The outlook for the Thai auto industry in 2013 remains bright, partially propelled by the demand from export markets.
Last year the industry attracted more than Bt100 billion in terms of additional investment from auto and auto-parts makers. Sales surged by 70 per cent to achieve a record 1.4 million vehicles, thanks to demand carried over from flood-stricken 2011 and the first-car-buyer programme. More than a million people received excise tax rebates a year after making their purchase.
This year’s auto production is targeted at 2.5 million units, said Suparat Sirisuwannangkura, chairman of the Federation of Thai Industries (FTI)’s Automotive Industry Club (AIC), with about 1.3-1.4 million for the domestic market.
"The reason sales will remain at the same level as 2012 is because there is a large amount of back orders carried over from 2012 – as many as 500,000 vehicles covering the third quarter of 2013. However, we also predict that as much as 30 per cent of the orders from the first-car-buyer scheme may disappear because some applicants may not pass the requirements and some may not have true purchasing power," Suparat said.
In this regard, the export market is expected to support the industry.
"Don’t forget that in 2012 we held back exports to supply the domestic market. So it should not be difficult to achieve 2.5-million-unit production while also maintaining the export market," he said.
Most major auto-makers with production facilities in Thailand export to the global market. About 32 per cent goes to Asia, 26 per cent to Australia and Oceania, 20 per cent to Central and South America, 7 per cent to Europe and 3 per cent to Africa.
TOYOTA EYES 1 MILLION UNITS
Toyota, the largest auto company in Thailand, expects a positive scenario for 2013.
While domestic sales are expected to be no fewer than 1.4 million units, Vichien Emprasertsuk, executive vice president of Toyota Motor Thailand (TMT) Co, said that this year, Toyota planned to sell in the domestic market no fewer than the 500,000 units it sold in 2012.
Its three plants now run with two shifts and the manufacturing cycle time is reduced to less than 56 seconds per unit, the fastest among all Toyota plants in the world.
"The total market should be the same or slightly larger than 2012 because there is still much demand, and there is still a large number of back orders. There are also a large number of new models to be launched," he said.
Vichien said Toyota planned to raise production to 1 million units this year to serve the growing domestic and export markers.
"But we’ll have to evaluate once again whether or not we will achieve production of 1 million units in 2013," he added.
ISUZU EXPECTS MARKET DROP
Expecting a 5-10 per cent fall in domestic demand this year with the end of the first-car buyer scheme, Panadda Jennavasin, vice president of Tripetch Isuzu Sales (TIS), said "Nevertheless, total sales will still be at an acceptable level as predicted. This is because in 2012 auto sales were inflated by various factors."
Panadda pointed out several important factors to watch out for. Apart from weakening economies in many parts of the world, the Chinese economy is also expected to decelerate. China is a major trade partner with Thailand.
"The Thai economy depends on exports, so if the economy of [one of] our partners slows down, it will affect our economy as well as businesses including the automobile industry," she said.
Panadda added that although the market might shrink, the industry’s strong foundation would still support it dramatically.
"Not only pickup trucks and passenger cars, but also large trucks would be in demand," she said.
Panadda said Isuzu would adjust the ratio of domestic to export vehicles from 60:40 to 50:50 to deal with the market decline.
HONDA: INTENSE COMPETITION IN H2
Pitak Pruittisarikorn, senior vice president of Honda Automobile (Thailand), said auto companies would stage a wider variety of sales promotions to maximise sales.
"Stronger market competition will peak during the second half of the year, because in the first half there remain large back orders to be delivered, and this is expected to take about six months, except for certain models such as the Suzuki Swift, for which customers may have to wait until October. These back orders will help support the market during the first half of the year," he said.
Back orders aren’t a big problem, since customers are aware of the situation.
"Some customers don’t require quick delivery either, while some say they can wait. Many customers don’t need to get their vehicles quickly because they placed an order early to qualify for the first-car-buyer scheme. The Excise Department has said that there are 1.2 million vehicles in this project. There should be about 450,000 back orders and another 50,000 from other models," he said.
Honda has set a sales target of 200,000 units.
After resuming production last April at its Ayutthaya plant that was totally flooded in late 2011, Honda launched 10 new models (three imported from Japan) and sold more than 170,000 vehicles, achieving growth of more than 100 per cent. But it could take six months to complete the delivery of 100,000 back orders.
Honda is also asking for confidence and clarity from the government so it can plan for the future.
"We need to plan together but if the rules and regulations that the government has announced could be changed or altered later, it will be difficult for everyone," he said.
"When the AEC [Asean Economic Community] starts, we must compete with neighbouring countries on the same platform, and the obstacle to competition is hidden costs. So if confidence in the government is inadequate, auto companies must work with plans B and C or alternative choices. These are a waste and could turn into added costs," Pitak said.
MITSUBISHI PINS HOPES ON ECO-CARS
Nobuyuki Murahashi, president of Mitsubishi Motors (Thailand), said 2012 was a "Golden Dragon Year" for the Thai auto industry, and there were no signs of major disruptions in 2013.
He said the market would remain highly active, but effects of the first-car-buyer scheme had yet to surface. The scheme created extraordinary sales in certain markets such as the B segment (small cars), which qualifies for the highest amount of excise-tax rebate.
"Popularity of double-cab pickups also grew, and we must wait until the end of the promotion and see whether the demand will return to normal levels," he said.
"In 2013 there is no more government promotion and the market will return to normal and serve people who really want automobiles, without any government stimulation. The eco-car segment should enjoy high popularity because they are fuel-economical and affordable," Murahashi said.
Mitsubishi plans to sell 120,000 vehicles in 2013.