Friday, November 16, 2012

Industry roars ahead with over 2m vehicles

THE NATION REPORT:

This year, Thailand will produce more than 2 million vehicles for the first time in history. 

It has taken more than five decades for the industry to come this far, and it speaks volumes of the success of all sectors that have been involved, whether government or private. 

In 2011 two major disasters were responsible for rocking Thailand's automobile industry - the East Japan earthquake and the great Thai flood. Both the tsumani in Japan and the mega flood in Thailand caused a disruption in the supply of parts that brought production lines to a halt. It also shook Thailand's position as a regional production hub, as production in other countries was also affected. 

The earthquake and tsunami in March 2011 heavily damaged many important auto parts production facilities in Japan, causing parts shortages. 

With assembly plants coming to a halt, the whole industry teamed up to overcome the problem and resume normal production. Auto-makers started to assist parts-makers in several ways in order to bring back this important link in the production chain. 

The government also assisted parts-makers in many ways, including relief from tax measures. It waived import duty on new machinery for replacing flood-damaged factories, waived import duty on CBU vehicles for assembly plants damaged by the flood, and waived import duty on auto parts for manufacturers damaged by the flood. 

Apart from quickly resolving production issues, the private sector also launched strong marketing strategies and introduced a large number of new vehicles. The government, on the other hand, launched assistance measures and put more focus on the First Car Buyer Programme. Auto-makers responded very well to the measures and helped drive the whole industry to new heights. 

According to the First Car scheme, the excise duty for vehicles that qualify (not more than Bt100,000) will be returned to the buyer after one year of purchase. Orders must be placed and applications submitted no later than December 31, 2012. There is no deadline for vehicle delivery. 

Auto manufacturers have not been able to deliver as many as 100,000 vehicles ordered since late 2011 due to the flood, and the First Car scheme has earned carmakers even more orders, with the industry growing by more than 70 per cent compared to the previous year. 

Apart for the increased demand, the large number of new vehicles, especially in the sub-compact, small and eco-car segments, as well as production increases, have aided the industry in achieving a new production record of 2 million vehicles. This is unprecedented. 

With the strong recovery, the government and private sector had predicted that 2012 would be a golden year for the auto industry. Domestic sales had been forecasted to reach 1.2 million vehicles, with a production of 2.2 million - both figures being the highest in history. After eight months, auto-makers started to raise their annual forecast to 1.3 million vehicles, and it was later raised to 1.4 million. 

This great recovery of the auto industry requires not only high market demand. The strength of our automobile industry built up in the last 50 years will indeed help it tackle every situation that arises, and soon place Thailand in the ranks of the world's top 10 auto producers.

Eye on the 3-million figure 

Thailand's next target is to produce 3 million vehicles in 2017, says Suparat Sirisuwannangkura, chairman of the Automotive Industry Group of the Federation of Thai Industries. 

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