A

Path of Thai Auto Parts Manufacturers

towards ASEAN Economic Community
Achana Limpaitoon
President of Thai Auto Parts Manufacturing Associa7on

Outline
Five Decades of Sustainable Growth
Natural Disasters that halted the Industry in 2011
Trend of Thailand Automo7ve Industry
Compara7ve Review within ASEAN Automo7ve Industry
The Role of ASEAN Economics Community
Thai Auto Parts Makers : Structure
Challenges and Conclusions
21/06/2012

FIVE DECADES OF SUSTAINABLE

GROWTH OF THAILAND AUTOMOTIVE
INDUSTRY
21/06/2012

Development of Thai AutomoJve Industry under Government Policies

1600000

Production
1400000

Sales

Export

Increased local content Repealing

prohibition on
54% for PC
import of all types
60-72% for PU
of vehicles
Reduced tariff tax rate
45% for Truck&Bus Tax Restructuring
Increased
Repealing
local content
Abolished local content
limitation of 42
from 25%to
Tax Restructuring CKD
series of passenger
50% for
from 20% to 33%
Diesel car assembly
passenger cars
engine was
Limited 42
Investment promotion
compulsory
series for
parts of pick
Tax reduction for export
passenger car
up
Repealing prohibition on
assembly
establishing vehicle assembly
factory

1200000

1000000

800000

600000

400000

200000

Reduced
excise tax
rate

0
80

81

82

83

1960-Thai
automotive
industry was born
for Import
Substitution

84

85

87

88

1970-Start
promoting
Automobile
Assembling
Base

Protection

21/06/2012

86

89

90

91

92

93

94

1980-Regions
Best
Automobile
Assembler

95

96

97

98

99

'00 '01 '02 '03 '04 '05 '06 '07 '08

1990-Region's Most
liberalized Automotive
Industry with the
Strongest Part
Manufacturers

Liberalization & Promotion

2000 to present Liberalization and

strong production
base of Asia

Globalization
4

NATURAL DISASTERS THAT HALTED

THE INDUSTRY IN 2011
21/06/2012

Thailand AutomoJve Industry Growth Trend

Automotive Production 2011: World Ranking

Impacts of the disasters on Thailand

AutomoJve Industry
2011 Annual
ProducJon drasJcally
plummeted to 1.45
million cars

However, demand for

cars conJnued to
increase

21/06/2012

Produc7on, Domes7c Sales, Exports

TREND OF AUTOMOTIVE INDUSTRY

IN THAILAND
21/06/2012

Car Production (Jan-Apr 2012 vs. Jan-Dec 2011)

Units
200,000
168,096

Production 2012

190,731
174,212

175,000

Production 2011

146,231 172,004 142,298

153,180
150,743
153,646
140,534
125,000
150,000

89,179

75,000
50,000
25,000
0

Car ProducJon

99,426

100,000
Jan-Apr 2012
= 641,659 units
Jan-Apr 2011
= 558,157 units
Growth = 15 %
Jan-Apr 2012 Target = 612,869 units
Actual > Target = 5 %

Jan Feb Mar

Apr May Jun

Jul

23,695
Aug Sep Oct Nov Dec

Units
120,000

Domestic vs. Export (Jan - Apr 2012)

Year 2012
(Domestic)

106,715
100,000

ProducJon for
DomesJc &
Exports

89,300

84,016 86,872

80,000
64,022 78,796
60,000
55,426
40,000 40,512
20,000

Jan-Apr 2012: Total of 605,659 units

Domestic = 323,399 units ( 53%)
Export = 282,260 units ( 47%)

21/06/2012

Source: AutomoJve Industry Club, FTI

Jan Feb Mar Apr May Jun

Jul

Aug Sep Oct Nov Dec

10

2012 Vs 2011 Car Domestic Sales: Jan-Apr

Units
120,000

110,977
105,000

91,325

93,008
87,012

90,000

77,019
75,000

79,043

87,788
70,259

77,213
68,398

72,902

67,283

60,000

55,339
55,851
42,873

45,000

Car Domestic Sales

- 21 % (Compare Mar12)
30 % (Compare Apr11)

30,000

15,000

26,069

Jan-Apr 2012 = 367,109 units

20 % (Growth of Jan-Apr)

0
Jan

Feb

Mar

21/06/2012
Source: AutomoJve Industry Club, FTI

Apr

May

Jun

Jul

Aug

Sep

Year 2012

Oct

Nov

Year 2011

Dec

11

2012 Vs 2011 CBU Export (units): Jan-Apr

Units
100,000

90,654

89,815
90,000

85,626
80,699
80,000

75,651
72,270

77,315
70,000

68,082

55,433

60,000

54,691

53,591
52,191

50,000

40,000

35,046

30,000

20,000

10,000

- 38% (Compare Mar12)

