1. Thailand : Detroit of Asia
By..
Mr.Ninnart Chaithirapinyo
Vice Chairman
The Federation of Thai Industries
Toyota Motor Thailand
Good 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”.

2. Today’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 and
Why Thailand.

3. I. Where are we? Let’s first look at // where we are//
with respect to the
Thai Automobile Industry.

4. Auto Policy by Government Movement of Automotive Industry
1.1 Circumstance Change in Market
Topics
’ ’ ’ ’ ‘10
Auto Policy by Government
Movement of Automotive Industry
Car Manufacturer Trend
Local content
regulations
Ban for CBU
vehicle import
Deregulation of
Local content
Tariff reduction
Free
competition
25% local
Content
requirement
Increase of
local
content to 50%
Abolishment
of local
content
FTA
Negotiation
AFTA Tariff
reduction
to 0%
Higher
competition
Regulation
Deregulation
Liberalization
This slide depicts the current changes// in the
Thai automotive market.
It represents// the history of automotive policy, //
government support,//
and local content regulations.//
The Thai automotive industry //
has been in continuous development from
being only //a vehicle assembly business, //
to a full car manufacturer.
Now, we fully compete on the stage of //
global car competition.
Vehicle Assembly
Asian Car
Global Car
Country Competition
Regional Competition
Global Competition

5. Company PC 1 TON P/U CV TOTAL
1.2 PRODUCTION CAPACITY IN 2005
Company PC
1 TON P/U CV
TOTAL
1. TOYOTA
200,000
50,000
450,000
2. ISUZU -
180,000
20,000
3. MITSUBISHI
100,000
20,200
170,200
4. AUTO ALLIANCE
(Ford& Mazda)
2,700
132,300
135,000
5. HONDA
120,000
6. GENERAL MOTOR
95,000
115,000
6. NISSAN
33,200
66,400
2,400
102,000
8. HINO
28,800
9. DAIMLERCHRYSLER
16,300
10.YMC Assembly
12,000
11. BMW.
10,000
12. VOLVO
474,200
773,700
121,200
1,369,100
Let’s first look at
Thailand’s current production capacity
for the 12 major assemblers in the industry.
As you can see at the bottom right hand
corner of this chart,//
Thailand’s production capacity for 2005
is expected to be around million units.
This will be expanded to more than//
1.5 million units in the near future.

6. P/U Ratio = 58% Local Content = 80-90% P/C Ratio = 33%
1.3 Market ratio
P/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 of
other commercial vehicles.
For local content, pick up utilizes
almost 100% of local content while
Passenger car utilizes local content
around 30-70%.

7. LOCAL SUPPLIERS Foreign Joint Venture Assemblers 12 Companies Tier 1
1.4 Industry structure
Foreign
Joint Venture
Assemblers
12 Companies
LEs
Tier 1
Foreign
Majority
287
Thai
Majority 68
Pure
Thai
354
709 Companies
Here is the grouping of the type of companies
//that contribute to the Thai automotive industry.
As you can see,// there are 12 foreign joint venture
assemblers in Thailand,
709 tier 1 companies, //and approximately
1,000 tier 2&3 local supplier companies
SMEs
Tier 2&3
LOCAL SUPPLIERS
1,000
Companies

8. Contribution of Auto Industry to Thai Economy
GDP
EMPLOYMENT
The production of vehicles and parts
has contributed to Thai economy at 16%
of gross domestic product (GDP ).
While the number of employed person
Hiring in the auto industry is
8% from the overall employment.
Manufacturing Sector

9. 1.5 Production, Domestic sales and Exports
Unit
This slide depicts the movement of //
Production, Sales, and Exports for
Thailand over past 12 years.
1997 and 1998 represented the period of
our financial crisis //where we experienced
a 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 volume
records 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 9,320
No.2 Vehicles & Parts 5,681
No.3 Circuit Board 4,974
No.4 Rubber 3,432
No.5 Plastic 3,132
The 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 plays
in the total economy of Thailand.

11. 1.7 World Productions & Sales Ranking in 2004
Country
NO.
Productions
Sales
U.S.A. 1
11,907,588
17,294,805
JAPAN 2
10,515,698
5,844,327
GERMANY 3
5,530,129 4
3,563,860
CHINA
5,056,715
5,061,180
KOREA 5
3,470,119 14
1,091,577
SPAIN 6
3,011,010 8
1,891,383
FRANCE 7
2,756,920
2,473,312
CANADA
2,669,961 10
1,575,590
BRAZIL 9
2,206,189
1,578,775 UK
1,856,057
2,957,200
MEXICO 11
1,567,337 13
1,114,099
INDIA 12
1,511,171
1,343,779
RUSSIA
1,392,646
1,376,273
ITALY
1,060,171
2,522,737
THAILAND 15
928,081 17
626,026
TURKEY 16
820,135
757,092
In 2005
Thailand will
rank No.14 in
Production and
No.17 in
Domestic sale
and will celebrate
One Million
Productions
in December
This 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 far
ahead of any other country in the world.
Germany ranks #3 in production //and #4 in sales.
Thailand is #15 in production and
maintain number 17 in sales.
I would like to note that //Thailand is expected
to rank #14 in production in 2005 //and #17 in sales.
We will celebrate //our 1-millionth production units
this November// which we consider quite
a milestone for the industry.

