Automotive manufacturing takes off in Thailand

The automotive manufacturing industry is a major player in the Association of South East Asian Nations (ASEAN). Within this region, Thailand is considered an important hub of activity. Many local and international firms have invested large sums across various manufacturing sectors in Thailand, with gains expected in automotive production and assembly in 2015.

Current forecasts put Thailand on track to produce 3 million vehicles locally each year by 2017, with many multinational automotive companies showing interest in entering the market or expanding their existing presence.

Thailand Board of Investment Secretary-General Udom Wongviwatchai explained that the international commitment to the country's eco-car scheme is a good indicator of how the overall industry is performing.

"The response has been better than expected, reflecting {foreign companies} confidence in Thailand's potential as a global automobile manufacturing hub," he said.

Already, Toyota, Honda, Nissan, Suzuki and Mitsubishi have contributed to the first phase of the Bt139 billion project. With phase two ready to get off the ground this year, production is likely to increase across the board due to the introduction of at least five more car companies.

Production growth expected to hit major targets

Although the ASEAN region failed to hit production targets in the automotive industry last year, the ASEAN Automotive Federation (AAF) forecasted 2015 will be a different story.

AAF President Piengjai Keawsuwan explained that growth in Thailand fell short  of the 2014 target of 4 million vehicles rolling off the production line, yet she is confident that recovery is imminent. Auto production in 2015 is expected to reach over 4 million units, due to Thailand's economy growing 4-5 per cent – in line with the global market.

Malaysia and Indonesia are also forecast to see strong growth, but it is clear that Thailand is leading the charge as the country faces particularly strong interest from foreign investors. Thailand should therefore contribute half of 2015's 4 million units, while Indonesia produces around 1.3 million and Malaysia makes up the rest.

Increased investment driving growth

There are a number of companies considering increased investment in Thailand's automotive industry. In particular, Mazda has announced the start of production in its auto transmission plant in Bangkok.

Mazda Powertrain Manufacturing Thailand (MPMT) is a state-of-the-art facility mass producing the company's new-generation SKYATIC technologies. This transmission is heralded as a solution to "provide both driving pleasure and outstanding environmental and safety performance at the same time".

The Thai plant is expected to reach an annual capacity of 400,000 units, pushing global production to 1.54 million units.

"We've made great efforts to ensure the manufacture of high-quality units at MPMT, including sending more than 30 engineers and managers to Mazda's plants in Hiroshima and Hofu," MPMT President and Chief Executive Officer Hidenori Kawakami explained.

"Moving forward, Mazda will continue to nurture the people who will support and lead the future of the automotive industry in Thailand and work hand in hand with the people of this country to make a contribution to the further development of the Thai economy."

Volkswagen is another company planning potentially increased investment in Thailand. Ayala Auto Holdings Corp Chair and President Philip S Orbeta revealed the company's plans this month, while pitching on behalf of the Philippines.

According to Mr Orbeta, Volkswagen is considering both Thailand and Indonesia as new locations for an ASEAN assembly plant. This is in addition to the production facility already in progress in Bangkok, which the firm announced in September under phase two of the eco-car program.

Further manufacturing investment boosts automotive market

Even outside of the automotive industry, Thailand is experiencing investment from major players. Beko, Europe's second-best-selling appliance company, has announced plans to build its first ASEAN facility in Thailand. 

While this is not an investment directly related to automotive manufacturing, the knock-on effects of Beko's commitment could establish Thailand as a key player in all manufacturing sectors.

Levent Cakiroglu, global CEO of Turkey-based Arcelik, Beko's parent company, said: ""Having a regional production facility in Thailand that can quickly respond to regional market needs is the key to achieving our growth plans in the [ASEAN]."

After impressive success in Europe, Beko's investment in Thailand is expected to boost the local economy and provide many opportunities for businesses and consumers. 

Mustafa V Koc, chairman of Koc Holding, the group connected to the Beko investment, explained that Beko's move into Thailand is a good sign for future growth in manufacturing, research and design. 

"Beko is an unfolding, global success story that has been a phenomenon in Europe thanks to our ability to understand local needs and reliably fulfil them through high-quality products that are innovation-driven. Delivering on that commitment requires a global organisation that is staffed with the highest-calibre people, production facilities that are both flexible and state-of-the-art, and strong [research and development] capabilities," he said.

Koc Holding employs more than 80,000 people across the globe, and owns research and development centres across 22 locations. The research assets give the company a strong competitive advantage in sectors such as energy and automotive manufacturing. With the move into Thailand, local business owners could potentially begin to benefit from access to these impressive facilities, research and skills.

"Southeast Asia is fast becoming one of the world's most important economic centres, and we believe Thailand has strong potential to be a manufacturing hub of this region," Mr Koc added.

He explained that Thailand had been selected as the new home for Beko's plant due to "the potential of the Thai economy, the existence of a strong network of supply industries, a geographically central location in the region, good infrastructure, the incentives offered by the Board of Investment, and, importantly, confidence in the Thai people". 

These are just some of examples of how Thailand is moving ahead as a manufacturing leader. Now seems to be a promising time for the country, and businesses that operate within its market.

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