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20 Dec 2011

Industry

Automotive Industry, Year of the Dragon: Expanding amid Risks (Business Brief No. 3221)

Automotive industry was severely affected by the recent devastating floods in Thailand. Production at manufacturing and assembly plants was directly or indirectly affected by the deluge, coming to a halt or slowed by supply chain disruptions. Recovery at flood-ravaged manufacturing plants may vary. The latest trend, however, shows that normal production may resume at almost all automotive plants in mid-2012, with the industry returning to growth after plunging by the Great East Japan Earthquake and widespread flooding here.
Based on our assumption that there are no other severe risks like what was seen this year, KResearch forecasts that domestic car sales may grow in a range of 14-19 percent in 2012, totaling 925,000-965,000 units, and our exports may resume growth of 24-29 percent, with 970,000-1,010,000 units in shipments. As a result, Thai car production may total 1,890,000-1,970,000 units, returning to growth of 25-30 percent.

In 2012, close attention should be paid to adjustments by automotive companies following the severe flooding. Should plants here be able to resume production quickly, the industry will record better performance. On the government's part, measures for rehabilitation of flood victims and overall economic policies will be conducive to consumer spending and confidence amid heightened market competition, given the launch of new car models and Thailand's first-time car buyer program. As for exports, we should watch the highly volatile global economy, especially in the US and EU, among our major car markets, that may affect the Thai shipments, either directly or indirectly.

Industry