The
COVID-19 pandemic has affected the global automobile supply chain since the
beginning of 2020, leading global automakers and parts manufacturers,
especially Japanese automakers, to adopt new business models in order to reduce
risks. Production has shifted from lean production that originally focused on
cost reduction to an agile supply chain, which is flexible and responsive
supply chain management in various situations. The business model for adopting
an agile supply chain for global automobile and parts industries can be divided
into 2 areas: 1) Maximize the shortened supply chain so that production easily
reaches the economies of scale, and 2) Search for the main production base of
the region.
Taking
the changing supply chain model into account, KResearch considers that joining
various economic cooperation groups connected to the world’s main consumer
markets, such as the EU and the US, will help attracting foreign investment
while making Thailand a part of a new supply chain that closely links Asia with
other regional markets, especially for electric cars.
KResearch
views that joining free trade groups such as the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP) that includes members of
American countries such as Mexico and Canada may help expand Thailand’s auto
parts investment and export opportunities* to Japan and Mexico through the
intensified trade linkages between the Americas and Asia. Thailand will have
more opportunities to develop as a production base for auto parts in the automobile
supply chain of both country groups, including an increased opportunity to
export automobiles to Mexico since it has reduced taxes from 30% to 0%. KResearch
expects that if Thailand joins CPTPP, within 5 years after the agreement comes
into effect, Thailand will export an amount of automobiles worth not less than
THB8,500 million and auto parts worth at least THB12,000 million. However, such
a situation will occur only if the government is not too late in its decision
to participate in the negotiation of the agreement (CPTPP) and if the transition
to electric vehicle technology also takes place gradually.
* Analyzed
only the results from the automobile and auto parts industry, while there are
numerous issues to be considered for deciding whether to participate in CPTPP
or not.
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