Is a Career in the Automotive Industry a Wise Choice?

This article examines the current status of the Thai Automotive Industry and explores the advantages of pursuing a career in this sector.

Thailand's automotive industry stands as a testament to the strength of a local supply chain supporting a robust local industry. Over the past six decades, Thailand has emerged as the premier automobile production hub in Southeast Asia and the 11th largest globally. In 2022, the sector garnered US$37.6 billion in total earnings, with auto parts and accessories contributing US$15.6 billion, according to official Commerce Ministry figures. Thai-made auto parts find significant demand in major export markets such as the USA, Japan, Southeast Asia, and Australia.

Under well-defined policy directives, successive Thai governments have successfully attracted major Japanese automotive brands, alongside leading European and US counterparts like Mercedes Benz, BMW, and Ford, to establish local production and export bases. In alignment with climate and environmental goals, Thailand has also enticed Chinese EV manufacturers like BYD, MG, and Great Wall Motor to establish regional production facilities in the country, with at least 50 Chinese EV auto parts suppliers also establishing a presence in Thailand.

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With approximately 2,200 auto parts and accessories manufacturers operating in Thailand, local production emphasizes high-quality, timely, and profitable outcomes. These suppliers have transformed into a standalone industry, exporting products to over 100 countries worldwide. A substantial portion of these suppliers caters to the After Market, servicing the replacement market, which remains robust given the vast number of used cars globally.

Among these manufacturers are around 500 predominantly foreign-owned firms that supply the original equipment manufacturers (OEM) segment, dominated by Japanese brands in Thailand. Many of these foreign OEM suppliers shifted their production to Thailand in the late 1980s and early 1990s following the relocation of major Japanese auto brands, driven by the appreciation of the Japanese Yen, making Japan-based exports less competitive.

Thailand's capture of a significant share of Japan's automotive manufacturing relocation is attributed in part to its substantial domestic market for one-ton pickup trucks, constituting roughly 50% of local sales. The one-ton pickup's versatility aligns well with Thailand's agricultural-based rural regions and public transport needs. Government initiatives like excise tax cuts on one-ton pickup models propelled Thailand to become the world’s second-largest producer of pickups. Subsequently, a new tax scheme promoting small, fuel-efficient eco-cars launched in the mid-2000s has dominated the domestic passenger car market and emerged as a key export item.

These initiatives have fostered a thriving domestic and overseas market not only for OEM parts but also for After Market components, demonstrating resilience even during challenging periods like the COVID-19 pandemic when semiconductor shortages impacted new car production.

Sompol Tanadumrongsak, President of The Thai Auto Parts Manufacturing Association (TAPMA), highlighted the industry's adaptability in the face of the EV revolution. While EVs require significantly fewer parts compared to internal combustion engine (ICE) vehicles, Sompol anticipates a gradual shift, estimating that EVs may account for only 30% of the market within the next decade, leaving ample room for growth in the After Market segment.

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