Industry Outlook 2020-2022: Auto Parts Industry

Auto Parts

Industry Outlook 2020-2022: Auto Parts Industry

10 September 2020

By Wanna Yongpisanphob

In 2020, the Thai auto parts industry will contract along with the auto sector. The OEM market will be hardest hit by the Covid-19 pandemic which had temporarily disrupted the industry’s supply chains in the first half of the year and continues to reduce spending power worldwide. The REM market will see a less severe impact. Demand for REM parts should continue to grow in line with the expanding national vehicle fleet, and decisions to postpone purchases of new vehicles by extending the life of vehicles on the road. In 2021 and 2022, the auto parts industry should recover as the number of vehicles assembled in Thailand is forecast to rise by an average of 3-4% p.a., in step with global vehicle production trends.

However, the industry faces several challenges. There is rising risk of countries raising trade barriers, especially since US authorities accused Thai tire manufacturers of dumping products in the US. The new US-Mexico-Canada free trade agreement which provides for tariff-free trade between the signatories could also have a significant impact on auto parts exports from Thailand to these counties.

Overview

The Thai auto parts industry has been receiving government support since 1963[1]. Initially, state efforts to encourage investment in the domestic production and use of auto parts consisted of raising import duties on ‘complete built-up’ autos (CBUs) and ‘complete knock-down’ units (CKDs). Later, as the government tried to attract foreign companies to establish production facilities in Thailand, the Board of Investment (BOI) introduced several investment incentives, including tax breaks for investors and waiving duties on imported machinery. The government also imposed ‘local content requirement’ (LCR) that set the minimum number or value of components and parts to be included in vehicles assembled in Thailand. The LCR now since been abandoned2/ but passenger cars manufactured in Thailand typically still contain 60-80% Thai-made parts (by value of the finished vehicle). LCR can reach 90% for eco-cars and pickups, and is close to 100% for motorcycles. The free trade agreements that has had major impact on the industry include the ASEAN Free Trade Agreement (AFTA), Japan-Thailand Economic Partnership Agreement (JTEPA), and the Thailand-Australia Free Trade Agreement (TAFTA). The common denominator among these agreements is the decision to cut or phase out import duties on CBUs and CKDs for the signatories

These policies have encouraged Thai and overseas investors to set up auto parts manufacturing facilities in Thailand, and Thailand now has a significant auto parts industry. Currently, the most important joint-ventures and Thai-only operations include Thai Summit Auto Parts, Sammitr Auto Parts, Somboon Advance Technology and Thai Auto Press Parts. The major international players active in Thailand include Robert Bosch, Denso, Magna, Continental, ZF and Aisin Seiki.

Most of the Japanese manufacturers (Table 1) have received some form of support from the government for the manufacture of: (i) parts made from rubber (which depend on domestic production of rubber inputs), including hosing, belts, window seals and tires which are produced through hi-tech processes; (ii) parts for powertrains and engines; parts for an internal combustion engines (ICEs) eat up a third of manufacturing costs. However, the government provides comprehensive support for manufacturers across the length of what are complex supply chains[3], including those which produce radiators, exhaust systems, fuel supply systems, petrol tanks, ignition systems and gearboxes; and (iii) parts for electric vehicles (EVs), for which the government is promoting investment under a comprehensive package[4]. There is a steady stream of applications from auto manufacturers looking to invest in the production of EVs and parts[5], specifically the battery which is a crucial component in EVs and represent over 30% of the vehicle production cost. The government has also introduced measures to promote investment in the assembly of battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs), and companies that have applied for incentives for BEV production are also eligible for the HEV incentives (provided applications had been submitted by December 31, 2019) subject to the following: (i) alongside HEV production, they are required to produce at least 1 major HEV part within 3 years of receiving the investment support and another 4 parts within 3 years of starting HEV production; and (ii) BEV producers need to manufacture 1 major part within 3 years of starting HEV production. The major parts include battery, traction motor, drive control unit (DCU) and battery management system (BMS).

The auto parts market is predominantly domestic and accounts for 60-70% of industry revenue. It is split between parts used in vehicle assembly (OEM market) and the replacement equipment and spares market (REM market).

