KResearch has assessed that Thai car exports in 2021 should improve from the previous year, thanks to the economic recovery of major trading partners in Oceania and Asia. At the same time, an increasing number of Japanese car manufacturers are using Thailand as a production base for export markets, especially for shipments back to Japan. However, two major risks are weighing on Thai car exports, namely (1) the trend of COVID-19 cases among Thailand's trading partners, which remains uncertain; and (2) the microchip shortage. Although KResearch perceives that the situation should gradually improve from the third quarter of 2021 onwards, ongoing chip scarcity at several major plants in certain countries may affect plans to allocate them to factories worldwide. For this reason, KResearch maintains a cautious stance, with car exports projected to be in the range of 890,000-950,000 units, or growth of 21.0-28.0%YoY from an extremely low base in 2020.
Going forward, carmakers in Thailand should expedite the development of zero-emission vehicles (ZEVs). On the other hand, Thai car exports to key existing markets may encounter mounting competition from other manufacturing sources as well as tariff measures that could eventually hinder the growing export volume. Moreover, if Thailand fails to conclude certain FTAs like its pending FTA with the EU, and the CPTPP, it may result in reduced exports.
Nevertheless, KResearch perceives that the potential rise in investment from Chinese carmakers may serve as a way for Thailand to expand into new export markets amid the risk of market share loss due to intensifying competition in the automotive industry, especially once ZEVs gain a stronger foothold in the market. Currently, Chinese cars are more accepted in the world market, as China’s exports of cars, especially passenger car, have increased rapidly. Chinese cars are also becoming increasingly welcomed in Thailand’s four main export markets (excluding China). However, close attention should still be paid to the geopolitical tensions between the Chinese government and key ZEV markets like the United States, Europe and Australia.
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