car-plant

The gap in car output between current regional leader Thailand and Indonesia narrowed to its smallest ever last year in percentage terms, and Indonesia’s production may push past Thailand’s within a decade, says a Reuters report.

According to ASEAN Auto Federation, Gaikindo and Federation of Thai Industries (FTI) data, Indonesian auto production grew seven percent in 2014 to 1.3 million vehicles while that of Thailand dropped 23% to 1.88 million units – considerably below the projected 2.1 million.

This put Indonesian output at 69% of the Thai total, compared to 43% in 2012. Cited reasons for the Thai slowdown last year include political turmoil and shrinking domestic demand.

Consulting manager at Ipsos Business Consulting’s Bangkok office Chukiat Wongtaveerat told Reuters that several carmakers, General Motors and Tata included, have been lured to set up shop in Indonesia, which could help the republic’s car output overtake Thailand’s in the next seven to 10 years. Indonesia is already South East Asia’s largest auto market.

But the Land of Smiles could bounce back – an FTI Auto Industry Club spokesperson told the news agency that this year, Thai production is predicted to jump 17% to 2.2 million vehicles.

“Even when Indonesia overtakes Thailand’s automotive production output, Thailand will still be a dominant player, with its component manufacturers providing many of the parts required by the assemblers in Indonesia. The challenge for Indonesia is to raise the quality of its product to be suitable for the global market, and to develop its domestic supply chain to match the quality of Thailand,” Chukiat told Reuters.