Thai traffic

The Trans-Pacific Partnership (TPP) currently consists of 12 member countries that signed the agreement back in early October. A 13th member could soon join the pact as automakers are urging Thailand to be a part of the TPP, to ensure the country’s automotive market continues to prosper in the long run.

In a report by Bangkok Post, it was revealed that Thailand boasts the strongest automotive industry in ASEAN, producing 49% of the 3.9 million vehicles that came out of the region each year. It also ranks second (26%) to Indonesia (35%) when it comes to ASEAN car sales, which amounted to 3.2 million units a year.

Speaking at the recent 32nd Thailand International Motor Expo, CEO of Honda Automobile (Thailand) Pitak Pruittisarikorn said any free trade agreements, bilateral or regional, would be advantageous to Thailand’s automotive industry – which exports 70% of its overall production.

“At present, Thailand has yet to lose much competitiveness against four ASEAN countries (Brunei, Malaysia, Singapore and Vietnam) that joined the TPP. The pact will deliver a huge impact to Thailand once they develop their own automotive industries to support TPP members or Indonesia decides to join the trade pact,” Pitak said.

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Thailand’s automotive industry has a total production capacity of 2.9 million vehicles a year, of which only 70% is being utilised. Pitak identifies this as a weakness of the industry, and reckons that an increase in export destinations through the TPP will help it achieve full production capacity.

However, he mentioned, “we don’t expect any projects under the second phase of the eco-car scheme to churn out in the foreseeable future, as the current production is bountiful.” Thailand’s vehicle output is estimated to hit 1.95 million units this year, ranking it 12th among the world’s car-making countries, unchanged from the year before.

Thailand’s automotive industry also stands to benefit when the ASEAN Economic Community (AEC) officially comes into effect at the end of the year, of which it is a member along with Malaysia. Its exports involving completely built-up vehicles (CBUs), completely knocked-down kits (CKDs) and auto parts throughout the region are expected to increase with the absence of tariffs.

This is according to Ong-arj Pongkijworasin, chairman of the automotive industry club under the Federation of Thai Industries Exports, who also added that the implementation of the AEC is unlikely to boost competitiveness in the regional automotive market, so long as Asean members are contending with one another.