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Business Insight

Thai Auto Industry Evolves

Tayamon Huttaporn

One of Southeast Asia's biggest motor shows has opened in Thailand. The domestic auto market has been struggling under the economic downturn, and has not yet shown clear signs of recovery.

Car sales this year surpassed 621,000 by the end of October, down over 13 percent from the same period last year. The figure peaked in 2012, when the government of Yingluck Shinawatra waived taxes for first-time car buyers.

Since that policy ended, sales have dropped by nearly half. Despite the harsh conditions, there's room for growth in the Thai auto industry, as seen by the Thailand International Motor Expo, which kicked off on Wednesday. 33 automakers from 11 countries are taking part. The organizer expects 1.5 million visitors during the two-week event.

Many companies are displaying what is the top-selling kind of vehicle in Thailand, the pickup truck. Pickups are popular for agriculture, as they can carry workers, crops and tools of the trade. They account for over half the vehicles produced in the country.

The US automaker Ford introduced 2 brand-new models, the Everest and the Ranger. Both are large, and suitable for driving in rural areas, where roads are not well-maintained. Managing Director, Ford Sales & Service Yukontorn Wisadkosin says "we're marketing in 30 rural areas across Thailand. That allows us to hear back from our customers about our vehicles...especially pickup trucks."

Falling demand is being felt by many companies at the event. But premium automaker BMW is welcoming many visitors to its booth, as it targets Thailand's growing numbers of newly-rich. BMW Thailand President Matthias Pfalz says "Our target group is mainly wealthy Thai people who do not depend that much on the short term economic cycles."

But alternatives are needed by Japanese automakers, which dominate the Thai market, accounting for over 90 percent. Japanese company Nissan is using the expo to spotlight its colorful pickup model called Navara. It is one of what the company calls "global cars," which are made in Thailand and often exported to emerging markets. Nissan Motor Thailand President Kazutaka Nambu says "Exports are increasing because demand is falling in Thailand, as it grows in other countries."

Mitsubishi Motors marked its 4 millionth vehicle produced in Thailand last month and expects Thailand's role as an export base will only become more important. Mitsubishi Motors President and COO Tetsuro Aikawa says "I believe the factory in Thailand will lead to further production and sales in the ASEAN area."

The Leaders of the Thai auto industry are welcoming the move from mere production base to "export-hub", as it still helps the Thai economy. Kovit Wongkolkitsilp, the Chairman of Federation of Thai Industries Auto Parts Industry Club says "exports are the best way to go for the Thai industry. Thailand has been exporting cars for many years, but it is only in the last 2 to 3 years that exports have outnumbered domestic sales. We should continue in the direction, as it helps the Thai economy grow."

As production for export increases and premium automakers find a niche, Thailand's auto industry continues to evolve.

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