6 % (Compare Apr11)

Jan Apr 2012

Jan Apr 2011
% Growth
Plan Jan-Apr 2012
Actual < Plan

=
=
=
=
=

276,154
286,598
-4%
291,408
-5%

6,258

0
Jan

Feb

Mar

21/06/2012
Source: AutomoJve Industry Club, FTI

Apr

May

Jun

Jul

Aug

Export CBU 2012

Sep

Oct

Nov

Export CBU 2011

Dec

12

Car Domestic Sales: 2012 Apr YTD

CBU Export: 2012 Apr YTD

Eco-Car
24,439
PPV
7%
21,398
6%

PPV
24,098
9%
P-Car
121,715
33%

Pickup 1
ton
176,993
48%

% Growth of Jan-Apr11
P-Car
-7%
Eco-Car:
105 %
Pick-up 1T:
35 %
PPV:
56 %
Other:
18 %

P-car
52,219
19%

Total = 643,246 Units

Domes7c = 57.07%
Export = 42.93%

Jan
Apr 2012 = 367,092 units
21/06/2012

Source: AutomoJve Industry Club, FTI

P/U 1 ton
199,837
72%

other
22,564
6%

Jan-Apr 2012 = 276,154 units

13

Thai Automotive Product Champions

Pickup is core product of Thailand
Eco Car is the second product champion

14

2012)Apr)YTD)Export)ProporGon)for)TOP)10)
Countries)(71.53%)of)Total)Export)Value))
South)Africa)
6%)

Thailand Auto-parts
Export (by Country)

Philippine)
5%)

ArgenGna)
4%)

Indonesia)
22%)

Vietnam)
7%)
USA)
7%)

Brazil)
9%)

Japan)
18%)
India)
9%)

Malaysia)
13%)

Million USD

Country

1 Indonesia
2 Japan
3 Malaysia
4 India
5 Brazil
6 USA
7 Vietnam
8 South Africa
9 Philippine
10 Argentina
Total 10 Countries
Other21/06/2012
Total

2008

1,223.73
1,308.29
846.35
339.36
362.83
427.93
460.37
384.75
390.29
85.88
5,829.78
2,420.40
8,250.18

2009

762.85
733.94
700.17
317.15
306.56
322.25
475.05
232.72
335.94
85.38
4,272.01
1,731.01
6,003.02

2010

1,190.56
1,180.13
860.84
517.55
410.74
461.38
529.16
328.34
478.68
108.54
6,065.92
2,506.96
8,572.88

2011

1,434.62
1,262.12
837.42
579.03
605.67
492.13
682.84
410.04
403.66
147.10
6,854.63
2,866.43
9,721.06

2011

2012

(Jan-April) (Jan-April)
472.42
567.23
361.59
454.09
278.18
333.24
195.09
235.66
199.15
234.79
178.24
188.46
208.71
166.18
128.44
157.44
141.24
122.72
40.55
96.68
2,203.61
2,556.49
935.37
1,017.29
15
3,138.98
3,573.78

COMPARATIVE REVIEW WITHIN THE

ASEAN AUTOMOTIVE INDUSTRY
21/06/2012

16

Trend of ASEAN Automotive Industry 2008-2011

Thailand

2008

2009

2010

Production

1,394,029

999,378

1,645,304

1,457,795

Sales

614,078

548,871

800,357

794,081

Indonesia

2008

2009

2010

2011

Production

600,628

464,816

702,508

837,948

Sales

603,774

483,548

764,710

894,164

2008

2009

2010

2011

Malaysia
Production

530,810

489,269 567,715

533,515

Sales

548,115

536,905 605,156

600,123

Philippines

21/06/2012

2011

2008

2009

2010

2011

Production

64,000

71,000

90,000

64,906

Sales

124,449

132,444

168,490

141,616

Vietnam

2008

2009

2010

2011

Production

111,950

119,460

112,224

100,465

Sales

111,950

119,460

112,224

109,660

Reference : FOURIN Asia Automotive Intelligence

17

Current ProducJon Vs sales (2012 Q1)

2012 Q1 Total Car Production
Units

2012 Q1 Total Car Sales

Total car production (2012 Q1)

Units

1,000,000

+6%

900,000

Total car sales (2012 Q1)

