, Production (Structures, Processes, (within company, etc.) Technologies, Tacit Leadership Style etc.) functions, customer or Knowledge etc.) suppliers etc.) R&D Procurement Production Modification of Local Operations Marketing Distribution After Sales
    • CONTACT: The ACC-HSG / AFG research team can be contacted to furtherdiscuss your interests and answer your questions. ASIA CONNECT Center-HSG Automotive Focus Group Dr. Roger Moser, Director Uli Kaiser University of St.Gallen Dufourstrasse 40a CH-9000 St.Gallen, Switzerland Tel: +41 71 224 73 54 E-mail: Roger.Moser@unisg.ch Web: www.acc.unisg.ch Paolodal Pozzo Toscanelli, 1457