Auto parts sector shrivels

Auto parts sector shrivels

Makers considering outlook downgrade

Workers assemble a car at a Mitsubishi plant in Laem Chabang Industrial Estate in Chon Buri. (Photo by Somchai Poomlard)
Workers assemble a car at a Mitsubishi plant in Laem Chabang Industrial Estate in Chon Buri. (Photo by Somchai Poomlard)

The auto parts industry club under the Federation of Thai Industries (FTI) expects the parts sector to continue shrinking as car factories close or cut production and global purchasing power weakens.

The club is considering a downgrade to forecasts for sales value and auto parts volume in 2020.

Pinai Sirinakorn, chairman of the auto parts club, expects to announce the full effects of the coronavirus pandemic on the industry in May.

"Normally, the value of auto parts in Thailand is on average 1.6 trillion baht per year, following car production output in Thailand," he said. "The automotive industry has downgraded its production for exports and domestic sales and club members are discussing the situation."

The automotive industry in Thailand is the largest in Asean. It is a major driver of the economy and consists of a wide network of local and foreign companies, small and large, all along the supply chain.

"The auto parts industry in Thailand has been supporting the growing automotive industry," Mr Pinai said. "More than 80% of auto parts are for the domestic market, the rest are for the export market."

FTI's auto industry club previously cut its production estimate for 2020 to 1.9 million units from 2 million, a 5% decrease based on a host of economic difficulties.

Global car makers such as Toyota, Honda, Mitsubishi, Ford and Mazda shut down production lines from March to April because of falling car sales, with expected knock-on effects for related industries like auto parts.

Mr Pinai said auto parts club members have no plans to lay off workers, as many companies are cutting work days and overtime to save costs and keep workers employed.

"It's lucky too that normally in April there are many holidays and many car makers shut down plants this time of year, so we have to wait and see what are the effects of the Covid-19 outbreak on auto parts directly," he said.

Mr Pinai said there are about 2,000 auto supply firms in Thailand. Of the total, 700-800 companies are FTI club members.

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