{"id":5209,"date":"2024-05-07T14:50:20","date_gmt":"2024-05-07T07:50:20","guid":{"rendered":"https:\/\/libcondemo.bangkokwebsitedesign.com\/new-challenges-in-thai-automotive-industry\/"},"modified":"2024-05-07T14:50:20","modified_gmt":"2024-05-07T07:50:20","slug":"new-challenges-in-thai-automotive-industry","status":"publish","type":"post","link":"https:\/\/libcon.co.th\/en\/new-challenges-in-thai-automotive-industry\/","title":{"rendered":"New challenges in Thai Automotive industry"},"content":{"rendered":"\t\t
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New Challenges in the Thai Automotive Industry, How to Adapt and Move Forward<\/b><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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The Thai automotive industry has continuously developed for the last 60 years, with tremendous foreign investments making the country a regional manufacturing hub. Thailand and Japan also expect to further their cooperation in the industry, and the recent outlook for the Thai automotive industry has been in great shape.<\/span><\/p>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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However, the Thai automotive industry faces new challenges as the automotive world is transitioning into an era of electric vehicles (EVs). Many countries have noticed this trend and started competitive strategies in the automotive market. The challenges become ever clearer for the Thai automotive industry: Which direction will the industry take? What can automakers do to prepare for the coming changes? LiB Consulting, a leading business advisor from Japan, has explored the latest Thai automotive industry and has shared their insights.<\/span><\/p>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Changes occurring in the automotive industry<\/b><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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According to LiB Consulting\u2019s analysis of the overall landscape of the Thai and overseas automotive industries, the company found that the automotive world is moving towards electric vehicles (EV), resulting in three automotive trends as follows:<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a01.EV and hybrid will constantly grow and replace ICE<\/b><\/p>\n

Internal combustion engine (ICE) vehicles will likely lose their place to EV and fuel cell vehicles. The changes are constantly happening; some signs are already visible as many countries have started to see lower ICE production. For example, in Norway, the proportion of EVs among cars sold in May 2023 reached 81%. In Thailand, the number of newly registered EVs from January to May 2023 was 24,106 units, a 148% increase compared to 2022. At the same time, the ecosystem for the EV market expanded, including parts manufacturing ecosystem, electricity generating for EV charging, and carbon regulations in favor of EVs.<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a02.The shift in player dynamics in the automotive industry<\/b><\/p>\n

Thailand has been an important manufacturing hub for Japanese carmakers in the past years, giving it an advantage in the ecosystem. However, the ecosystem is also a weakness for Thailand; while European and American carmakers are rapidly developing to serve the new EV market, Japanese carmakers have slower EV plans. Thailand has felt the impact, as the country couldn\u2019t adapt to the rapidly changing market.<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a03.Increasing international competition in automotive manufacturing<\/b><\/p>\n

As interest in electric vehicles (EVs) takes off worldwide, more countries are stepping up their game in the car production arena. This shift is shaking up the traditional dominance of Thailand, with nations like Indonesia and Vietnam making a push to become major players in the automotive supply chain. These countries are becoming serious contenders because they’re adapting quickly to the changing landscape of EVs. Unlike Thailand, they’re not as deeply rooted in making traditional internal combustion engine (ICE) vehicles. Plus, they’ve got lots of essential minerals like nickel needed for making batteries, making it easier for them to switch to making EVs. On top of that, it often costs less to produce things and pay workers in these countries compared to Thailand.<\/span><\/p>\n

Now, Indonesia is taking proactive steps by putting policies in place to boost the EV industry. The government is controlling how much nickel gets exported, saving it up for making batteries locally and offering tax breaks for EVs that use components made in the country by more than 40%. At the same time, Thailand is also getting in on the action, offering incentives and cutting import taxes for EVs to keep up with unavoidable competition.<\/span><\/p>\n

Indonesia, armed with the world’s biggest nickel reserves, is serious about becoming a leader in making EVs. This dedication could shake up the plans of many top car brands. Players in the Thai car industry need to be ready for tougher competition from around the world \u2013 it’s a challenge they can’t afford to overlook.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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New challenges and opportunities for Thai automotive industry<\/b><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Thailand may lose its status as a major manufacturing hub. Currently, the proportion of exports and domestic automotive production in Thailand is around 50:50. If Thai automotive businesses fail to follow the EV trend, the possibility of Thailand losing its export proportion is very high, risking 50% of its automotive production. Additionally, the lower number of components per electric vehicle compared to internal combustion engine (ICE) vehicles may have a widespread impact on parts manufacturers in Thailand, stemming from the shrinking demand.<\/span><\/p>\n

Nevertheless, many Chinese carmakers are interested in expanding their investments in Thailand due to the long-standing manufacturing potential in the country. When comparing the investment proportions of Chinese companies to the number of ICE vehicles produced in Thailand for export, the investment from China is considered favorable. Currently, all Chinese brands investing in Thailand have a combined production capacity of 624,000 vehicles per year, compared to Thailand’s car export volume in 2022, which was approximately 1,000,000 vehicles. This means the outlook for the Thai automotive industry, particularly in the EV market, holds new opportunities. Although most Chinese brands are entering the market to secure sales in the EV sector, Thai automotive industry players have the potential to adapt to the global landscape. Thailand still stands a good chance of becoming a central production hub for the region.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Solutions and adaptations for sustainability in the Thai automotive industry<\/b><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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The changes that are happening in the global automotive industry are signaling Thai automotive businesses to accelerate their adaptation to the changes. LiB Consulting introduces three suggestions for adapting to the coming situation:<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a01. Utilizing Cost Leadership Strategy<\/b><\/p>\n

