Development Status of Thailand Automotive Parts and Accessories Industry

Thailand's auto parts industry and the automotive industry began in the 60s. Thailand successfully attracted motor companies in the United States, Japan, and Europe to establish joint ventures in Thailand and establish assembly plants. The first method of assembly was to use SKD, and later to use CKD to assemble. Japanese car companies used to have 92% market share in Thailand. With European and American car companies entering the Thai market, this ratio dropped to 82% in 2000. Japanese companies have strong parts supply networks, distribution networks and service centers. Thai manufacturers have signed subcontracts with Japanese manufacturers, laying the foundation for Thailand's auto parts industry and making Thailand increasingly active in the spare parts market.

In 1991, in order to encourage component manufacturers to improve efficiency, improve technology, and improve quality, Thailand's spare parts market has achieved liberalization and investment has continued to increase. In early 2000, in accordance with the WTO's "trade-related investment measures," the Thai government cancelled the requirement that the local content of cars reach 54%, the local content of small trucks to 70%, and the local content of commercial trucks to 62%. It is not only possible to use automotive parts and components that are produced in Thailand, but also to freely select high-quality, inexpensive car accessories from abroad, and fierce competition in the auto parts market. In the past, Japanese companies only purchased spare parts from other companies in the Group or Japanese suppliers, but this traditional practice has changed. In order to obtain greater profits and more reasonable prices, Japanese automakers have expanded their channels for buying spare parts, which has provided business opportunities for other suppliers.

According to the information provided by the Association of Automobile Parts Manufacturers of Thailand, with the increasing investment in the industry, Thailand has been able to provide any type of automobile parts ranging from tires to brake cylinders, from transmission components to interior trim.

Thailand's rubber and plastic parts are highly competitive and the products include rubber molded strips, hoses, door and window rubber sheets, rubber carpets, and molded parts for vehicle lights. Tyres, rubber toolboxes and rubber belts produced in Thailand have been exported, with the largest volume of tire exports.

Due to the transfer of technology from foreign companies, the automotive foundry industry in Thailand has developed greatly. It has been able to produce brake cylinders, discs, rotating plates, hubs, brackets, and clutch covers. In addition, it can also produce overall cylinders and exhausts for engines. Tubes, flywheels, ball joints, Vientiane Festival, putters and other products.

In the field of electronic components, joint ventures dominate, producing electrical wiring, oscillators, and electronic signal lights, while local factories in Thailand mainly produce labor-intensive products such as seat parts, rearview mirrors, and steering wheels.

Automotive paints mainly use imported raw materials and technologies, which are costly.

According to the analysis report of the National Industry Association of Thailand, the cost of foreign imported spare parts manufactured by Thailand for small vans mainly used for export accounted for 41.5% of the total investment costs, and Thailand's production of spare parts accounted for 20.8% of the total cost. If manufacturers gradually increase the proportion of parts produced in Thailand, they can reduce the cost of automobiles and increase their competitiveness in the international market. This requires that the parts and components produced by Thai manufacturers must improve quality and achieve economies of scale to reduce costs. At present, Thailand is working with ASEAN countries to achieve localization of auto parts and components. The implementation of this plan will reduce the cost of producing automobile spare parts in Thailand; in the long run, this cooperation plan will help ASEAN countries reduce the cost of car production.

In order to better attract foreign investors to invest in auto parts industry, the Thai Investment Committee has issued a series of investment incentives to produce engine parts, transmission parts, brakes, steering and suspension systems, fuel tanks, filters, electrical wiring, and antennas. Enterprises with seals and reeds can enjoy comprehensive preferential treatment, and 14 kinds of automotive auxiliary industries can enjoy preferential tax treatment, including casting, punching, jig processing, cutting, heat treatment, surface treatment and engineering plastics.

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