Automotive to Thailand
Trends and opportunities
The automotive sector is Thailand’s third-largest industry. 2016 production
was around 1.94 million motor vehicles (or 56 per cent of capacity), meaning
Thailand has capacity to produce more then three million cars and trucks.
It is the fifth-largest automotive manufacturer in Asia and twelfth
International Organization of Motor Vehicle Manufacturers (OICA) )
There are 19 automotive and eight motorcycle manufacturers with facilities
or assembly plants based in Bangkok and surrounding areas, Ayutthaya, plus
the Eastern Seaboard (Rayong and Chonburi).
Major automobile manufacturers such as Toyota, Isuzu, Honda, Mitsubishi,
Nissan and Ford currently export vehicles worldwide from Thailand. Japanese
manufacturers account for over 85 per cent of Thailand’s vehicle sales. The
most recent addition to vehicle manufacturing is the largest auto company
on China's A-share market – the Chinese state-owned SAIC Motor – CP
(manufactures MG cars).
Thailand specialises in pickups. It is the world’s second-largest producer
behind the United States, and largest producer of one-tonne pickup trucks.
Pickup trucks also make up the highest percentage of sales on the domestic
market with Toyota Hilux, Isuzu D-Max and Ford Ranger the three top-selling
vehicle models in Thailand.
While one-tonne pickups dominate Thailand’s domestic sales, smaller
fuel-efficient eco cars (650 – 1500cc) is an emerging segment which has the
highest market share of the sales within the sedan cars segment. Domestic
sales account for 799,632 units, showing this to be a very export-oriented
industry. (Source: Thailand Automotive Institute’s
To encourage new manufacturing investment, the Office of the Board of
Investment (BOI) offers tax and other incentives to car manufacturers to
invest in electric vehicles and fuel efficient vehicles (eco cars). The
focus of these incentives is aimed at electric vehicles (EV) including
hybrid electric vehicles, plug-in hybrid electric vehicles and battery
electric vehicles, EV components and charging stations. Toyota has
submitted an investment application for production of hybrid vehicles , and
other global car manufacturers have also expressed interest. These include
BMW, Mercedez Benz, Nissan, FOMM and SAIC.
The Thai Government recently announced a ‘Thailand’s Automotive Industry
4.0’ strategy to strengthen the industry into the 21st century,
encouraging the sector to focus on innovation including the development of
electric vehicle (EV) technology, the establishment of automotive and
tyre-testing centers, and development of automotive industry ‘super
clusters’ within the Eastern Seaboard Corridor provinces of Rayong, Chon
Buri and Chachoengsao.
More than 520,000 employees work in Thailand’s automotive industry (Source:
Thailand Automotive Institute
Thailand Automotive Industry Situation and Master Plan) but the country still needs to address its skills base to improve
national capability and competitiveness, especially in engineering and
research and development (R&D), in order to maintain its position
within the global automotive market.
The aftermarket is growing. More than 55 per cent of Thailand’s vehicles
are older than five years. Key areas of demand are engine and crash repair,
maintenance and accessories, key products such as starter motors and
alternators, radiators and fans, compressors, brakes, clutches, wipers,
suspension parts and lubricants.
The off-road and four-wheel-drive (4WD) segment continues to grow,
generating demand for 4WD vehicle accessories, suspension parts, high
performance products and recovery equipment.
Due to a limited local ability in Thailand to design and produce high-tech
parts, combined with a shift of R&D into parts manufacturers (as a
cost-saving strategy) and a drive for quality improvement, there are
opportunities for high technology parts manufactured in Australia such as
electrical components and R&D activities.
Australian automotive component manufacturers can participate in the Thai
industry through offering technical expertise, engaging with local
component manufacturers, or through investing in an Original Equipment
Manufacturing (OEM) facility. Investing locally to manufacture, which
ensures price competitiveness as well as closeness to the supply chain,
will increase chances of success.
Vehicle Manufacture – Automotive OEM Market
: Australian companies find direct supply to Japanese OEMs in Thailand
extremely difficult and companies normally supply via Tier 1 or Tier 2
Aftermarket segment: Australian replacement parts automotive aftermarket product manufacturers
can sell to OEM car manufacturers’ Parts and Accessories (P&A)
divisions in order to supply aftermarket parts, which is a much less
complicated sourcing process than original components. Australian 4WD
equipment and accessories are well recognised in Thailand. Many leading
Australian brands have successfully penetrated the market. Australian
suppliers of 4WD equipment and accessories may consider approaching
importers of relevant products or vehicle modifiers to access the market.
The automotive parts manufacturing sector in Thailand is considered to be
the most capable in South East Asia, with the local supply of almost 100
per cent of pick-up truck components and more than 60 per cent of passenger
Although major R&D on vehicles remains based at the headquarters of car
manufacturers, Honda, Toyota and Nissan Motor Asia Pacific (NMAP) have
recently established regional R&D and testing centers in Thailand.
The potential establishment of an ASEAN Economic Community (AEC) is
expected to offer significant opportunities for automotive aftermarket
products including 4WD equipment, suspension parts and performance
Australia is perceived to supply products and services of a similar quality
to many European countries and the US. However, barriers exist to accessing
the market such as the requirement to obtain approval from headquarters of
Japanese or affiliated companies dominate the OEM market with 90 per
cent of the market.
