Development of Thailand Automotive Industry Opportunity & Challenges By Tasana Piriyaprut Vice President Thailand Automotive Institute 1
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 2
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 3
I. Motor vehicle: world industry & Thailand positioning - World Motor Vehicle Production Source: International Organization of Motor Vehicle Manufacturers (OICA) 4
I. Motor vehicle: world industry & Thailand positioning - World Motor Vehicle Production Ranking in 2012 Source: International Organization of Motor Vehicle Manufacturers (OICA) Note: *Canada data from Autonews and **Thailand data from TAIA 5
I. Motor vehicle: world industry & Thailand positioning - World Motor Vehicle Sales Source: International Organization of Motor Vehicle Manufacturers (OICA) 6
I. Motor vehicle: world industry & Thailand positioning - World Motor Vehicle Sales Ranking in 2012 Source: International Organization of Motor Vehicle Manufacturers (OICA) 7
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 8
II. Overview of ASEAN Automotive industries ASEAN Key Indicators 2012 Population : 608 million GDP : 2,339 billion USD GDP Growth rate : 5 % Car Production : 4.23 million units Car Total Sales : 3.47 million units Vietnam Population : 88.77 million Production : 73,673 units Sales : 80,453 units Product Champion : Motorcycle Philippines Population : 96.70 million Production : 75,413 Units Sales : 156,654 Units Thailand Population : 66.78 million Production : 2.45 million units Sales : 1.43 million units Product Champion : 1 ton Pick up, ECO car Indonesia Population : 246.86 million Production : 1.06 million units Sales : 1.11 million units Product Champion : SUV and MPV, Big Truck Malaysia Population : 29.23 million Production : 0.56 million units Sales : 0.62 million units Product Champion : Passenger Car 9
II. Overview of ASEAN automotive industries Source: ASEAN Automotive Federation (AAF) 10
II. Overview of ASEAN Automotive industries (cont.) ASEAN Automotive Matrix High domestic demand No Production Base Strong Production Base Low Domestic demand
II. Overview of ASEAN Automotive industries (cont.) ASEAN countries focus on new technology Malaysia EEV (Energy Efficiency Vehcle) Indonesia MPV and Low cost green car Vietnam Motorcycle and Low cost production base Philippines Auto parts: Transmission 12
II. Overview of ASEAN Automotive industries (cont.) - Opportunity 1. Greater Market 2. Greater supply network 3. Mutual recognition on standard (19 UN ECE) 4. More derivatives and product opportunity 5. More attractive to FDI 6. More partnership with ASEAN member 7. More partnership with ASEAN + + + 13
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 14
III. Thai Automotive Industry - History 2,500,000 2,000,000 Production Domestic Sales Exports 1,500,000 1,000,000 500,000 0 19 61 19 62 19 63 19 64 19 65 19 66 19 67 19 68 19 69 19 70 19 71 19 72 19 73 19 74 19 75 19 76 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 1960 1970 1980 1990 2000 2010 Inception Investment Promotion and Import substitution Domestic part Promotion 1 Ton pick up truck ASEAN FTA Restructuring Recover from crisis Automotive production hub BOI Tariff reduction for CKD Limited model LCR CBU import ban Increase LCR CBU ban lifted for >2,300 cc Small truck industry policy Tariff reduction Engine plant promotion No LCR Tax Restructuring FTAs Eco Car 1 Alternative energy New excise tax (Co2 basis) Eco Car 2 15
III. Thai Automotive Industry - Structure Assemblers Motor Vehicle: 16 Companies (19 Brands -2.81 units) MC: 7 Companies Foreign/ Joint Venture LSEs Tier 1 635 Companies Foreign Majority Thai Majority Pure Thai Tier 2, 3 & lower 1,700 Companies Local Suppliers SMEs Total 2,359 companies 16
III. Thai Automotive Industry -OEM Location Ayudhaya - Honda Automobile (Thailand) Pathumthani - Thai Suzuki Motor Samutprakarn - Toyota Motor Thailand (Samrong) - Isuzu Motors (Thailand)(Samrong) - Nissan Motor (Thailand) - Thai Swedish Assembly - Thonburi Automotive Assembly - Scania (Thailand) - Thai Yamaha Motor Bangkok - Fuso truck (Thailand) - Thai Honda Manufacturing Chonburi -Mitsubishi Motors Thailand - Hino Motors (Thailand) -Triumph Motorcycle Thailand Prachinburi - Honda Automobile (Thailand) Chachoengsao - Toyota Motor Thailand (Gateway) - Toyota Motor Thailand (Ban Po) - Isuzu Motors (Thailand) (Gateway) - Dongfeng Automobile (Thailand) Rayong - Auto Alliance (Thailand) - General Motors (Thailand) - BMW Manufacturing (Thailand) - Ford Motors (Thailand) - Suzuki Motor Thailand - Kawasaki Motors Enterprise (Thailand) - Ducati Motorcycle (Thailand) 17
