Presentation on theme: "Thailand : Detroit of Asia"— Presentation transcript:
1Thailand : Detroit of Asia By..Mr.Ninnart ChaithirapinyoVice ChairmanThe Federation of Thai IndustriesToyota Motor ThailandGood morning (afternoon) all members of the ______________.It is a great pleasure for me// to be with you today //in your beautiful country of Germany //to discuss potential business opportunities for both you,//and the people of Thailand.//My presentation today is entitled, //“Thailand: Detroit of Asia”.
2Today’s topic I. Where are we? II. Where will we go? III. How will we go?IV. Why Thailand?My remarks will cover the following topics:Where are We.Where will we go.How will we go andWhy Thailand.
3I. Where are we? Let’s first look at // where we are// with respect to theThai Automobile Industry.
4Auto Policy by Government Movement of Automotive Industry 1.1 Circumstance Change in MarketTopics’ ’ ’ ’ ‘10Auto Policy by GovernmentMovement of Automotive IndustryCar Manufacturer TrendLocal contentregulationsBan for CBUvehicle importDeregulation ofLocal contentTariff reductionFreecompetition25% localContentrequirementIncrease oflocalcontent to 50%Abolishmentof localcontentFTANegotiationAFTA Tariffreductionto 0%HighercompetitionRegulationDeregulationLiberalizationThis slide depicts the current changes// in theThai automotive market.It represents// the history of automotive policy, //government support,//and local content regulations.//The Thai automotive industry //has been in continuous development frombeing only //a vehicle assembly business, //to a full car manufacturer.Now, we fully compete on the stage of //global car competition.Vehicle AssemblyAsian CarGlobal CarCountry CompetitionRegional CompetitionGlobal Competition
5Company PC 1 TON P/U CV TOTAL 1.2 PRODUCTION CAPACITY IN 2005CompanyPC1 TON P/UCVTOTAL1. TOYOTA200,00050,000450,0002. ISUZU-180,00020,0003. MITSUBISHI100,00020,200170,2004. AUTO ALLIANCE(Ford& Mazda)2,700132,300135,0005. HONDA120,0006. GENERAL MOTOR95,000115,0006. NISSAN33,20066,4002,400102,0008. HINO28,8009. DAIMLERCHRYSLER16,30010.YMC Assembly12,00011. BMW.10,00012. VOLVO474,200773,700121,2001,369,100Let’s first look atThailand’s current production capacityfor the 12 major assemblers in the industry.As you can see at the bottom right handcorner of this chart,//Thailand’s production capacity for 2005is expected to be around million units.This will be expanded to more than//1.5 million units in the near future.
6P/U Ratio = 58% Local Content = 80-90% P/C Ratio = 33% 1.3 Market ratioP/U Ratio = 58%Local Content = 80-90%P/C Ratio = 33%Local Content = 30-70%Our domestic market is comprised of //both pickup trucks and passenger cars //with the majority, of 58%,being in the pickup segment.Passenger cars represent only 33%.The remaining share consists ofother commercial vehicles.For local content, pick up utilizesalmost 100% of local content whilePassenger car utilizes local contentaround 30-70%.
7LOCAL SUPPLIERS Foreign Joint Venture Assemblers 12 Companies Tier 1 1.4 Industry structureForeignJoint VentureAssemblers12 CompaniesLEsTier 1ForeignMajority287ThaiMajority68PureThai354709 CompaniesHere is the grouping of the type of companies//that contribute to the Thai automotive industry.As you can see,// there are 12 foreign joint ventureassemblers in Thailand,709 tier 1 companies, //and approximately1,000 tier 2&3 local supplier companiesSMEsTier 2&3LOCAL SUPPLIERS1,000Companies
8Contribution of Auto Industry to Thai Economy GDPEMPLOYMENTThe production of vehicles and partshas contributed to Thai economy at 16%of gross domestic product (GDP ).While the number of employed personHiring in the auto industry is8% from the overall employment.Manufacturing Sector
91.5 Production, Domestic sales and Exports UnitThis slide depicts the movement of //Production, Sales, and Exports forThailand over past 12 years.1997 and 1998 represented the period ofour financial crisis //where we experienceda tremendous downturn in our industry //as well as most other businesses.However, //since 1999,we have enjoyed steady growth, //where today we will achieve all-time volumerecords for all 3 categories.
