Thailand as a manufacturing hub for foreign auto players

A new market research report, 揂sian Automotive Industry Outlook (2007-2011),"by market research firm RNCOS reveals that Thailand is emerging as a major manufacturing center for foreign automobile makers. According to the report, the automobile industry forms an integral part of the overall Thai economy. Thus, by offering various investment incentives to automotive manufacturers, the Thai government is actively pitching in the country as an automobile production base. Consequently, many big car manufacturers are establishing their regional production bases in the country. Moreover, the Thai auto industry is fully liberalized and open to foreign investments. Foreign players are allowed to have majority share in vehicle assembly facilities of the country and assemblers are allowed to export their auto parts worldwide. However, the government of Thailand has one of the highest import duties in the region, which is encouraging many auto manufacturers to set up their production bases in the country to satisfy the demands of domestic as well as export market. Further, the demand for passenger cars is expected to increase in Thailand at a CAGR of around 14.4% during 2007-2011.Thus, to satisfy the rapidly increasing demand for automobiles in the country under a high import duty framework, manufacturers are likely to increase domestic production instead of depending upon the imports. Further increase in production of automobiles due to high import duty is leading to an increase in export of completely built units (CBUs) of automobiles and this export had been steadily rising since 2000 till 2006. Vehicle manufacturers in Thailand are launching new models in a move to boost market share and sales in the commercial vehicles market. According to a recent analysis from Frost & Sullivan, title 揟hailand Commercial Vehicles Market,?the market accrued 510,484 units in 2005 and is likely to increase to 1.36 million units in 2012 at a compound annual growth rate (CAGR) of 15%. The pickup segment accounts for 92.1% of total vehicles sold in Thailand due to the large agricultural sector and the tax regime that has favored purchases of these vehicles rather than passenger cars. Thus, Thailand's commercial vehicles market will depend on the sales of pickup trucks. However, rising fuel prices is likely to dampen sales of commercial vehicles in Thailand. The Thai government had raised fuel diesel prices by 20%. Many fleet operators are expected to defer their decisions to buy more vehicles due to the fuel price hike. Thailand is at the forefront of reducing emissions from vehicles and is currently following Euro 3, which requires the vehicles to use advanced powertrain technologies such as common rail diesel injection or catalytic converters in gasoline powered vehicles. Vehicle manufacturers have to invest in machinery and tooling to adapt to the new standard, which increases the cost of the vehicle, as incorporation of the new technology entails a huge investment. Local option American Axle & Manufacturing Holdings Inc. (AAM) plans to establish a production facility in Thailand, near the city of Rayong, located southeast of Bangkok. The company is a manufacturer of chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. 揙ur new facility in Thailand represents a significant expansion of our manufacturing footprint in the important economy of Asia where growing demand for vehicles is accelerating production volumes,"stated AAM Co-Founder, Chairman & CEO Richard E. Dauch. The manufacturing facility will be located in the Hemaraj Eastern Seaboard Industrial Estate that is locally recognized as 揇etroit of the East "for its heavy population of automotive OEMs and suppliers. The location is strategically located in proximity to key seaports and will provide excellentNIKE AIR FORCE