III. Thai Automotive Industry - Auto parts Location Pathumthani Body Parts: 18%, Engine Parts; Electrical Parts: 13% each, Suspension & Brake Parts: 10%, Drive, Transmission&Steering Parts; Accessories: 8% each, Other: 31% Bangkok Body Parts: 9%, Engine Parts; Electrical Parts; Drive, Transmission&Steering Parts; Accessories: 6% each, Suspension & Brake Parts: 4%, Mold&Die: 3%, Other: 60% Samutprakarn Body Parts: 22%, Electrical Parts: 15%, Engine Parts; Drive, Transmission &Steering Parts: 8% each, Suspension & Brake Parts: 5%, Mold&Die: 4%, Accessories: 3%, Other: 36% Rayong Body Parts: 24%, Engine Parts; Drive, Transmission &Steering Parts: 15% each, Suspension & Brake Parts: 12%, Electrical Parts: 10%, Accessories: 7%, Mold&Die: 2%, Other: 15% Chonburi Body Parts: 25%, Engine Parts: 22%, Drive, Transmission &Steering Parts: 15%, Electrical Parts: 9%, Accessories: 5%, Suspension & Brake Parts: 4%, Mold&Die: 4%, Other: 16% 18
III. Thailand automotive industry Current situation Motor vehicle production, domestic sales and export 2,500e Source: Thailand Automotive Institute (TAI) 19
III. Thailand automotive industry Current situation Motor vehicle export 20
III. Thailand automotive industry Mile stones Domestic Export 21
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 22
IV. Challenges - Competitiveness among big 3 ASEAN Thailand, Indonesia, and Malaysia 2011 domestic Source: Boston consulting group 23
IV. Challenges - Emission standard Country 2009 2010 2011 2012 2013 2014 2015 2016 2017 THAILAND Euro3 Euro4 INDONESIA Euro2 Euro 4 (Tentative) MALAYSIA Gasoline Euro2 Euro 3 (Tentative) Diesel Euro1 Euro 2 (Tentative) Euro 4 (Tentative) PHILIPPINES Euro2 Euro 4 (Tentative) VIETNAM Euro2 Euro4 (Under Study) SINGAPORE Gasoline Euro2 Euro 4 (Tentative) Diesel Euro4 Euro 5 (Tentative) 24
IV. Challenges - Human resources By Skills ------------------------------------------ Manufacturing 50% Mechanic 26% Engineering 7% Electrical 5% Electronics 7% Accounting & Admin 1% 800,000 18,200 43,300 41,100 41,500 41,900 By Job Level ------------------------------------------ Staff 74% Technical 7% Supervisor 7% Expert 5% Engineer 4% Executive 3% 400,000 483,000 501,200 544,500 585,600 627,100 669,000 By Education ------------------------------------------ Secondary-High School 50% Vocational 15% Diploma 25% Non-degree 10% 0 2010 2011 2012 2013 2014 2015 No. of Labours Increasing Labour 25
IV. Challenges - Global warming issue Total CO2 emissions are not decreasing Need to monitoring and control CO2 in the future Carbon dioxide Carbon monoxide Nitrogen oxide Volatile organic compound Sulfur dioxide EU vehicles toxic emission down but CO2 still a challenging Source: Automotive Foundation (FIA) 26
IV. Challenges - Technology issue 27
IV. Challenge - Safety issue Global Vehicle Safety Regulation Improvement Active safety standard Brakes (Electronic stability program, ESP) etc. Passive safety standard Crash test (Design crumple zones) etc. Intelligent Transportation System (ITS) Source : Global Trends 2020 and Beyond Automobile Use, Environment & Safety Challenges, FIA Foundation, June 2011 28
Outline I. Motor vehicle: world industry & Thailand positioning II. Overview of ASEAN automotive industry III. Thailand automotive industry IV. Challenges V. The way forward for Thailand 29
VI The way forward for Thailand Thailand Automotive Industry Vision today and tomorrow Vision 2011 Vision 2021 Thailand is production base in Asia which creates more value added to the country with strong automotive parts industry Thailand is a global green automotive production base with strong domestic supply chains which create high value added for the country Green = Environmental friendly & international standard 30
VISION 2021 Thailand is a global green automotive production base with strong domestic supply chains which create high value added for the country Strategic Plan (3 COEs + 2 ENVs) Alternative energy Human Resources Development Integrated AHRD System Development Capability upgrading COE 1 COE 2 COE 3 Research and Technology Development Light weight vehicles Vehicle safety Advanced production T technology AHRD Alliance Entrepreneur Strength Enhancement Productivity Improvement Cluster/Supply chain Network Green manufacturing ENV 1 Infrastructure Testing and R&D Centers Automotive Information Centers Automotive Academy Policy Integration Policy Research Support Promote Investment Promotion for Green Products and Suppliers Branding for REM 31
V. The way forward for Thailand Eco Car 2 Criteria Package: Car assembly + Engine manufacturing + Part manufacturing Actual production not less than 100,000 units per year from year 4 Have to start by 2019 Qualification 4.3 liter per 100 km. Euro V standard CO 2 not exceed 100 grams per km. Safety standard UN ECE R 94&95 Safety part: ABS ESC At lease 4 of the 5 Cs of engine parts Investment minimum: 6.5 billion Baht Deadline submission 31 March 2014 Incentives Exemption of import duty on machinery Up to 90% import duty reduction on raw material Exemption on corporate income tax of 6 years, not exceed the project investment amount One or Two additional year if there is investment or expenditure in developing Thai auto part suppliers 32
Thank you Thailand Automotive Institute www.thaiauto.or.th 33