+5%

750,000
700,000
650,000

800,000

600,000
550,000

700,000

500,000

+7%

600,000

450,000
400,000

500,000
400,000

+19%

-8%

-1%

350,000

-32%

250,000

300,000

200,000
150,000

200,000

-13%
+40%

-10%
-35%

-0.3%

100,000

100,000
-

+17%

+11%

300,000

50,000

Indonesia

Malaysia

Philippines

Thailand

Vietnam

TOTAL

2011

208,957

154,253

18,332

468,978

25,666

876,186

2011

2012

247,836

141,959

18,149

499,560

17,404

924,908

2012

Brunei

Indonesia

Malaysia

Thailand

Vietnam

Total

3,388

225,739

158,432

Philippines Singapore
36,293

9,731

238,619

27,826

700,028

4,734

250,533

138,544

32,608

9,704

279,321

18,122

733,566

Source : ASEAN Automotive Federation

2012Q1 Vs 2011Q1 Market share in Car Production (Jan-Mar)

Market share 2011 Q1
3%

Market share 2012 Q1

2%

24%

54%

18%

27%

54%
2%

15%

2012Q1 Vs 2011Q1 Market share in Car Sales

Market share 2011 Q1

4%

32%

34%
1%

5%

23%

Market share 2012 Q1

2%
34%

38%
1%
4%

19%

Source : ASEAN Automotive Federation

2012 Vs 2011 Total Motorcycle Production (Jan-Mar)

Production Market share 2011 Q1

Units

Total mortorcyle production (2012Q1 Vs 2012Q1)

20%
+0.5%

3,000,000

6%
4%

70%

2,700,000
2,400,000

-3%

2,100,000
1,800,000
1,500,000

Production Market share 2012 Q1

1,200,000

+15%

900,000

-30%

+20%

600,000
300,000
-

24%
Indonesia

Malaysia

Philippines

Thailand

Total

2011

2,019,628

122,831

182,370

573,658

2,898,487

2012

1,958,242

140,606

127,721

685,022

2,911,591

4%
5%

67%

Source : ASEAN Automotive Federation

THE ROLE OF ASEAN ECONOMICS

COMMUNITY
21/06/2012

21

ASEAN Economics Community (AEC)

1970 1990 2000 2005 2010 2015

Auto-Policy &
Movement

Regulation

Car
Manufacturer
Trend

Abolish
ment of
local
content

Increase
of local
content
to 50 %

25% local
content
requirement

Deregulation

FTA
Negotiation

Liberalization

Vehicle
assembly
( CKD )

Localization

Country competition

Regional competition

AFTA
Tariff
reductio
n to 0%

AEC

Higher
competition

Re-allocation

Global competition

Source: IHS (previously CSM Worldwide Co., Ltd.)

22

Production Network in ASEAN and ASEAN+

Automotive Production Network in ASEAN

Source: IHS (previously CSM Worldwide Co., Ltd.)

STRUCTURE OF THAI AUTO PART

MAKERS
21/06/2012

24

Structure of Thai Automotive Industry

Tier 1

Assembler

Number of
Entrepreneur

Number of
Employee

Car Part
Manufacturers
(386 Firms)
Car and Motorcycle Part
Manufacturers (122 Firms)

Motorcycle
Assemblers
8 Firms
8 Factories

Motorcycle Part
Manufacturers
(201 Firms)

Passenger Car/Truck
Assemblers
17 Firms,
23 Factories

Engines, Drivetrains, Steering, Suspension,

Brake Wheel, Tire, Bodyworks,
Interiors, Electronics and Elec Systems

*Car Assembler
100,000 people
Sales Representative,
Service Center
200,000 people
By INVESTOR
By SIZE

TOTAL 585 Firms

Tier 2 & 3
Auto Part
Manufacturers
(1,700 Firms)
Stamping, plastics, rubber,
machining, casting, forging,
function, electrical, trimming

Auto Part Manufacturer 450,000 people

Supporting Industry 100,000 people

Pure THAI
340 Firms (58.4 %)

Joint Venture
182 Firms (31.3 %)

Pure Foreigner
60 Firms (10.3 %)

Small Enterprise
368 Firms (63.2%)

Medium Enterprise
141 Firms (24.2 %)

Large Enterprise
73 Firms (12.5%)

25

CHALLENGES AND CONCLUSIONS

21/06/2012

26

Shortage of Labor

Labor Skill

EducaJonal
System not suiJng
MFG Demand
21/06/2012

To employ non-immigrant labor

To be allowed to hire foreign labor for an extended
period

Labor skill standard

VocaJonal qualicaJon standard
Skill cerJcaJon system
InsJtute of vocaJonal qualicaJon

Ministry of EducaJon
Ministry of Labor
Thai Auto Parts Manufacturers (TAPMA) join hands in
hands to introduce School-Factory system, Factory-School
system

27

Lack of R&D

R&D and Auto parts tesJng center

Low ProducJvity

SME Auto part makers subsidized with OJT &

ProducJvity training
AutomaJon / RoboJzaJon
ProducJvity fund

AutomoJve
Industry Policy/
RegistraJon/
Standard

TAPMA would be the focal point

21/06/2012

28

THANK YOU

21/06/2012

29