Fitch ranks Thailand tops in Asia for auto production
Thailand is the most attractive country in Asia and the second most attractive country in the world as a location to manufacture automobiles, other vehicles, and parts, according to Fitch Solutions.
Fitch Solutions Macro Research is a British company and subsidiary of Fitch Ratings, the global credit rating agency. Fitch Solutions released the results of its most recent global Autos Production Risk/Reward Index last week. The firm called Thailand’s overall score impressive as the Kingdom finished ahead of 54 other countries around the world.
“Automakers in the country will benefit from its large-scale, good growth opportunities, strong automotive policy, size of labor force with low employment costs, and diverse automotive landscape,’’ Fitch Solutions said about Thailand.
Thailand has been known for decades as “The Detroit of Asia” because so many vehicle manufacturers from around the world have chosen to establish assembly plants in the Kingdom. Thailand’s open investment policies, well-developed infrastructure and logistics, and the fact that it never developed its own ‘national car,’ have made it the pre-eminent location for vehicle production.
While global auto firms compete for dominance of the Thai automobile market, they also manufacture in Thailand to export to other markets in Asia and around the world. Japanese cars are the biggest sellers in Thailand, but American cars have been gaining ground.
The Ford Ranger pickup truck recently led in sales in Thailand, surpassing Isuzu and Toyota for the first time. And Ford announced last week that it plans to begin importing its iconic Mustang model to Thailand later this year, although it did not announce plans to build that car in the Kingdom.
Thailand achieved a total score of 72.2 out of a possible 100 in the Fitch Solutions index. That was a significant increase over its 68.5 score during the previous quarter.
“Thailand’s key strengths lie in the sheer size of its autos manufacturing, reflected in its score of 82.1 on its vehicle production volume indicator; its diverse, competitive landscape (scoring 92.9); its strong automotive policy (scoring 81.3); and its large and low-cost labor force (scoring 76.8 for the size of its labor force and 69.6 for labor costs),” Fitch wrote in its report.
“Thailand also gets a strong score of 79.6 on its manufacturing capability indicator. This indicator includes a measure of complex goods as a percentage of total manufacturing and is better suited to assessing how well a country can adopt higher value-added manufacturing like automotive production,” Fitch wrote.
The firm also cited as positive points the country’s logistics infrastructure, sound short-term economic outlook, and stable short-term political environment with low operational risks.