10(Ranking compared with other products) 1.6 Thai Export Value(Ranking compared with other products)Million US$No.1 Computer 9,320No.2 Vehicles & Parts 5,681No.3 Circuit Board 4,974No.4 Rubber 3,432No.5 Plastic 3,132The exports of vehicles and auto parts rank # 2//among all products exported by Thailand.Only computers rank higher.Thus, //you can see the important role that //the Thai auto industry playsin the total economy of Thailand.
111.7 World Productions & Sales Ranking in 2004 CountryNO.ProductionsSalesU.S.A.111,907,58817,294,805JAPAN210,515,6985,844,327GERMANY35,530,12943,563,860CHINA5,056,7155,061,180KOREA53,470,119141,091,577SPAIN63,011,01081,891,383FRANCE72,756,9202,473,312CANADA2,669,961101,575,590BRAZIL92,206,1891,578,775UK1,856,0572,957,200MEXICO111,567,337131,114,099INDIA121,511,1711,343,779RUSSIA1,392,6461,376,273ITALY1,060,1712,522,737THAILAND15928,08117626,026TURKEY16820,135757,092In 2005Thailand willrank No.14 inProduction andNo.17 inDomestic saleand will celebrateOne MillionProductionsin DecemberThis slide shows the 2004 world ranking for//auto production and sales.As you might guess, //The U.S. ranks just ahead of Japan in production //with nearly 12 million units, //while their sales are farahead of any other country in the world.Germany ranks #3 in production //and #4 in sales.Thailand is #15 in production andmaintain number 17 in sales.I would like to note that //Thailand is expectedto rank #14 in production in 2005 //and #17 in sales.We will celebrate //our 1-millionth production unitsthis November// which we consider quitea milestone for the industry.
121.8 Productions, Domestic Sales and Exports in 2005 FORCASTING, 2005EXPORT FORCAST 2005Company2005 (units)TOYOTA150,000MITSUBISHI100,000FORD & MAZDA65,000GENERAL MOTORS50,000ISUZUHONDA40,000OTHERS30,000TOTAL500,000In 2005,//we expect production to grow to about1.1 Million units, //comprise of 680,000 units forthe domestic market, //and 500,000 units for exports.Toyota will top all company export manufacturers//with about 150,000 units, followed by Mitsubishi,And the combination of Ford and Mazda.
13II. Where will we go?Now, let’s see where we will go from here.
14Detroit of Asia’s Target Production 1.8 million units with export 40% in 2010Being 1 ton P/U production base of the worldBeing the production base of motorcycleWe have an ambitious target as we strive to become //the “Detroit of Asia”.By 2010, //we expect to produce approximately 1.8 million units //with exports representing about 40% of the business. //We also expect to be the world’s production basefor 1-ton pickup trucks //and already have a pretty good start at this.We also expect to be //a sizeable production base forboth motorcycles and OEM and REM parts for the industry.Being the production base of OEM and REM parts
163.1 AHRDP Objective : To enhance competitiveness in term of price, (Automotive Human Resource Development Project)Objective: To enhance competitiveness in term of price,quality and delivery: To Improve the following:- Engineering capability- Mould & Die-making capability- Manufacturing capability(Plastic/ rubber, Casting, Machining,Stamping)First of all,// we need to strengthenthe competitiveness of our parts suppliersthrough an Automotive Human ResourceDevelopment Project, //which will be a joint effortbetween the Japanese government, //the Thai Government, //and the private sector.//We will focus on improving engineering capability,//die &mould making capability,//and manufacturing capability.//The project will start in the fourth quarter of this year //by training 2,000 trainers, then,each trainer will teach 100 traineesin their own companies.We expect that 200,000 trainees will betrained in this 5-year plan.(Joint project among Jetro, JCC,TAI, FTI)
