They shared the view that the world auto market, and particularly the huge market in China, would soon have high demand for small-sized, energy-saving cars.

The auto industry experts were speaking at a seminar, "Opportunity for Thai Auto-Parts Exporters in China and Malaysia", held in Bangkok yesterday. The seminar covered the Automechanika exhibitions to be held in Shanghai in November and December and in Malaysia next March and April.

Speakers pointed out that because of sky-rocketing oil prices, market demand would focus more on "city cars" with engines smaller than 2 litres. They said Thai carmakers should consider manufacturing city cars as an alternative product, because of the great potential they offered as Thailand's "second manufacturing champion", after pickups.

Vivek Vaidya, automotive and transportation consulting manager for Frost and Sullivan, agreed that Thai auto-makers should switch to smaller cars with engines smaller than 2 litres to serve an increasing demand.

He said Thai carmakers should also invest in China, because of the lower costs there for raw materials and labour.

"Thai car manufacturers should be taking advantage of these," Vaidya said. "Their production [in China] should not be focused only on the domestic market, but they should also be creating a manufacturing base for exports to third countries."

He said China's demand for cars was increasing to 6 million units a year. Last year, there were 24 cars for every 1,000 people in China, and the ratio is expected to grow to 40 cars for every 1,000 people this year.

Phaichit Viboontanasarn, director of the Export Promotion Department's Special Export Bureau, called the increasing demand for small-sized cars a new challenge for Thai exporters. He said manufacturers should also be focusing on innovative engines capable of using alternative fuels.

Phaichit said Thai auto-makers had a big opportunity to increase exports of spare parts, accessories and after-sales service in the Chinese market, because of the rapidly rising demand there for cars.

"Thai carmakers should invest in China and enjoy the lower taxes, because the automobile industry is excluded from the Thai-Chinese Free-Trade Agreement," he said, adding that Thai car exports to China were subject to 20 per cent import duty. The Commerce Ministry reported the value of Thailand's automobile and auto-parts exports jumped 29.4 per cent to US$4.49 billion (Bt168 billion) in the first half of the year.

Thai Auto-Parts Manufacturers' Association director Samart Deebhijarn said there were big opportunities for Thai manufacturers to export replacement parts made from rubber to China.

Samart said there was also high demand for Thai-made vehicles in Malaysia, and surveys showed there were 230 cars for every 1,000 people in Malaysia.

Thai exporters should focus more on exporting to Malaysia by taking advantage of low tariffs under the Asean Free-Trade Area agreement. Until now, Thai auto exports to Malaysia were subject to a 5-per-cent import tariff.

Petchanet Pratruangkrai

The Nation