OEM market: This accounts for 30-40% of the value of the domestic auto parts market, though it moves along with auto output. Over 80% of auto parts consumed by domestic auto assemblers are manufactured in Thailand. The rest of the parts are mostly hi-tech components that are imported either directly from their parent company or form an overseas supplier to the parent company. They include microcontroller chips that Japanese manufacturers in Thailand import from Japan. Trucks and bus parts are imported from China for use in Thai assembly lines; they include those used in MG cars (made by SAIC Motor-CP), DFSK trucks (made by Tongfong Motors) and Golden Dragon buses (Bestrin Group).
REM market: This accounts 60-70% of the value of the domestic auto parts market. REM sales have been rising along with the size of the national vehicle fleet. Demand for REM spares is derived from the need to replace parts, and this is determined by the age and mileage of vehicles. REM spares are distributed through several channels including dealers’ and distributors’ service centers, retailers and wholesalers of spares, and general garages. Imported REM parts account for 10-20% of all imports of auto parts, and mostly come from Japan (43% of all imports of REM parts, by value), China (17%) and the US (8%), though the US is making inroads into the Thai market.

Receipts from the export of auto parts account for 30-40% of industry revenue, split between OEM products (80-85% of auto parts exports by value) and REM goods (15-20%). The most commonly exported goods are engines, wiring harness, body work, windows, gearboxes, tires and rubber products. Thanks to the extensive and developed supply chains, Thailand’s auto parts industry is able to generate economies of scale. And, coupled with the ability to produce parts that meets auto manufacturers’ specifications, Thai auto parts producers are competitive on world markets. Thailand’s strategic geographical location also allows the country to be an auto parts manufacturing hub for ASEAN zone and other industries6/. These factors have helped Thailand to turn into a major supplier of auto parts globally. In 2019, Thailand was the largest auto parts exporter (by value) in ASEAN zone and 14th in the world. Thailand is the 3rd largest tire exporter in the world, 4th for motorcycle parts (excluding engines or tires), 11th for engines, and 16th for auto parts (excluding engines or tires). The most common destination for these exporters is production facilities elsewhere in the ASEAN zone, including Indonesia, Malaysia, Vietnam and the Philippines, which absorb a combined 25% of exports of auto parts by value. This is followed by the United States (18%) and Japan (10%). However, labor cost in Thailand is higher than in Indonesia and Vietnam, and the level of research & development in the industry is low compared to Malaysia (Figure 3).

Situation

The auto parts industry is projected to move in line with the general auto industry. However, from 2012 to 2018, the auto parts market was affected by changes in the economy. That also hurt exports as economies in the major export destinations slowed. However, the industry benefited from investment in/the expansion of production facilities operated by overseas players, especially Japanese companies which use Thailand as a production base to export to assembly lines elsewhere in the ASEAN zone. This helped to support earning growth in the industry. Key points are:

2012-2013: The introduction of the First-Car Buyer scheme dramatically lifted auto output. At the same time, government introduced policies to support grass-root economic activities, which boosted spending power upcountry, which translated into stronger sales of motorcycles. Against this backdrop, rising demand for OEM parts reached a new high and industry revenue rose 27.8% (in THB) in 2012, before decelerating to 6.1% in 2013.

2014: The expiry of the First-Car Buyer scheme, which also had the effect of pulling forward future demand, led to a sharp drop in demand for OEM parts in the year. Domestic sales of autos and motorcycles also tumbled by 33.7% and 15.1%, respectively. However, the drought, low prices for agricultural goods, and renewed political tension in Thailand, contributed to weaker unit sales. Nevertheless, exports of both autos and motorcycles continued to grow in line with trade partners’ economies. Growth also slowed in the REM market as consumers put off replacing some parts (e.g. tires), and the surge in new vehicles bought under the First-Car Buyer scheme meant demand for replacement parts for those vehicles was limited to low-value parts like air and oil filters, lightbulbs, spark plugs, windscreen wipers and brake pads. Overall, Thailand’s auto parts industry revenue contracted by 7.3% in the year.