17R&D and Training fund will be managed by term committee Car assemblerswithdraw forOversea & Domestic trainingScholarshipR&DSOURCE OF FUNDCAR ASSEMBLERSPART MAKERS90%R&DTRAININGFUNDSMEs withdraw forTrainingR&D100%Moreover, The automotive cluster will set up theR&D and Training fund //to strengthen the human resource competitiveness.//The source of funding for this project will comeexclusively from //the car manufacturers andparts makers.90% of the money will be used by //car assemblers with the balance used by SME’s.Moreover,//Donator will benefit from tax privilege,the reduction in corporate income tax by2 times of expense amount.10%R&D and Training fund will be managed by term committee
18To expand additional market 3.3 Free Trade AgreementsTo expand additional marketINDIA(Pop~ 1,000 million)CHINA(Pop~ 1,300 million)PERU(Pop~ 28 millionBAHRAIN(Pop 0.9 million)AUSTRALIA(Pop ~ 20 million)THAILAND(Pop ~ 64.8 million)AFTA(Pop ~ 500 million)NEWZEALAND(Pop ~ 4 million)The expansion of the FTA, //or Free Trade Agreement,is another way to expand our business.//Thailand is in the process of negotiating//& implementing FTA’s with 8 countries and//two economic group, //namely BIMSTECand ASEAN to promote free trade of its products.BIMSTECJAPAN(Pop~127 million)AMERICA(Pop~292 million)
193.3 Free Trade Agreement : Australian Tariff Reduction 10 % increaseIn exportTariff reduction30 % increasein exportWe have already seen great progress with the FTA’s.For instance, with Australia,the tariff reduction has produced a significant increasein our exports .Tariff reduction
20The opportunities for Automotive Industry I. Enhancing trade in vehiclesThe Australian and Thai vehicles are complementary. There are global platform similarities and both use the right hand drive format.Thailand is a centre for light commercial vehicles production (Detroit of Asia).Australia has a competitive advantage in large car production.The trade expansion would be expected to affluent rise as a result of the tariff reduction.This FTA made perfect sense asour automotive industry’s can gain muchfrom one another.This can be the case with many other countriesin the future.
21The opportunities for Automotive Industry II. Enhancing trade in Auto componentsThere will be trade exposure potential for exports and sales under TAFTA.Improving the economies of scale via production increases as well as cost reduction from cheaper raw material ex: steel, copper, aluminum etc.We expect great opportunities to existbetween both partners asit will improve economies of scaledue to production increases.
22The opportunities for Automotive Industry III. Enhancing in Services and InvestmentEnhancing in the service in the area of training, technology transfer, Design & Engineering Alliance, Mold & Die making or plastic injection ,etc.Labor and services are able to move easier under the TAFTA. Leading to export engineering, design and technical expertise.There are motor vehicle service, repair opportunities in the aftermarket sector and also auto part reconditioning .BOI offers more privilege for the auto industry.These pluses are also apparent in thenon-production end of our business,such as service training and varioustechnology transfers.The aftermarket business benefitsas well, and additional privilegesare earned from BOI.
