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Thailand's Industry slump to affect $10bn target
The export growth of the country's auto parts and accessories was on a steady downward trend, due partly to the baht's appreciation beginning from early 2005, said Sookjai Leungmekul, director of Federation of Thai Industries' auto parts industry club.
The export value of auto parts and accessories in 2003 jumped 56% from 2002 to US$2.4 billion. In 2004, the value increased to $3.7 billion but the growth rate was much slower, at 26% or almost half that seen in 2003.
When the baht started to strengthen in 2005, exports continued to rise to $4.69 billion but the growth rate dropped further to 15% from 2004. In 2006, exports rose at the same rate, to $5.4 billion.
Given such a trend, the target to achieve shipments of $10 billion worth of Thai-made auto parts and accessories by 2010 seemed a distant one, he said.
In fact, he added, as export growth continued to shrink, the value was projected AT only $8 billion in that year.
Since the baht became stronger, exports of auto parts and accessories from low-cost countries such as
''We cannot adjust export prices upward due to the pressure of the baht and competitive shipments from these emerging markets,'' said Mr Sookjai.
To ride out the export difficulties, he said, auto-parts manufacturers have become more selective, producing only high-margin products. They also use more local raw materials.
''We should avoid exporting mass-market products but shift to niche or seasonal ones such as parts for auto heaters and air-conditioners,'' he said.
As well, auto-parts manufacturers are stepping efforts to increase local sales, especially in the replacement market, to offset declining exports.
In addition to stiff competition from
''We are sandwiched between them'' he added.
Vallop Tiasiri, president of the Thailand Automotive Institute, said
''We believe the target will be missed and delayed by another two or three years,'' said Mr Vallop.
The industry is expected to improve when the economy picks up and politics become more stable, especially after the general election scheduled for December.
By 2010, he said,
Mr Vallop said local automobile sales were projected at 650,000 units including 25,000 imported ones, and exports at 625,000 units this year.
Local sales should increase to 700,000 units next year while exports are likely to be flat.
If the economy and political situation return to normal, the automobile market would bounce back strongly in 2009, said Mr Vallop.