2015-2018: The domestic auto parts market saw a slow recovery led by greater demand for OEM parts as output of finished vehicles rose and operators supported higher levels of exports through the expansion of their production facilities. Toyota Siam expanded diesel engine production capacity, Honda invested in factories to make its 1.8-liter benzene and 1.5-liter VTEC turbo engines. Mazda Powertrain expanded production capacity of 1.3 and 2.0-liter SkyActiv engines. Dana Holdings expanded production of gearboxes, axels and drive shafts. And, Chinese players, including tire manufacturers Sentury Tire, Huayi Group and Dadi Group, increased investment to produce for export. Conditions also improved for the REM market, driven by replacement demand for vehicles bought under the First-Car Buyer scheme that were now 3-5 years old; they need to replace more expensive components, such as batteries and tires. Given these positive factors, industry revenue grew by an average of 6.0% annually (Figure 5).

In 2019, the market contracted for the first time in five years. This was attributed to the slowing economy and the resulting effect on consumer spending. The industry’s Manufacturing Production Index (MPI) slipped 5.1% relative to a year earlier (Figure 6) as the OEM market had weakened with smaller output by auto manufacturers. However, the steadily rising number of vehicles on Thai roads helped to buoy demand for REM parts. Exports also suffered in the year because the US-China trade war had hurt auto production in Thailand’s export markets. These factors combined reduced industry revenue (in THB) by 5.2%.

Domestic market: Demand for OEM parts fell in 2019, along with a 7.1% drop in auto output (to 2.01 million units) and a 5.6% slide in motorcycles output (to 1.95 million units). Unit sales fell because of a sluggish domestic economy, weak spending power upcountry (lower income in the farming sector), lenders tightening requirements for auto loans, and some consumers delaying decisions to buy new vehicles. (Krungsri Research estimates that in 2019, consumers owned passenger vehicles and pickups for an average of 8.8 years and 12.1 years, respectively, up from 8.7 years and 11.9 years in 2018). But like before, the REM market expanded with the 2.9% increase in the number of vehicles registered in the country (Table 3). However, the increase in number of vehicles over 5 years old (12.9 million autos and 12.0 million motorcycles) and the ‘Shop for the Nation’ scheme7/ helped to boost demand for new tires by allowing consumers to offset the cost against personal tax. On the imports of parts, total value shrank 4.4% to USD17bn (Table 4), with declines seen in key import sources: Japan (-5.4%), China (-12.1%)8/ and ASEAN region (-4.5%).

Exports: These also weakened in 2019, slipping 2.3% to USD21bn (Table 5).
- Engines: Exports of engines fell by 14.5%, the first drop in five years, though it was in line with the 5.2% drop in auto output worldwide (second year of decline). This was driven by transition from ICE to electric-powered vehicles and weaker economic outlook at export markets. In the year, auto output in Japan and ASEAN region9/ (main buyers of Thai-produced engines, with a combined 40.3% share of the market by value) fell by 0.7% to 11.8 million units.
- Tires: 2019 exports rose by 13.1% to USD5.8bn supported by the following: (i) Michelin opening a new factory to produce off-road tires for distribution in Thailand and to export to Asia, Africa and the Middle East, as well as to be a hub to produce tires for Ford, Isuzu, Mazda and Toyota, and (ii) the US-China trade war had prompted some Chinese tire manufacturers to shift production to Thailand10/. As a result, exports to the US rose, and for the first time Thailand became the largest single exporter of tires to the America, achieving 18.8% market share by value and knocking China out of first place (Chinese market share tumbled from 16.7% in 2018 to just 8.5% a year later). Thailand’s global market share (7.0%) also moved the country up to third place among tire exporters, behind China (18.7%) and Germany (7.2%). Thailand’s most important export markets are the United States (46.2% of tire exports by value), ASEAN zone (13.9%), and the European Union (8.9%).
- Other auto parts: Exports of other auto parts weakened in 2019, slipping 3.7% to USD10bn. They comprised (i) parts for autos including CKDs, gearboxes, braking systems, airbags, drive shafts and chassis, which export value fell by 4.7% to USD9.5bn (first drop in a decade), and (ii) parts for motorcycles including CKDs, wheels, brakes, saddles and foot-pegs, which exports rose 9.1% to USD835.5m. The latter was supported by the decision by several manufacturers to set up factories in Thailand, which lifted demand for motorcycle spares even as global motorcycle production contracted by 2.6%. The most important export markets for these parts11/ include Indonesia, Malaysia, Vietnam and the Philippines, which together account for 30.3% of all exports in this product group, followed by Japan (13.7%) and the United States (7.9%).