23Japan-Thailand Economic Partnership Agreement I. Automobiles 20052006200720082009Passenger carExceed 3,000 cc.80%75%70%65%60%Passenger carless than3,000 cc.Renegotiation will commence ona date to be agreed upon before signingBesides, TAFTA on 1 September this year,//Prime Minister Koizumi and Prime Minister Taksin //announced the agreement in principleOf Japan and Thailand Economic PartnershipAgreement.The commitment of both sides on the industrial sector//will be undertaken //to promote competitiveness ofthe auto and part industry.For passenger car over 3,000 cc.,//the tariff will reduced 5% each year //until it reaches 60% in 2009//and will then maintained at 60%.While passenger car under 3,000 cc.//both sides will renegotiate on market access//on a date to be agreed//before signing JTEPA.A political declaration on automobile will be issuedat the time of signing JTEPA
24Japan-Thailand Economic Partnership Agreement II. Auto parts The tariff rate will be reduced to 20%and maintained before eliminate in 2011Tariff over20%Tariff at 20%and belowThe tariff rate will be maintained andeliminated in 2011On the date of entry into force of the JTEPA//auto parts with tariff rate over 20% //will be gone down to 20% //and maintained until elimination in 2011.For items with tariff rates 20% and below//will keep continue before elimination in2011// while sensitive items will be 0% in 2013.The Auto parts subjects to be eliminatedaccording to the AFTA scheme in 2010,which is not affect the European and AmericanAuto industry// because tariff on auto partreduces gradually.The conclusion on auto part represent //the compromise point of JTEPAThe tariff rate will be maintained andeliminated in 2013Sensitive(5 items)
25Japan-Thailand Economic Partnership Agreement III. Iron and steel productsSome products will be eliminated on the effective date.The others will be abolished, at latest, by the first dayof the 11th year after the entry into effect.For some specific hot rolled coils and plates,zero tariff quota scheme will be established and theirQuantity will be reviewed annually.Both sides will eliminate tariff on almost items//from the effective date// while the others will beEliminated, at latest, by the first day of the 11th year.Zero tariff quota scheme will be establishedFor hot-rolled coils and plates.
26IV. Why’s ThailandSo why consider Thailand to expand your businesses?
274.1 Nine Government policies in 2005 Poverty Eradication PolicyHuman development policy and quality of lifeEconomic restructuring policy to create equilibrium and competitivenessNatural Resources and Environmental policyForeign policy and international economic policyPolicy on the development of the legal system and good governancePolicy to promote democracy and civil society processNational security policyPolicy according to directive principles of fundamental state policyThere are many reasons thatThailand offers you great opportunity andHere are just a few.I would like to highlight numbers 3, 5, and 6For instance, promote adding value to goods,Develop industrial system to increase capabilityAnd conduct a proactive foreign policy.however, as they deal with economic andpolitical issues, and I know thatthese are major concerns forany foreign investors.In short, Thailand offers economicand political stability and welcomes thosewho participate in the automobile business.
28Citroen, Peugeot,Volkswagen 4.2 Global Brands in Thailand4ANNUAL PRODUCTIONCAPACITY1.2 MILLION UNITS< JAPAN >Toyota+ R&D CenterHonda + R&D CenterIsuzu,Mitsubishi,Mazda,Hino, Nissan,< EUROPE >Citroen, Peugeot,Volkswagen,BMW, Volvo ,Daimler< USA >Ford + Asia Pacific HQsGM + Asia Pacific HQsChryslerMost Global brands have already established theirProduction base in Thailand, includingToyota, Honda, Isuzu, GM and Ford.Some companies, like Toyota, Honda & IsuzuHave also established R&D centers in Thailand.
29Possibility for expansion potential 4.3 Car ownershipPossibility for expansion potentialAmerica persons / unitJapan persons / unitMalaysia persons / unitSingapore persons / unitThailand persons / unitPhilippines persons / unitIndonesia persons / unitVietnam persons / unitNot only government policy endorsementand establishment of global brand in Thailand,But also the potential to expand the domesticMarket. As you can notice from the slide,The potential car buyers in Thailand still represent a high portion of the populationat 10 persons per unit.It is clear that consumer demand for//personalized transportation will drive salesas the ability to buy rises to match aspirations.In contrast, the US,and Japan have a low index level,reflecting higher levels of existing ownershipand reduced potential for further growth.
