Auto production surges and Goodyear is bullish on the sector

3 cars3The automobile industry is reclaiming its role of revving up the Thai economy as production surged nearly 25 percent year on year in May, and 21 percent compared to April. Meanwhile, United States-based tire manufacturer Goodyear, and German automotive firms BMW and Bosch all expressed confidence that sales will increase during the second half of this year.

May saw the industry turn out 168,394 new vehicles, a 24.7 percent year-on-year increase and 21.8 percent month-on-month jump.  Total production from January to May was up 3.8 percent to 813,505 units, according to the Federation of Thai Industries Automotive Industry Club. Reuters news agency reported that the increase was the best-annualized rise since May 2013.

Chen Namchaisiri, chairman of the Federation, said that production for export rose 22.1 percent year on year in May to 98,202 units, and total production for export from January to May was 493,493 units. Production for domestic sales increased by 28.4 percent to 70,192 units in May, and 11.15 percent to 320,012 units in the first five months.

May’s domestic car sales improved only 15.9 percent year on year to 66,019 units because of the slow economic recovery, he said.

Despite sluggish domestic sales in the last two years, Goodyear Thailand Managing Director Finbarr O’Connor, who is also chairman of the Thai Automobile Tire Manufacturers Association, said his company would do well in the second half of this year.

In 2012, the previous government’s program to spur new car sales produced a surge in new vehicles on the roads, and the time is now coming when tires on many of those vehicles will need to be replaced.

“Demand for replacement tires is still strong, as tires need to be changed every 35,000 miles,” he said.

Thailand is one of the world’s top five tire manufacturers, with production of 75 million tires each year. Of that total, 50-55 million tires are exported with the rest serving the domestic market.

But tire manufacturers aren’t the only automotive players that are taking a positive view on the Thai auto industry. BMW Thailand President Matthias Pfalz said that he expects his company’s sales figures will improve in the second half of this year, despite declining during the first four months of 2016. He believes the launch of new BMW models and products will drive sales into robust territory when the year reaches completion.

In addition, The Thai unit of German auto parts maker, Robert Bosch Limited, believes it will achieve another year of double-digit sales growth after its revenue approached $300 million last year. Bosch reported its sales last year rose by 22 percent, marking a 25-year high. Thailand recorded the strongest sales among its operations in Southeast Asia.