Fitch: Thailand an ‘outperformer’ in auto production

Thailand is still appealing to investors as an automotive production base, outperforming most competitors, because of its sound policies, wage levels and strong policies, according to Fitch Solutions in its annual global Auto Production Risk Index.

Thailand has “a sound automobile policy that offers automakers an attractive production base. A well established industry reflected in large vehicle production volumes with a variety of automakers present also bolsters its appeal,” Fitch said.

During the 1970s through the 1990s, the Kingdom was a pioneer in vehicle production in the region, earning it the sobriquet “the Detroit of Southeast Asia.” During the past two decades, a few other countries in the area have begun to challenge Thailand in this sector, but the Kingdom has always maintained a healthy lead over its rivals.

Today, Thailand’s automotive sector is continuing its innovative spirit by pursuing a transformation to electric and hybrid vehicle production.

Thailand’s key strengths lie in the sheer size of its auto manufacturing industry, reflected in its score of 80.4 for the vehicle production volume indicator. It also has a diverse competitive landscape (scoring 92.9), a strong automotive policy (81.3) and low cost of labor, scoring 82.1 out of a possible 100, according to Fitch.

Thailand also scored 82.1 out of a possible 100 for manufacturing capability, which is considered a strong result. The indicator includes a measure of complex goods as a percentage of total manufacturing, and assesses how well a country can adopt higher value-added manufacturing. That includes electric vehicle production and manufacturing components for new-energy vehicles.

Fitch also said the Kingdom benefits from having better logistics infrastructure compared to its regional and global peers, and that is crucial in enabling automakers to export finished products in an efficient manner.

Photo courtesy of https://www.thaiauto.or.th/