In the first half of 2020, the industry’s MPI tumbled 34.7% YoY because the global Covid-19 pandemic had temporarily halted auto assembly operations and slashed demand for auto parts in the domestic and international markets.

Domestic market: Demand for OEM parts crashed along with weaker car output (fell 43.1% YoY to 610,000 units) and motorcycle output (fell 30.0% YoY to 680,000 units). However, the REM market should continue to see growth as the weak economy is encouraging consumers to defer purchases of new vehicles and instead, repair existing cars to extend the life. Imports also fell by 22.8% YoY to USD6.5bn, and these were experienced by all the major exporters; imports from Japan (33.3% of all imports) shrank 26.4% YoY to USD2.2bn and those from China (18.5% of imports) dipped 17.3% YoY to USD1.2bn. However, imports from the United States (10.6% of imports) rose 13.5% YoY to USD685.2m, comprising mostly parts for use in the assembly of Harley-Davidson motorcycles at their new Thai assembly line.
Exports: In 1H20, the Covid-19 pandemic and orders to temporarily shutter auto assembly lines caused a 20.3% YoY drop in the export of auto parts (to USD8.1bn), as follows:
- Engines: Overall, exports of engines fell by 16.2% YoY to USD1.9bn following the sharp drop in demand in the main markets in ASEAN zone (-26.5% YoY to USD517.6m) and Japan (-35.8% YoY to USD123.4m). However, the supply chain disruption in China helped to lift exports there (mostly from big manufacturers Honda, Mitsubishi, Suzuki, Nissan and Yamaha) by 54.6% YoY to USD279.7m.
- Tires: Exports fell by 14.3% YoY to USD2.4bn, with drops seen across the board led by the US (-7.5% YoY to USD1.1bn), ASEAN region (-24.5% YoY to USD307.6m), and the EU (-30.2% YoY to USD182.9m).
- Other products: Like elsewhere, exports of other goods also tumbled in 1H20, crashing 25.4% YoY to USD3.8bn. For car parts, exports dropped 26.4% YoY to USD3.5bn led by the ASEAN zone (-33.1% YoY), Japan (-17.8%) and the European Union (-19.9%). For motorcycle parts, the situation was less severe but demand still fell 12.9% YoY to USD340.1m, led by ASEAN zone (-26.3% YoY), Japan (-2.8%), the US (-16.1%) and the EU (-18.3%).

Outlook

For full year 2020, auto parts output is projected to contract significantly relative to 2019. The global pandemic had forced auto assembly lines worldwide to halt production temporarily in the first half of the year and slashed consumer purchasing power. This had badly affected demand for OEM parts. However, the resilient REM market will help to offset some of the impact. Industry revenues in 2021 and 2022 would also be supported by a recovering economy, which will lift demand for auto parts.

Domestic market: Thailand’s auto parts output is projected to tumble this year but would recover in 2021 and 2022, when the OEM market start to benefit from the recover in the auto sector (Figure 8). Krungsri Research forecasts that for 2020, a 5% fall in global GDP and domestic recession would cause Thai GDP to shrink by 10.3%. Coupled with tighter restrictions for auto loans, these would reduce auto output by 36-37%, the worst in 21 years. For motorcycles, the contraction would be smaller at 24-25% but that would still be a new low. The situation should improve again in 2021 and 2022, and annual output of autos and motorcycles is expected to rise by 3-4%. This would be driven by stronger economic fundamentals and pent-up demand, especially replacement demand for vehicles bought under the First-Car Buyer scheme which would be 8-9 years old. Additionally, several manufacturers which had received investment support for eco-cars and EVs will need to step up production. Against this, the REM market should see steady growth given the 6% average annual growth in the number of vehicles over 5 years old on Thai roads. In this segment, vehicles bought under the First-Car Buyer scheme will be an important market because they would start to need new parts. However, the falling number of cars below-5 years old suggests the accessories market will experience slow growth (Figure 9).

