Thailand’s Position As Key Automotive Production Hub To Further Strengthen In Next Five Years

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Automotive sector has long been a key pillar of the Thailand economy. Increasing domestic demand, attractive tax incentives by government and reduced import duties on auto parts are all set to boost investments in the sector and the country’s position as a key automotive production hub for leading automakers is set to strengthen over the next five years, according to GlobalData, a leading research and consulting company.

Major automakers including Toyota, Nissan, Mitsubishi, Honda, Isuzu, Ford and Mazda have chosen Thailand as their production hub. As of 2019, Thai vehicle production capacity was approximately 4.1 million units with Japanese OEMs Toyota, Mitsubishi, Honda and Nissan holding majority shares of 20.8%, 12.4%, 10.2% and 9%, respectively, according to Federation of Thai Industries (FTI).

Nissan recently announced plans to ramp up vehicle production in Thailand in order to meet the strong overseas demand, especially for Nissan Kicks e-Power and Nissan Navara. The company plans to hire over 2,000 people in Thailand.

Animesh Kumar, Director of Automotive Consulting at GlobalData, says: “Thailand is presently Nissan’s only production base in the ASEAN region and a leading export hub for the company, exporting to over 100 countries. The plans to ramp up production and manpower are aligned with major business restructuring and new priorities set by the company in between 2019 and 2020.

“As a part of restructuring, the company also discontinued a few models and re-aligned capacity utilization in Thailand. The company’s announcement to increase production in Thailand follows its shutting down of production in Indonesia and Spain. The move will further strengthen Thailand’s position as a strategic location and key production hub for Nissan globally.”

Thailand is also bolstering its image as one of the budding EV hubs in ASEAN. Attractive incentives through Thailand Board of Investment (BOI) investment support has made OEMs including Mitsubishi, BMW, FOMM, Nissan, Toyota, MG to ramp up EV production in the country.

Mr Kumar concludes: “The Big three in Southeast Asia markets–Thailand, Indonesia and Malaysia–have been competing against each other to attract investments. Governments and administrators in all three countries have extended attractive policies, packages and subsidies and over the years managed to attract several global players. However, at the moment, Thailand indeed has its nose ahead. Favorable policies and support from the government, strong automotive supply chain, export potential, EV opportunities, skilled workforce and strong domestic market are conducive for the further growth of Thailand as a key automotive production hub that caters to the domestic as well as global markets.”

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