The Thai automotive industry needs to adjust its competition strategies. A strong infrastructure is one of its advantages, but production and workforce costs are high, and solutions to these problems must be accelerated.<\/span><\/p>\n

Firstly, Thai automotive businesses must admit that ICE exports will decline following the decline in global demand. However, the demand for ICE and hybrid vehicles will not completely deplete as demand will persist in the global markets. For this reason, Thailand should maintain its status as an ICE manufacturing hub to take advantage of becoming the last ICE manufacturing hub in the region.<\/span><\/p>\n

Cost leadership is another great strategy for cost competition. It is undeniable that costs in Thailand are more expensive than in China. Nonetheless, Thailand can come up with a strategy to become a co-manufacturing hub or a second manufacturing hub for China, according to the China + Alpha policy. Ultimately, Thailand needs to control overall costs at the same level as China. This strategy will help the Thai automotive industry retain its ICE manufacturing hub status. Extra budgets from cost control attempts will enable businesses to invest and develop in other areas<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a02. Diversifying manufacturing, especially EV components<\/b><\/p>\n

After the country successfully retains its ICE manufacturing hub status, Thailand should start transforming to focus on serving the global demand by simultaneously manufacturing EV vehicles. Manufacturing base diversification will help attract interest from new EV-focused carmakers, who may choose Thailand as their manufacturing base. The country will be able to reduce risks by solely focusing on ICE manufacturing.<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a03. Leveraging existing potential to move forward to new business<\/b><\/p>\n

Amidst current challenging times, businesses can change crisis into opportunity by transforming and developing for \u201cnew business.\u201d Thai automotive businesses can leverage their existing resources and expertise to enter new markets. Businesses can cooperate with private sectors and research institutes from both domestic and overseas levels to develop new products such as MaaS (Mobility as a Service), BaaS (Battery as a Service), Agtech (Agricultural technology), etc., satisfying demands in and outside the industry. Leveraging existing potential is another way for businesses to move forward sustainably.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Conclusion<\/b><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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These new challenges are moving ever closer to Thai automotive businesses. Change can be concerning, but from another perspective, businesses can take the challenges as opportunities to adjust and develop diverse capabilities.<\/span><\/p>\n

As such, businesses should eliminate unnecessary workflow to improve flexibility and competitiveness. They should develop long-term plans to deal with uncertainties, such as investing in new business early or using existing potential to develop new products to satisfy industrial markets. For example, a Japanese automotive parts manufacturer has developed a new navigation system for taxis and food delivery vehicles. One company leveraged existing tire technologies to produce insoles for sports footwear, and another utilized its automotive sensor technology to develop health-check products for older people. These adaptations must be conducted simultaneously with new developments for businesses to maintain their positions in the supply chain and, in turn, maintain the stability and sustainability of the Thai automobile industry.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

New Challenges in the Thai Automotive Industry, How to Adapt and Move Forward The Thai automotive industry has continuously developed for the last 60 years, with tremendous foreign investments making the country a regional manufacturing hub. Thailand and Japan also expect to further their cooperation in the industry, and the recent outlook for the Thai […]<\/p>\n","protected":false},"author":1,"featured_media":5201,"comment_status":"open","ping_status":"open","sticky":false,"template":"elementor_header_footer","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":["post-5209","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-en"],"yoast_head":"\nNew challenges in Thai Automotive industry - LiB Consulting - \u0e43\u0e2b\u0e49\u0e04\u0e33\u0e1b\u0e23\u0e36\u0e01\u0e29\u0e32\u0e25\u0e39\u0e01\u0e04\u0e49\u0e32\u0e17\u0e35\u0e48\u0e21\u0e38\u0e48\u0e07\u0e40\u0e19\u0e49\u0e19\u0e01\u0e32\u0e23\u0e2a\u0e23\u0e49\u0e32\u0e07\u0e1c\u0e25\u0e25\u0e31\u0e1e\u0e18\u0e4c\u0e17\u0e31\u0e49\u0e07\u0e14\u0e49\u0e32\u0e19\u0e01\u0e25\u0e22\u0e38\u0e17\u0e18\u0e4c<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/libcon.co.th\/en\/new-challenges-in-thai-automotive-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New challenges in Thai Automotive industry - LiB Consulting - \u0e43\u0e2b\u0e49\u0e04\u0e33\u0e1b\u0e23\u0e36\u0e01\u0e29\u0e32\u0e25\u0e39\u0e01\u0e04\u0e49\u0e32\u0e17\u0e35\u0e48\u0e21\u0e38\u0e48\u0e07\u0e40\u0e19\u0e49\u0e19\u0e01\u0e32\u0e23\u0e2a\u0e23\u0e49\u0e32\u0e07\u0e1c\u0e25\u0e25\u0e31\u0e1e\u0e18\u0e4c\u0e17\u0e31\u0e49\u0e07\u0e14\u0e49\u0e32\u0e19\u0e01\u0e25\u0e22\u0e38\u0e17\u0e18\u0e4c\" \/>\n<meta property=\"og:description\" content=\"New Challenges in the Thai Automotive Industry, How to Adapt and Move Forward The Thai automotive industry has continuously developed for the last 60 years, with tremendous foreign investments making the country a regional manufacturing hub. 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