Posted on 15 Jun 2021
Thailand, the largest car production hub in ASEAN, has enjoyed the growth in car production reaching a high level of 2.17 million vehicles in 2018 before the volume slipped slightly to 2.01 million vehicles in 2019. During the COVID-19 outbreak in 2020, car production dropped 29% y-o-y to 1.43 million vehicles.
Domestic sales in the country continued to expand gradually from around 800,000 vehicles in 2015 to a million vehicles in 2018 and 2019 before the volume went down to 792,146 vehicles in 2020 during the pandemic.
Thailand’s market for passenger car is strong, accounting for 46% of all vehicles distributed domestically and 54% of total car exported. 32% out of which is the sub-1,500 cc group of passenger vehicles (which also includes eco-cars) and 14% with engine size over 1,501 cc.
As for commercial cars, 51% of total car production in Thailand is the production of one-ton pick-up truck. This is because Thailand is dominant in one-ton pickup truck, which accounted for 49% of total domestic car sales and 46% of total car export is commercial car. Thailand’s car export reached the peak at 1.2 million vehicles in 2015 and the volume gradually decline till 792,000 vehicles in 2020.
The Federation of Thai Industries expected that car production would increase slightly, by only 5% y-o-y to 1.5 million vehicles in 2021.
Indonesia is the second-largest car manufacturing nation in ASEAN. Indonesia is primarily dependent on foreign direct investment, particularly from Japan, for the establishment of onshore car manufacturing facilities. The country is developing car component industries that support the car manufacturing industry.
Indonesia has a large population of 276 million inhabitants and is having a rapidly expanding middle class. These two factors have created a powerful consumer force for car sales in the country. In terms of market size, Indonesia is the biggest car market in ASEAN. Indonesia accounts for about one-third of total annual car sales, at an average of 1 million tonnes a year. However, the COVID-19 impact has caused the sales volume to drop by half to 530,000 vehicles in 2020. Sales volume declined 21% y-o-y to 187,021 vehicles in the first quarter of 2021. However, it is expected that the sales volume would recover to 750,000 vehicles in 2021, still below the pre-COVID-19 level.
Attracted by low per-capita-car ownership with a huge size of market in the country, low labor costs and a rapidly expanding middle class, various global car-makers decided to expand production capacity in Indonesia and may make it their future production hub. The most popular types of cars used in the country are Multipurpose Vehicle (MPV) and Sport Utility Vehicle (SUV).
Therefore, Indonesia has a well-developed MPV and SUV manufacturing industry. However, the sedan car is underdeveloped in the country. The key reason for this is because the government tax system does not encourage the production and export of the sedan vehicle. The luxury goods tax for the sedan is 30%, while the tax on the MPV is set at 10%. The undeveloped manufacturing for sedan car is, another word, due to the low in demand in domestic market. However, such the low demand and undeveloped production could also cause the country not to be competitive in terms of export.
Car production in Indonesia has expanded to the highest level at 1.34 million vehicles in 2018 and the volume slightly decline to 1.29 million vehicles in 2019 due to economic slowdown. The impact of the pandemic in 2020 has resulted to a sharp drop of car production to 690,000 vehicles. Car production in the first quarter of 2021 registered 255,312 vehicles, a decline of 22% y-o-y. The Association of Indonesia Automotive Industries (GAIKINDO) predicted that car production would reach a high of 970,000 vehicles in 2021.
Source:SEAISI