Exports: Export value will fall in 2020 in line with weaker global auto output. But in 2021 and 2022, the direction will reverse. The recovery in the global auto sector will be sustainable and lift auto parts output. The lingering uncertainty over US-China trade relations could also benefit Thailand if trade diversion brings larger orders for Thai manufacturers. Beyond this, manufacturers may respond to this year’s supply chain disruption through improving their resilience to weather future crises by diversifying geographical locations and moving some production capacity to Thailand. If this happens, it would mean the Covid-19 pandemic would effectively strengthen Thailand’s auto parts industry by creating opportunities for manufacturers to improve the quality of their operations and master manufacturing technology, and place them in a better position to expand their export markets.

However, despite the potentially optimistic factors, there are still challenges for the industry. (i) The United States-Mexico-Canada Agreement (USMCA) took effect on July 1, 2020. This means imports of autos between the signatories are now zero-rated when at least 75% of the parts used in these are manufactured in the signatory nations; this could hurt imports of auto parts from Thailand (currently, 21.2% of Thailand’s exports go to these three countries). (ii) The US may implement anti-dumping measures and counter-vailing duties on tires imported from Thailand (current duties are 3.7%). The authorities are considering the situation and would make a decision between November 2020 and May 2021. If the decision is unfavorable for Thailand, Thai exports to the US will suffer and manufacturers based in Thailand may decide to move their operations to another country. (iii) Manufacturers for the REM market (over 1,100 Thai operations, mostly tier-2 and tier-3 manufacturers) could face stronger competition from overseas players which move production to Thailand and tier-1 manufacturers (most of which currently produce goods for the OEM market), to hedge against risk by penetrating the more stable REM market.

Over the long-term, Thai auto parts manufacturers may be hurt by government policies to encourage investment in the production of hybrid and battery electric vehicles. The government is targeting 1.2 million electric vehicles on the road by 2036. However, the domestic market for electric vehicles will grow slowly initially because it will continue to be dominated by hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs). But because these vehicles use standard parts for internal combustion engines (ICEs) alongside their battery-powered components, OEM auto parts manufacturers will not be strongly affected by these developments in 2020-2022. IN the subsequent 4-6 years, the BEVs segment is projected to surge and market share will grow with positive developments in lithium-ion batteries and prices drop12/. In 2010, lithium-ion batteries cost USD 1,200/kWh, by 2020, this would drop to USD 156/kWh. Bloomberg sees the price of BEVs moving close to prices for ICE-powered vehicles by 202213/ (for similar types of vehicles). These growth trends in the BEVs market will be a major turning point for Thai auto parts manufacturers, which will need to adjust to a rapidly-changing industrial landscape. The industry had been focusing strongly on developing the supply chain for internal combustion engines, but as BEVs become more popular, the number of parts by required auto manufacturers will shrink. The typical BEV drivetrain has about 20 parts compared to over 2,000 in an ICE vehicle. In BEVs, the battery - rather than the engine - will be the major component and is expected to consume up to 30% of total production costs for a BEV.

There have been rising investment in Thailand to produce auto parts for EVs, especially batteries. These include the development and production of a nickel-metal hydride battery by Toyota and a lithium-ion battery by BMW. And, as the EV market matures, it will affect demand for a wide range of OEM parts, including engines, radiators, exhaust systems, fuel systems, petrol tanks, ignition systems and gears. But there will still be demand for products such as suspension, body work, lighting systems and interior fittings. Some BEVs also use electronic control systems to reduce wear on parts (e.g. tires and brake pads). Future automated driving systems will also be safer and reduce the number of accidents, which would mean lower demand for REM parts.

