“Detroit in Southeast Asia” changed March 5 at 17:39

Did you know that there is a country where the automobile industry is developing, also called “Detroit in Southeast Asia”? Eight major Japanese companies, including Toyota, Honda and Isuzu, have production bases, and many parts manufacturers have entered Thailand. Southeast Asia's largest car-producing country, with 2 million cars produced annually in Thailand and overseas, production has grown steadily in recent years. However, last year, the United States and China faced the trade dispute and, more recently, faced with the challenge of spreading the new coronavirus. (Hirooki Iwama, Reporter, Asian Directorate General)

Hit by U.S.-China trade friction

President Adachi "Our company has been rapidly braking orders from around October last year in response to the situation where automobile production in Thailand is declining."

This is the talk of Takuya Adachi, a local subsidiary of a Japanese manufacturer with a factory in Thailand. Mr. Adachi's company produces parts for molds used in the manufacture of automotive parts such as engines, but since the fall of last year, we have felt the cooling of demand.

Compared to the strong first half of last year, recent sales have dropped by more than 10%. While new orders are tough, the company is striving to focus on the product maintenance business and cultivate new customers abroad, but there are no signs that business performance will recover.

The data shows that the Thai automotive industry is facing a tough environment. Over the past year, the number of cars produced in Thailand was more than 2.1 million, down 7% from the previous year, the first decrease in five years.

The slowdown in the global economy caused by the trade friction between the United States and China caused a slowdown in exports to markets such as Asia, Oceania and Europe to which exports were made, which had a major impact. The surge in the Thai currency and baht has also had a headwind, and the Thai export industry, including automobiles, has been damaged.

What cast a shadow on new car sales

The trade friction between the United States and China overshadowed not only exports but also the strong sales of new cars in Thailand. Sales of new cars, which exceeded 1 million units for the first time in five years, stalled in the second half of last year.

Toyota, which has the largest share of the local market, forecasts that the sales of new cars will be 940,000 units, minus for the second consecutive year. At a press conference, Toyota Thailand's President Michinobu Sugata said with a steep expression:

President Sugata: "The most noticeable thing about the workplace is that the Thai customers' consumer sentiment has cooled."

Further hits ...

What is even worse is the spread of the new coronavirus infection. Along with export industries such as automobiles, the tourism industry is the engine of growth of the Thai economy. Of the nearly 40 million foreign tourists a year, about 11 million are Chinese and nearly 30% are foreigners. Occupy.

With the spread of the infection, which coincided with the Chinese Lunar New Year, which is the travel season, travel cancellations in Thailand were repeated, which had a major impact on the tourism industry. It is predicted that the loss of the tourism industry due to the new coronavirus will exceed THB 300 billion, exceeding ¥ 1 trillion in Japanese yen, and it is inevitable that the Thai economy will further cool.

The president of a Toyota-affiliated car dealer said, `` The problem of the new coronavirus will cause consumers anxiety and further slow down the new car market '', heading for further difficulties following the trade friction between the United States and China I am.

Risk to supply chain

The threat of the new coronavirus can also extend to the manufacturing supply chain, such as the automotive industry. If the spread of infection is prolonged, the procurement of parts and raw materials from China will be delayed.

According to a survey by the Japan External Trade Organization (JETRO), 66% of Thai automakers procure parts in Thailand and only about 4% procure parts from China. The ratio may seem small, but if the procurement of some of the tens of thousands of automotive parts is delayed, the production of finished vehicles may be affected immediately.

The Thai auto parts manufacturers we interviewed procure most of the parts needed for production in Thailand, but import nearly 10% from China. Although the customer's factory in China has resumed production for the time being, it has not returned to full production, so I am worried about what will happen to the production of the automobile manufacturer of the supplier as well as procurement of its own parts .

Hataiwan, a Thai bank-related think tank familiar with the automotive industry, also warned.

Mr. Hataywan: "The impact on production will not only be limited to China, but will also spread to countries that export and import products and parts to China. If a problem occurs in a factory in China, production in other countries may stop. There is no. "

What are the consequences of the spread of infection and how far?

The presence of Japanese automakers in the Thai automobile industry is extremely high, and Japanese cars account for nearly 90% of the domestic sales in Thailand. In addition, it is a country that can be said to be the "Japanese castle's stronghold", which is also a production and export base for pickup trucks and other types of vehicles.

It is also a manufacturing hub in Southeast Asia, home to more than 2,300 Japanese manufacturers, including automobiles. Therefore, I will continue to closely monitor how the effects of the spread of the new coronavirus will affect the economies of Southeast Asia, including Thailand.

Hirotake Iwama, Reporter, Asia Directorate General

Joined the Ministry of Economic Affairs in 2000 for automobiles, finance and securities,
Coverage of METI, etc.