Thailand has been a stronghold for automobile manufacturing in the last decade, nicknamed as the ‘Detroit of Asia,’ and currently ranks 12th in auto manufacturing globally and the largest in Southeast Asia. Decades ago, the country imposed an 80% tariff on imported vehicles, protecting its local manufacturing businesses and its leading stance within the region. Today, it is the manufacturing hub for international auto giants including Mazda, Toyota and Ford, all competing for a place in the Southeast Asian market.

Thailand’s Exploding Auto-making Growth

Foreign companies relocating to Thailand are exempted from corporate income taxes as a policy to attract foreign manufacturers and investments. Thailand’s geographical location with easy accessibility to container ports and airports allow the ease of exports. With auto parts sourced then assembled internally in the country and a free trade agreement with neighboring countries, automakers in Thailand pay zero or highly reduced tariffs for its exports.

Thailand is a leading manufacturer in trucks and production is highly demanded even in its domestic market. Small pickup trucks in Thailand leads 2nd place as the most sold vehicles domestically besides its exports to US. Although Indonesia’s manufacturing business and other competing markets have labor costs cheaper than Thailand, the country benefits from having a higher quality and experienced work force with acquired management skills. Comparatively, such factors remain critical in ranking Thailand as a leading auto manufacturing country.

The Future

To keep up with today’s technological advancement, Thailand announced its plan to attract further investments and research in environmentally friendly EV production included in the ambitious Eastern Economic Corridor development worth 45 billion USD. The Federal Thailand Investment Board predicts that the country will produce more than 30 million vehicles by 2020, and increase its current manufacturing ranking to 8th place globally. However, political instability has unsettled investors including its 2006 and 2014 political strife, which has rattled automakers in the past.

In recent years, larger brands have progressively emerged onto the Thai market. The Nation, reported that since 1962, Toyota has produced 100 thousand units in Thailand. Just Auto, an automotive industry new and analysis community, reported that Ford’s Ranger Raptor, will soon begin its production. The Nation also reported that Mazda’s product profit has advanced from the previous year and will increase its production to 65 thousand units in 2018.

Source: United News