In the coming period, EVs will play an increasingly important role in the Thai auto industry. This will reshape the industry’s supply chains which are currently structured in a strictly linear fashion. Orders filter through in a fixed direction through the layers in the auto parts industry (Figure 11). They include: (i) Tier 1 suppliers, which produce goods that meet the quality set by the major auto manufacturers, allowing them to supply to these players directly; (ii) Tier 2 suppliers, which supply parts to Tier 1 producers and may benefit from technology transfer, and (iii) Tier 3 suppliers are small outfits that supply to Tier 1 and Tier 2 players. Navigating the linear supply chain is cumbersome and it can take a long time for an order to percolate through the levels. To respond to just-in-time delivery, it is often necessary for suppliers to maintain high stock levels, making this type of operation suitable only for mass auto production where only economies of scales can justify involvement. However, the manufacture of EVs are more dependent on robotic and automated production lines (to ensure precision) and the use of hi-tech end-user products. They include automatic driver assistance, automated impact detection sensors, automatic speed controllers and on-board systems that connect with online data. They are required to create a smooth travel experience, for example by collecting data on weather, road and traffic conditions, or downloading relevant maps. In future, this will also extend to continually improve automated driving assistance (Figure 12). Because of these differences, the EV supply chain often diverges markedly, taking a circular, networked form rather than a straight line from start to end (Figure 13). The network would comprise auto parts suppliers, device manufacturers, telecom companies, online players and IT suppliers. The participants have a non-hierarchical relationships with each another, which helps to accelerate production and gives greater flexibility. Supplier would not need to maintain excessive stock. As a result, the system is better able to respond to a wider range of needs.

Krungsri Research view:

Alike elsewhere in the economy, the Covid-19 pandemic and resulting drop in spending power in Thailand and worldwide will slash revenue in the auto parts industry in 2020. Demand for OEM parts would drop but that would be partly compensated by resilient growth of the REM market along with a rising number of vehicles on Thai roads. In 2021 and 2022, the situation should start to recover as economic activities return to normal and lift demand for auto parts.

Manufacturers of parts and spares: Earnings will shrink sharply in 2020 due to the weak global economy. However, there would some recovery in 2021 and 2022. Demand for OEM parts would grow, premised on the projected 3-4% annual growth in domestic auto output. However, the REM market should be less volatile and expand in line with near-normal growth in the number of vehicles registered in the country. Meanwhile, exports would be threatened by the USMCA agreement effective July 1, 2020, which exempts autos from import duties when shipped between the signatory countries, if they are built mainly from parts produced in those countries. This could adversely hurt Thailand’s exports to the US, Canada and Mexico. The extended US-China trade conflict could also weaken the economies of overseas export destinations.
Tire manufacturers: In 2021, the US may impose anti-dumping measures on Thai tire manufacturers. If they do that, American manufacturers which have production facilities in Thailand (e.g. Goodyear and Dunlop) may not be seriously affected, but those from other countries (including Thai-owned operations) could be effectively locked out of the US market. Meanwhile, the REM market will grow with the national vehicle fleet.

Distributors of auto parts, spares and accessories: Revenue will rise in line with the number of vehicles registered in the country, but competition will rise and operators may be exposed to inventory risks.
- Wholesalers and retailers of new parts and accessories: The will be rising demand for parts, spares and decorative accessories with short useful life, along with stronger vehicle sales. Similarly, the rising number of vehicles on the road will also support demand for replacement parts, but the large number of players in this segment mean there will be strong price competition.
- Wholesalers and retailers of used parts and accessories (“Xiang Gong”): Operators in this group will see revenues rise in line with the growing national vehicle fleet, especially vehicles that are more than five years old. These vehicles would require more frequent repairs and replacement parts, and some vehicle owners may choose used parts to reduce cost. However, profits may be held back by the business model that requires operators to carry a wide range of stock, which increases risk of stock obsolescence and other issues pertaining to stock management.

