© Reuters. FILE PHOTO: Employees work on an assembly line at Toyota’s manufacturing plant in Chachoengsao province, east of Bangkok, on November 7, 2012. REUTERS / Chaiwat Subprasom / File Photo
By Orathai Sriring and Satawasin Staporncharnchai
BANGKOK (Reuters) – As tourism-dependent Thailand struggles with a collapse in foreign visitors, the country’s auto sector is regaining some slack with the value of auto exports set to rise to a record this year as that the world economy reopens.
The Southeast Asian nation is Asia’s second most popular tourist destination, but its famous beaches, street markets and pagodas have been deprived of business for the past year due to pandemic restrictions that have brought global travel to a standstill.
While Thailand’s central bank has lowered its projections for economic growth this year due to the impact on consumption and tourism, last week it raised its forecast for export growth for 2021 to an 11-year high from 17, 1%, compared to the 10.0% increase expected in March. .
Much of that is due to exports of cars, parts and accessories, Thailand’s biggest shipment, which rose 170% year-on-year in May, the fastest pace in more than eight years, customs data showed.
“Exports are now a main engine driving the economy,” Thai Trade Minister Jurin Laksanawisit told reporters this month. “We have to admit that our tourism cannot get going yet.”
Thailand is Asia’s fourth-largest car assembly and export hub for some of the world’s largest automakers, such as Toyota and Honda. Industry accounts for about 10% of Thailand’s GDP and manufacturing jobs.
The sector has been able to shed the disruptive impact of COVID-19 much faster than the tourism industry.
Auto parts maker AAPICO Hitech, which has 4,500 workers, is operating at full capacity 24 hours a day, company president Yeap Swee Chuan told Reuters, in stark contrast to last year’s downturn in factories. when the pandemic hit.
“Last year was not good at all, but this year should be sunny,” he said, pointing to 20% sales growth and much higher profits this year.
“So far we have not seen much impact from any situation in Thailand, as the export market is still strong, and the local market, the demand seems to be there until now.
EXPORT LED AUTO BOOM
Thailand’s most recent and largest coronavirus outbreak so far, which began in April, has slowed domestic activity and dealt a deeper blow to the country’s already fragile economic recovery.
But the fallout on car sales has been limited, while the auto boom has been driven by foreign demand.
The Federation of Thai Industries (FTI) said the country’s exports of fully-built cars could reach 800,000 to 850,000 units this year, surpassing its target of 750,000 from 736,000 in 2020.
Surapong Paisitpattanapong, spokesperson for FTI’s automotive industry division, expects total auto shipments to reach a record 1 trillion baht ($ 31.4 billion) this year compared to 786 billion baht in 2019 before the pandemic.
Thailand’s auto exports reached $ 12.4 billion in January-May, more than half of the $ 21.4 billion shipped for all of 2020, according to the Ministry of Commerce.
In contrast, only half a million foreign tourists are expected this year, the state planning agency predicted, compared with a record nearly 40 million in 2019.
Market leader Toyota Motor (NYSE 🙂 Thailand forecast an 18% increase in the company’s fully-built car exports to 254,000 units this year due to increased demand in Asia and Oceania.
So far, problems related to the global supply of microchips have yet to significantly disrupt Thai car production, although FTI warns that it remains a risk.
Spokespersons for Toyota and Mazda said they had been able to get enough chips for production. A Honda Thailand spokesperson told Reuters it had closed a plant in May due to a shortage of chips, but had managed to limit the impact on customers.
Nuntawat Srivaratachkul, acting vice president of Toyota Motor Thailand’s corporate planning division, told Reuters that vaccine launches and government stimulus had helped demand in key markets.
Thai car exports to the main buyer, Australia, more than tripled in May, while those from Vietnam increased almost tenfold and those from Japan increased 76% that month.
In Australia, where local car production ended in 2017, a return to pre-pandemic economic prosperity and government stimulus have bolstered business and consumer demand, helping businesses buy vans.
Vietnam’s reduction of red tape around vehicle imports, meanwhile, has also eased trade flows.
Isao Sekiguchi, head of Nissan (OTC 🙂 in Thailand, told Reuters its exports were driven by demand for its recently launched electric vehicle, especially from Japan, and its new pickup.
Yukontorn Wisadkosin, president of Ford ASEAN, said the company was benefiting from demand from Australians, who are looking to travel domestically amid coronavirus restrictions.
“The Ford Ranger and Ford Everest continue to enjoy strong momentum in Australia as the vehicles of choice for Australians across the country as they seek adventure in their own backyard,” he added.