Bangkok Post : Recovering from a one-two-punch
The tsunami in Japan and flooding in Thailand left the country’s automotive industry severely battered in 2011, with far-reaching repercussions at home and abroad.
Producers are now starting to recover, helped by an influx of tax-free imported parts and the resumption of supplies of some locally made parts.
However, the higher cost of imported parts will push up car production costs, while local suppliers are expected to raise some of their prices to reflect the cost of restoring their flood-hit factories. It is not clear yet whether these costs will be passed along to vehicle buyers.
Barring any new disruptions, auto production is expected to recover to nearly 100% of normal levels within the first quarter of 2012, said Suparat Sirisuwannangura, president of the Automotive Industry Club at the Federation of Thai Industries.
“Air transport capacity so far has been jammed from carrying parts from Japan to Thailand; some have been forced to be carried by ships,” he said.
The Thai automobile industry this year is expected to produce more than 2 million units, which would put the country into the top 10 among global producers for the first time. the country entered 2011 ranked 13th but fell to 15th as output plunged at year’s end.
The projections for 2012 are based on an assumption that Honda, by far the hardest-hit producer, will not be able to restore full production. However, the missing volume could be offset by eco-cars to be produced by Suzuki and Mitsubishi in 2012 as well as Ford’s compact sedan to be built at its new plant in Rayong.
In addition, Toyota will expand capacity this year at its Ban Pho and Gateway plants in Chachoengsao by 20% each.
The industry also expects consumer sentiment to be lifted by government spending on flood recovery, overall economic stimulus policies, the launch of new car models and the continuing of first-time car buyer incentives.
Domestic sales and exports are each forecast at around 1 million units, but the volatile global economy, especially in the US and EU, could affect Thai exports.
However, auto exports to Europe are only 10% of the total.
The disasters in Japan and Thailand reduced local automobile production in 2011 to an estimated 1.43 million units, about 300,000 below the original target and representing a loss of some 180 billion baht.
Before the floods struck last year, the industry was predicting output in 2012 of between 2.1 million and 2.3 million units. That figure has since been revised down to 2 million.
Questions still surround the ability of Honda to recover, given the massive damage suffered at its plants in Ayutthaya, where the Japanese company had only recently completed an expansion. Reports from Tokyo said the plants may reopen in late April.
The flooding brought other carmakers to a halt as the parts supply was crippled. Toyota’s three plants in Samut Prakan and Chachoengsao were not directly affected but were closed as parts could not be obtained.
Even at the year-end motor expo, Toyota did not take car bookings for fear that it could not meet delivery commitments amid a huge backlog.
The production figures for the final three months of the year underscored the extent of the flood impact _ 49,000 units in October against a forecast of 170,000, 23,000 in November against planned production of 180,000, and 80,000 units in December, half the total expected for that month.
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