[1] The first phase of development of the Thai automobile industry involved the import of ‘complete knock-down’ (CKD) units from foreign manufacturers or their subsidiaries. These were then assembled in-country as ‘complete built-up’ (CBU) vehicles.
[2] The World Trade Organization (WTO) prohibits all member states, including Thailand, from specifying local content requirements, so Thai authorities abandoned that on January 1, 2000.
[3] Manufacturing a regular ICE vehicle typically uses over 2,000 different parts and components.
[4] This is with regard to both assembling vehicles and manufacturing the key auto parts, including batteries for EVs, traction motors, electric air conditioners and parts for these, power management systems, driving control systems, on-board chargers, charging lines (with sockets and plugs), DC]DC converters, inverters, portable electric vehicle chargers, electrical circuit breakers, front and rear axles for electric buses, and programs for developing EV smart charging systems.
[5] Companies that have applied for investment support to produce EVs and EV components include the following (information correct as of May 2020):
- Hybrid electric vehicles (HEVs): Toyota, Honda, Mazda, Nissan and Suzuki
- Plug-in hybrid electric vehicles (PHEVs): Mercedes-Benz, BMW, Toyota, Mitsubishi, MG and Audi
- Battery electric vehicles (BEVs): Mercedes-Benz, MG, FOMM, Mine, Toyota, Honda, Audi, Mitsubishi, Nissan, Sky Well, Takano Auto and Suplaor
- Batteries for EVs: Toyota, Honda, Mercedes-Benz, BMW and Global Power Synergy
[6] From ‘Thailand’s Economic Integration with Neighboring Countries and Possible Connectivity with South Asia’, ADB Institute
[7] The ‘Shop for the Nation’ promotion allowed consumers to claim - within two years - taxes on up to THB15,000 worth of purchases made between December 15, 2018 and January 16, 2019. Eligible goods included tires (from manufacturers that bought rubber input from the Rubber Authority of Thailand between December 1, 2018 and January 16, 2019), books, and OTOP products.
[8] Imports of auto parts from China have jumped in recent years, from 5.3% of the total value of imports in 2007 to 17.2% in 2019.
[9] Countries in the Asean region that are also hosts to major Japanese production facilities include Indonesia, the Philippines, Malaysia and Vietnam.
[10] Following 3 years of anti-dumping tax on tires for passenger vehicles and mini trucks in the US (from September 26, 2009 to September 25, 2012), US authorities imposed punitive duties on imported Chinese tires. These were set at 35% in the 1st year, 30% in the 2nd year and 25% in the 3rd year (compared to the earlier rate of 3.4-4.0%). The US then hiked import duties a second time, to 10% with effect from September 24, 2018, rising to 25% on January 1, 2019. This prompted a number of Chinese tire manufacturers to set up facilities in Thailand, including Hang Zhou Zhong Ce Rubber, Shandong Linglong Tire, Sentury Tire, Huayi Group (manufacturing under ‘Double Coin’ and ‘Strong Man’ brands) and Dadi Group (operating under the ‘Shenzhou’ brand).
[11] Thailand remains Japanese manufacturers’ preferred location for a regional production hub in the automotive industry, but big players are now operating the ‘Thailand-plus-one’ policy, to disperse production facilities to other countries in the Asean zone, especially Indonesia for auto assembly and Vietnam for the production of motorcycles.
[12] With a budget allocation of THB180m to promote energy conservation, the Ministry of Energy and the Vidyasirimedhi Institute of Science and Technology (VISTEC) are jointly-developing batteries for use in electric vehicles and are seeking ways to store energy generated from solar power. The partnership has patented a lithium-sulfur battery with a capacity 3-5 times that of lithium-ion batteries, is lighter, and can power a car for up to 800 kilometers on a single charge compared to 400-500 kilometers for a lithium-ion battery. Given that lithium is about 200 times more expensive than sulfur, the VISTEC battery is naturally also cheaper, but unfortunately, it has a useful life of only 2-3 years compared to an average of 10 years for a lithium-ion battery. VISTEC hopes to start commercial production of the new batteries in 2021-2022.
[13] Bloomberg estimates the cost of producing BEVs will be close to that for ICE vehicles when the price of lithium ion batteries is about 125 USD]kWh.

Industry Outlook 2020-2022: Auto Parts Industry

ประกาศวันที่ :10 September 2020

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