The outbreak of novel coronavirus (COVID-19) with the epicenter in China has become unpredictable as it is spreading, adversely affecting the economy worldwide, including China's automotive sector and the global auto industry, including Thailand's. All automotive sectors are suffering contraction. Consequently, KResearch is lowering the estimated car sales in 2020 from a contraction of 5 percent originally or 960,000 units of auto sales to a contraction of 7-11 percent or only 900,000-940,000 units of vehicles that are expected to be sold for the whole year. In 1Q20, the auto sales are likely to suffer the most, based on the assumption that China can contain the outbreak of the virus in the country and resume normal business activities by the end of 1Q20, and the COVID-19 virus does not widely spread in Thailand.
As a result, KResearch forecasts that the total auto production in 2020 will reduce to 1.9 million units, shrinking by 6 percent from the previous year. Thailand's auto exports are likely to drop significantly or expected to fall by more than 7 percent. Hence, Thailand will be able to export less than 980,000 units of vehicles because importing countries are also suffering from the COVID-19 virus, facing a similar situation to Thailand.
Additionally, original equipment manufacturer (OEM) vehicle part manufacturers have experienced a drop in demand domestically and internationally. However, if Thailand can create a supportive environment to promote the market and investment, especially for the domestic market for electric vehicles and parts, it may present an opportunity for Thailand to attract investment from the auto making companies and parts producers, who want to manage risks, by diversifying their investment from China to Thailand.