Automotive parts imported from Japan account for 46.8 per cent of total
imports, followed by China with a 12.5 per cent share.
(Source: The Royal Thai Customs)
There are over 1800 automotive parts suppliers in Thailand, including OEM
and Replacement Equipment Manufacturing (REM). Major local parts produced
include: radio broadcasting receivers, lighting and signaling equipment,
diesel and motorcycle engines and parts, brake systems, radiators,
batteries, steering systems and suspensions, transmissions, safety and body
parts, electronic parts, interior/exterior parts, tyres, plastic parts,
glass and accessories (Source:
ASEAN Supporting Industry Database)
Tariffs, Regulations and Customs
There is no local content requirement on motor vehicles manufactured in
Thailand. Import duties on Completely Knocked Down (CKD) components are
from 10 to 30 per cent on Cost, Insurance and Freight (CIF) value depended
on type of vehicles, while duties between 80 and 40 per cent on CIF value
are applied to Completely Built Unit (CBU) cars and trucks respectively.
However, under the
Thailand–Australia Free Trade Agreement
(TAFTA), any given components, CKD kits and CBUs that reach a minimum of
Thailand or Australia’s content requirement of 40 per cent, will be subject
to tariff reduction or zero import duties.
Duties are compounded by other taxes:
the new excise tax structure has been in effect since January 2016. The
excise tax rates vary between vehicle types based on Carbon Dioxide (CO 2) levels and engine displacement size: 3 per cent for a
single cab pick-up truck with CO2 levels of less than 200
gram/kilometre, rising to 50 per cent for large passenger sedans
Thailand Automotive Institute
interior taxes at 10 per cent of the excise taxes
Value Added Tax (VAT) at 7 per cent
Department of Foreign Affairs and Trade
Production quality is increasingly important as the Thai auto sector
focuses on building exports. Vehicle manufacturers require that parts
suppliers achieve ISO9001 and/or ISO14001.
There are also standards that apply to specific parts, especially those
related to driver and passenger safety. The
Thai Industrial Standards Institute
is the government body responsible for setting and controlling standards of
automobiles and parts – particularly emission and safety standards. The
Pollution Control Department (PCD)
is responsible for air quality and noise standards.
Currently, passenger cars and light commercial vehicles in Thailand are
required to meet Euro-IV emission standards, however vehicles under Eco Car
Program Phase two will need to achieve Euro-V emission standards (Source:
Board of Investment (BOI), Thailand)
Australian suppliers should note Thailand’s automotive industry's
standards, especially for parts, are based on the European system which can
differ to Australian standards.
Marketing your products and services
In most cases, new entrants to Thailand’s auto industry requires partnership with either assemblers or an existing parts suppliers. Foreign firms can enter Thailand through joint venture with wholly-owned Thai companies - or hold 100 per cent ownership if approved by the BOI.
To market OEM products, suppliers need direct contact with car manufacturers’ headquarters or regional offices in Japan, Germany, the US, etc.
A relationship with a car manufacturer’s parent company is an advantage in securing contracts, as all use global or regional sourcing policies to increase efficiency and to maintain negotiation power with parts manufacturers.
Distribution channels for Thailand’s automotive aftermarket products are well structured. The products are distributed through such channels as:
- parts and accessories divisions of car companies
- authorised car dealers
- independent repair centres
- importers and wholesalers
- retailers and fast-fit service chains.
The original packaging of automotive aftermarket products from Australia is
regarded as premium and can command a higher but reasonable price.
Selling aftermarket parts to car manufacturers, especially safety related
parts, is somewhat difficult unless the parts maker is the same maker as
that of OEM parts (as all parts sold through car companies are included in
warranty). However, it is possible to supply car accessories that are not
replacement parts to car companies’ parts and accessories division.
The options for marketing aftermarket parts and accessories are:
- to appoint a local sole agent/distributor who can supply to sub-distributors or retailers
- to import through big and medium-sized local parts importers.
Transport and logistics to the market
OEM parts are normally supplied direct to car assemblers as they may
involve special import clearance.
Most aftermarket products and equipment are shipped by sea freight:
The shipping time from Australia to Thailand takes approximately two
Shipping frequencies are twice weekly from major Australian ports
Lam Chabang is the destination port for most automotive products
It is recommended exporters use a customs broker or agent to clear goods
from the customs. Your local agent or distributor usually handles the
import procedures and documentation, as it is a requirement that all import
procedures be completed by a Thai registered company.
To claim benefits of import duty reductions under TAFTA, Australian
suppliers need to obtain a Certificate of Origin from Australia, to present
to the Customs in Thailand.
Payment is usually made by irrevocable letter of credit.
It is advisable to investigate a variety of service providers.
Links and industry contacts
Government, business and trade
Australian Embassy Bangkok
Australian-Thai Chamber of Commerce
Ministry of Commerce
Ministry of Foreign Affairs
Royal Thai Customs Department
Society of Automotive Engineers Thailand
Stock Exchange of Thailand
Thai Auto-Parts Manufacturers Association (TAPMA)
Thai Automotive Industry Association (TAIA)
Thai Chamber of Commerce
Thailand Board of Investment
Thai Tool and Die Industry Association
Thailand Automotive Institute
Tourism Authority of Thailand
World Trade Organization
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