Thailand will see its annual car production increase to more than 2 million units within two years thanks to the global economic recovery, the Federation of Thai Industries (FTI) has predicted.
The government's incentive package for electric vehicles (EVs), which includes the reduction of customs duty for battery electric vehicles by up to 40%, may boost car imports but will not affect domestic manufacturing in the long term, said Surapong Paisitpatanapong, vice-chairman and spokesman for the FTI's automotive club.
"Though car importers will benefit from the package, the government eventually wants to have more investments in EV development within the country," he said.
Last March the National EV Policy Committee announced it wanted EVs to constitute 50% of locally made vehicles by 2030, part of an ambitious plan to make Thailand a regional EV production hub.
The FTI expects the Thai automotive industry to bounce back from sluggish sales, mainly caused by lockdown measures to control the spread of Covid-19, and return to the high production levels the country enjoyed before it was hit by the pandemic.
In 2018, car production in Thailand stood at 2,167,694, with 1,142,733 units produced for export.
"Thailand is a leading automaker, assembler and car component manufacturer, exporting cars worldwide," said Mr Surapong.
Despite the pandemic, the number of cars manufactured in the country managed to increase last year to 1.68 million units, a rise of 18.1% year-on-year. The numbers exceeded the FTI's target of 1.6 million units, said the federation.
The FTI expects car production to increase again this year to 1.8 million units, with around 900,000-950,000 units to be exported.
Mr Surapong said he believes the government's EV incentive package will help bolster the automotive industry.
"We will see more clearly any progress in the EV market in the second half this year, driven by the response to incentives for both carmakers and buyers," he said.