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Automotive Industries in Thailand Essay

Contribution of MNC’s in automotive industry:

Most of the developing countries consider that the automotive industry will move the country toward an intensive industrialisation by creating a large set of related businesses. Thailand aims to be regarded as the Detroit of Asia. The country has engaged in the last few decades in the development of the automotive industry, with a special focus on domestic auto-assembly.

Thailand is the world’s second largest pick-up truck market after the U.S., and it is ASEAN’s largest automotive market and assembler. Today all leading Japanese car producers as well as BMW, Mercedes Benz, General Motors, Ford, Volvo, and Peugeot, assemble cars in Thailand along with their group of subcontractors and suppliers. Thailand has become the main production base for auto exports in South East Asia.

Thailand is considered as one of the most attractive countries for automotive investments mainly due to factors such as the good and growing domestic market size, the relative political stability, liberal trade and investment policy, and the lack of a “national car program”.

The automotive industry is Thailand’s third largest industry, employing an estimated total workforce of about 225,000 employees, and with a total production capacity of around 1,270,100 cars and trucks per year.

Japanese-make automobiles have dominated the local auto market; with nearly 90% market share but other global vehicle manufacturers’ investments are growing consistently, creating a very dynamic industry. New global parts manufacturers are in the process of relocating some of their operations to Thailand.

Thailand has 16 vehicle assemblers; most of them are large-scale foreign owned or joint venture enterprises. As well, there are more than 1100 small and medium sized companies working as suppliers of original equipment (OEM), or producing replacement equipment (REM).

The automotive industry in Thailand is very concentrated with most of the factories located in the Samut Prakarn province (approximately 20 km south of Bangkok), followed by Rayong (approximately 130 km south-east of Bangkok).

The largest car producer is Toyota, and in 2003 it was the first manufacturer to establish a local R&D centre in Thailand. However, this type of initiative, a cooperative arrangement between MNCs and local universities, is so far not a widespread practice in Thailand. Therefore, there is a stringent need to understand the mechanisms allowing for knowledge transfer and sharing, if Thailand wants to position itself as a very competitive country, not only in the automotive industry but in other industrial sectors as well. Thailand benefits from these companies operations as almost 18% of labour and employment are generated by the automotive industry.

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