Although the country's vehicle exports are contracting, shipments of auto parts are expected to grow by 7.5% to US$18.5 billion (617 billion baht) this year, says the Federation of Thai Industries (FTI).
Thavorn: Supply chain is strong
Thavorn Chalassathien, chairman of the FTI's automotive industry club, said components exports have turned in a healthier performance than the agency's earlier forecast of 5% growth, thanks to a strong supply chain in the automotive sector.
"Globally, Thailand is the main original equipment manufacturer for not only car assembly, but also parts-making to serve automakers worldwide," Mr Thavorn said. "Although 80% of the 700 tier-one manufacturers are foreign companies investing in the country, about 1,700 in tier one and tier two are Thai."
He said the country's automotive industry can produce components for roughly 80% of one vehicle, including vital parts like engines and transmissions.
Yesterday, the agency reported that the export value over the first six months increased by 13.9% to US$9.5 billion, while the greatest shipment value was to the US, representing 32.3% of the total, followed by Japan, Indonesia, Malaysia and China.
Import value also went up by 6.8% to $7.63 billion, mainly from Japan at 49.3% and China at 28.3%.
By contrast, vehicle exports in July declined by 9.2% to 90,015 units, while export value also dropped 6.9% to 48 billion baht.
Surapong Paisitpatanapong, a spokesman for the FTI's automotive club, said July exports shrank everywhere except to Oceania, Africa and North America.
Vehicle exports from January to July remained in the red at 626,421 units, down 9.7% from the same period last year, with value reaching 331.5 billion baht, down 10.6%.
"Due to the downturn in the price of oil, shipments to the Middle East have dropped sharply, by 45.3%, to 55,240 vehicles over the first seven months," Mr Surapong said. "This region used to be a key destination for Thailand's vehicle exports. The club has revised down its export projection throughout 2017 from 1.2 million earlier to 1.1 million units, a 7.5% drop from 2016 vehicle exports."
Due to negative pressure from exports, the club has further revised down its total car output projection from 2 million to 1.93 million units -- a 0.7% drop.
The club also reported that car output in July increased by 3.3% year-on-year to 159,091 units, thanks to the production of both passenger cars and pickup trucks for the domestic market.
Output over the first seven months stood at 1.11 million vehicles, a 3.3% drop from the same period last year.
Car sales last month increased by 7.5% year-on-year to 65,178 units, topping off seven straight months of growth, thanks to the introduction of many new models this year.
Purchasing power has been further buoyed by rising tourist numbers and farm prices, while the overall export sector has picked up as well.
Car sales for the seven-month period totalled 475,158 units, up 10.7% from the same period last year.
The club said the domestic market will register annual growth for the first time in five years, projecting 8% growth with 830,000 cars sold, Mr Surapong said.