30liberalization policy Attractive government incentives 4.4 Why ThailandPolitical stabilityliberalization policyAttractive government incentivesGovernmentGood & Massive infrastructurenetwork( Electricity ,Telecommunication ,Air ports , Ports )Other reasons for investing in Thailand include:Political stability—Liberalization policy—Attractive government incentives.Also, Thailand offers a good, //massive infrastructure network with regardincluding //ample electricity, //telecommunications,//sea ports, and a new airport.Infrastructure
314.4 Why Thailand Market Supplier Considerable market size Large production base for pick up truckGateway to 500 million people of ASEANMarketRich pool of supporting industriesGood access to raw materialsCheaper parts manufacturing costIn addition,// we offer a large market,and, as mentioned before,//the largest Production basefor pickup trucks, as well as the gatewayto 500 million Asian people.We also have a rich supply ofsupporting industries,good access to raw materials,and inexpensive manufacturing costs.Supplier
32Abundant of quality labor forces Language proficiency 4.4 Why ThailandAbundant of quality labor forcesLanguage proficiencyHospitality and friendly attitudePeopleDelicious foods and fruitsAttractive tourist placesPlenty of golf coursesWe have an abundant supply of quality laborwho possess languageproficiency and who are friendly and hospitable.Let’s not also forget some of the other amenitiessuch as delicious food,attractive tourist locations, and plenty of golf courses.Amenity
331. Mirror Set 4.5 Low Cost & Competitive Market 2.Glass set Here are some of the competitiveparts components we currently manufacture.
343.Stamping part 4. Insulator Set 4.5 Low Cost & Competitive Market3.Stamping part4. Insulator SetHere are some more.
355.Rubber Set 6. Interior Set 4.5 Low Cost & Competitive Market5.Rubber Set6. Interior Set
367. Engine Set 4.5 Low Cost & Competitive Market GASOLINE DIESEL We also produce a variety of engines in Thailand.GASOLINEDIESEL
37Opportunity to invest in Thailand!! 4.6 Opportunity for Auto IndustryINSUFFICIENT COMPONENTS PRODUCED IN THAILANDPassenger Car EnginesFuel Injection Pumps*TransmissionsDifferential GearsInjection Nozzles*Electronic SystemsElectronic Control UnitsTurbo Chargers*Substrates for Catalytic ConvertersAnti-Lock Brake SystemsTraining ServiceDesign & EngineeringMould & Die MakingPlastic injectionOpportunity toinvestin Thailand!!Here is a list of parts componentswhich we will have insufficient productioncapacity in Thailand.These include passenger car engines and transmissions,mould & die making, plastic injection mould.Hence, there are good opportunitiesto invest in Thailand.* New investment
384.6 Opportunity for Auto Industry PARTS MANUFACTURERED IN THAILAND Engine- Diesels, MotorcyclesEngine Components- Starters, Alternators, Pumps, Filters, Hosed, Gears, FlywheelsBody Parts- Chassis, Bumpers, Fenders, Hoods, Door PanelsBrake Systems- Master Cylinders, Drums, Disc, Pads, LiningsSteering Systems- Steering Wheels, Gears, Columns, Pumps, LinkagesSuspensions- Shocks, Coils, Ball JointsTransmissions- Gears, Casings, Rear Axles, Drive Shafts, Propeller ShaftsElectrical / Electronic- Alternators, Starters, Speedometers, lamps, Motors, Flasher RelaysInteriors / Exteriors- Seats, Mats, Weather Strips, Console BoxesOthers- Windshields, Seat Belts, Radiators, Wheels, CompressorsThis slide represents some of the partsthat are currently produced in Thailand.For instance; Diesel engines,steering wheels, drum and disc brakes,suspension systems, transmissions, Electricaland electronic systems and so on.
39+ + BRIGHT FUTURE 4.6 Opportunity for Auto Industry POTENTIAL BUSINESS GROWTH FOR NEW/EXISTING INVESTORSTHAILANDGOVERNMENTSUPPORTPRODUCTIONVOLUME INCREASE++With the effort of the private sector,along with favorable government support,we can see a very bright future forthe auto industry in Thailand.EFFORT OF THEPRIVATE SECTOR100%LOCALIZATION
40Vielen vielen DankAgain,// I wish to thank you all for your kind attention,and look forward to talking to you later//about the business opportunities that exist in//our great country of Thailand.Vielen vielen DankThank you very much.