Vehicles of the future will come loaded with electronics
It took half a century for the Thai automobile industry and tremendous efforts from both government and private sectors to achieve annual production of 2 million vehicles.
Today, this industry has grown into one of the country’s strategic industries that generates billions of baht for Thailand.
Indeed, the auto parts sector is the heart of the Thai automobile industry. But what’s important is creating stability for Thailand as a sustainable auto production and export hub, and this will depend on a number of key factors.
Hundreds of billion baht have been invested in the Thai auto industry, with over Bt100 billion going for research and development.
The next target for the industry is to produce 3 million vehicles per year for supplying the Asia-Pacific and global markets. There is also a good possibility that Thailand will replace other countries as the manufacturing hub for many brands, due to its strong foundation that includes the auto parts industry.
A stronger parts sector will make the Thai automobile industry stronger as well.
There are also factors that could determine the future of the Thai auto industry and its future, such as trade issues – both bilateral and multinational. The government has in fact been focusing on maintaining a framework and promoting the auto industry in this respect.
Although the Thai auto parts industry, with more than 2,300 players, may seem strong enough to compete with other countries, in reality it is facing many tough challenges. Thai auto parts-makers need to swiftly adjust to the bigger market and stronger competition from others.
Thavorn Chalasthien, assistant secretary of the Human Capacity Building Institute, Federation of Thai Industries (FTI), talked the The Nation about the future of the Thai auto parts industry.
Future business trends will see mergers and acquisitions resulting in a lower number of – but larger – companies that are able to more efficiently make use of existing production bases around the world.
“Automobiles will be developed in the direction of a ‘high-volume global platform’, which will have lower production bases that are concentrated in a few countries, with Asia being the centre. Production of automobiles and auto parts, especially in China and India, where there is low-cost and low-priced labour, will supply to high-demand domestic markets,” said Thavorn. “Meanwhile, the drive to conserve fuel and save the environment will result in smaller and more fuel-efficient vehicles including electric vehicles being widely used in large cities,” he said.
Automobiles of the future will have even more electronics, which will become the main components for vehicles. High-level technology incorporated into automobiles will require not only high-technology production processes and machinery in order to raise production efficiency but also a labour force that is more educated in a wider variety of fields.
“In Thailand, the auto and auto parts industries will move on to become an important production centre for the Asia-Pacific region. We will be able to produce high-quality automobiles for export to any part of the world. The short-term goal now is to concentrate on raising the level of the production process, while in the mid-term, the goal is to stress on research and development of auto parts and integrated systems, as well as the spare parts and accessories market in order to create added value. In the long term, our goal is to become the leader in production, research and development for ‘mechatronics’ in the Asia-Pacific region, while having strict environmental measures like Europe,” he said.
Thavorn said Thailand should give priority to two of its champion products – pickup trucks and eco-cars, as well as motorcycles, auto parts and accessories.
“Today Thailand is able to develop our own semi-automation systems and robotics to replace costly machinery imports and to raise production efficiency. We also need to quickly develop skilled labour to raise competitiveness and provide sustainability to the auto and auto parts industries,” he added.
3 factors for sustainability
In the future, the development of the Thai auto parts industry into “sustainable mobility” will come from three main factors – people, technology and the supply chain.
Thavorn said if Thailand possesses these three factors, our auto parts industry will definitely enjoy future sustainability.
“There are three types of people in this industry – unskilled [or semi-skilled] which makes up 55%, technical [from vocational schools] making up 35%, and engineers. What we need to urgently do is to increase the number in the second and third groups, while lowering the number in the first group. We must do this in order to take on the role of a high-technology production centre,” he pointed out.
“Where does the technology come from? It comes from the fact that Thailand needs to have its own testing centre to cater to innovations, which will raise our competitiveness. Don’t think that small parts lack innovation – everything needs development, and the testing centre will serve as a very important gear in developing the Thai auto parts industry so that it has high quality and is capable of developing many innovative products. When speaking about the supply chain, we mean the various SMEs who are the suppliers for auto parts,” he said.
According to Thavorn, Thailand’s auto parts industry will be changed from production using moulds and dies, as well as machining and assembly, into a high-level know-how sector.
“More of this picture will be noticed during the next five years and a clear scenario will emerge in 10 years,” he said.
Thavorn said the Thai auto industry has invested very little in research and development, especially when compared to the large sales and production volumes.
“It is expected that Thailand will produce more than 2 million vehicles this year, and we believe that everything will change so that we are ready for growth in the future,” he added.
More investment will flow into the Thai auto industry on a continuous basis. It has in fact already started. According to the Board of Investment, as much as 20-30 per cent of applications for investment promotions come from the automotive sector.