BANGKOK, Thailand, 30 June (Reuters) – As Thailand’s tourism-dependent economy struggles, the country’s auto sector is picking up the slack, with the value of automobile exports expected to hit a new high this year as the global economy reopens. The Southeast Asian nation is Asia’s second-most popular tourist destination, but because to pandemic restrictions that have hampered worldwide travel, its iconic beaches, street markets, and pagodas have seen a drop in commerce over the past year. While Thailand’s central bank cut its growth forecasts for this year due to a drop in consumption and tourism, it upped its export growth forecast for 2021 to an 11-year high of 17.1 percent, up from the 10.0 percent expected in March. Exports of autos, parts, and accessories, Thailand’s largest shipment, increased 170 percent year on year in May, the quickest pace in more than eight years, according to customs data. This month, Thai Commerce Minister Jurin Laksanawisit told reporters, “Exports are now a primary engine propelling the economy.” “We have to recognize that our tourism industry is still struggling.” Thailand is Asia’s fourth-biggest auto assembly and export hub, with Toyota (7203.T) and Honda (7203.H) among the world’s largest automakers (7267.T). The industry employs around 10% of Thailand’s workforce and contributes 10% of the country’s GDP. The sector has recovered from COVID-19’s disruptive effects far faster than the tourism industry. AAPICO Hitech (AH.BK), an auto components manufacturer with 4,500 employees, is operating at full capacity 24 hours a day, according to company president Yeap Swee Chuan, a dramatic contrast to last year’s production shutdown when the pandemic struck. “Last year was not good at all,” he remarked, adding that he expects a 20% increase in sales and a significant increase in earnings this year. “So far, we haven’t noticed much of an influence from whatever is going on in Thailand because the export market is still robust, and the local market, demand appears to be stable.” AUTOMATIC BOOM FOR EXPORT Thailand’s latest and largest coronavirus outbreak, which began in April, has halted domestic activity, further complicating the country’s already precarious economic recovery. However, the impact on auto sales has been minimal, as the auto sector’s growth has been fueled by international demand. According to the Federation of Thai Industries (FTI), the country’s entire car exports could reach 800,000 to 850,000 units this year, exceeding its target of 750,000 and compared to roughly 736,000 in 2020. Surapong Paisitpattanapong, a representative for FTI’s automotive industry section, predicts that total car shipments would set a new high of 1 trillion baht ($31.4 billion) this year, up from 786 billion baht in 2019 before the epidemic. Thailand’s vehicle exports totaled $12.4 billion in January-May, accounting for more than half of the $21.4 billion delivered in 2020. In contrast, the state planning department predicts that only half a million foreign tourists will visit this year, down from a high of around 40 million in 2019. Due to rising demand in Asia and Oceania, market leader Toyota Motor Thailand expects an 18 percent growth in totally manufactured automobile exports to 254,000 units this year. Issues with global semiconductor supply have so far had little impact on Thai auto production, though FTI warns that it is still a possibility. Toyota and Mazda (7261.T) spokespeople stated they were able to get enough chips for production. A Honda Thailand representative told Reuters that the company shut down a plant in May due to chip shortages, but that the company was able to minimize the impact on customers. PRIMARY MARKET Vaccination rollouts and government support, according to SNuntawat Srivaratachkul, acting vice president of Toyota Motor Thailand’s corporate planning division, have aided demand in important areas. Thailand’s auto exports to the world’s largest buyer, Australia, more than quadrupled in May, while those to Vietnam nearly tenfolded and those to Japan increased by 76%. In Australia, where domestic automobile manufacture ceased in 2017, a return to pre-pandemic economic prosperity and government stimulus have bolstered corporate and consumer demand, facilitating pickup truck purchases by businesses. find out more Meanwhile, Vietnam’s decrease of red tape surrounding automobile imports has aided trade flows. The robust demand for pickup vehicles, according to FTI’s Surapong, is a hint that pent-up global demand is returning. “You have to acquire pick-up trucks when the economy improves and trade expands,” he remarked. Chayut Setboonsarng in Bangkok and Eimi Yamamitsu in Tokyo contributed additional reporting, and Sam Holmes and Ana Nicolaci da Costa edited the piece. The Thomson Reuters Trust Principles are our standards. Continue reading