12. 1.8 Productions, Domestic Sales and Exports in 2005
FORCASTING, 2005
EXPORT FORCAST 2005
Company
2005 (units)
TOYOTA
150,000
MITSUBISHI
100,000
FORD & MAZDA
65,000
GENERAL MOTORS
50,000
ISUZU
HONDA
40,000
OTHERS
30,000
TOTAL
500,000
In 2005,//we expect production to grow to about
1.1 Million units, //comprise of 680,000 units for
the 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.

13. II. Where will we go?
Now, let’s see where we will go from here.

14. Detroit of Asia’s Target
Production 1.8 million units with export 40% in 2010
Being 1 ton P/U production base of the world
Being the production base of motorcycle
We 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 base
for 1-ton pickup trucks //
and already have a pretty good start at this.
We also expect to be //a sizeable production base for
both motorcycles and OEM and REM parts for the industry.
Being the production base of OEM and REM parts

15. III. How to go?
Now, turning to “How to go?”

16. 3.1 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 strengthen
the competitiveness of our parts suppliers
through an Automotive Human Resource
Development Project, //which will be a joint effort
between 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 trainees
in their own companies.
We expect that 200,000 trainees will be
trained in this 5-year plan.
(Joint project among Jetro, JCC,TAI, FTI)

17. R&D and Training fund will be managed by term committee
Car assemblers
withdraw for
Oversea & Domestic training
Scholarship
R&D
SOURCE OF FUND
CAR ASSEMBLERS
PART MAKERS
90%
R&D
TRAINING
FUND
SMEs withdraw for
Training
R&D
100%
Moreover, The automotive cluster will set up the
R&D and Training fund //
to strengthen the human resource competitiveness.//
The source of funding for this project will come
exclusively from //the car manufacturers and
parts 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 by
2 times of expense amount.
10%
R&D and Training fund will be managed by term committee

18. To expand additional market
3.3 Free Trade Agreements
To expand additional market
INDIA
(Pop~ 1,000 million)
CHINA
(Pop~ 1,300 million)
PERU
(Pop~ 28 million
BAHRAIN
(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 BIMSTEC
and ASEAN to promote free trade of its products.
BIMSTEC
JAPAN
(Pop~127 million)
AMERICA
(Pop~292 million)

19. 3.3 Free Trade Agreement : Australian Tariff Reduction
10 % increase
In export
Tariff reduction
30 % increase
in export
We have already seen great progress with the FTA’s.
For instance, with Australia,
the tariff reduction has produced a significant increase
in our exports .
Tariff reduction

20. The opportunities for Automotive Industry
I. Enhancing trade in vehicles
The 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 as
our automotive industry’s can gain much
from one another.
This can be the case with many other countries
in the future.

21. The opportunities for Automotive Industry
II. Enhancing trade in Auto components
There 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 exist
between both partners as
it will improve economies of scale
due to production increases.

22. The opportunities for Automotive Industry
III. Enhancing in Services and Investment
Enhancing 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 the
non-production end of our business,
such as service training and various
technology transfers.
The aftermarket business benefits
as well, and additional privileges
are earned from BOI.

23. Japan-Thailand Economic Partnership Agreement I. Automobiles
2005
2006
2007
2008
2009
Passenger car
Exceed 3,000 cc.
80%
75%
70%
65%
60%
Passenger car
less than
3,000 cc.
Renegotiation will commence on
a date to be agreed upon before signing
Besides, TAFTA on 1 September this year,//
Prime Minister Koizumi and Prime Minister Taksin //
announced the agreement in principle
Of Japan and Thailand Economic Partnership
Agreement.
The commitment of both sides on the industrial sector//
will be undertaken //to promote competitiveness of
the 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 issued
at the time of signing JTEPA

24. Japan-Thailand Economic Partnership Agreement II. Auto parts
The tariff rate will be reduced to 20%
and maintained before eliminate in 2011
Tariff over
20%
Tariff at 20%
and below
The tariff rate will be maintained and
eliminated in 2011
On 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 in
2011// while sensitive items will be 0% in 2013.
The Auto parts subjects to be eliminated
according to the AFTA scheme in 2010,
which is not affect the European and American
Auto industry// because tariff on auto part
reduces gradually.
The conclusion on auto part represent //
the compromise point of JTEPA
The tariff rate will be maintained and
eliminated in 2013
Sensitive
(5 items)

25. Japan-Thailand Economic Partnership Agreement
III. Iron and steel products
Some products will be eliminated on the effective date.
The others will be abolished, at latest, by the first day
of the 11th year after the entry into effect.
For some specific hot rolled coils and plates,
zero tariff quota scheme will be established and their
Quantity will be reviewed annually.
Both sides will eliminate tariff on almost items//
from the effective date// while the others will be
Eliminated, at latest, by the first day of the 11th year.
Zero tariff quota scheme will be established
For hot-rolled coils and plates.

26. IV. Why’s Thailand
So why consider Thailand to expand your businesses?

27. 4.1 Nine Government policies in 2005
Poverty Eradication Policy
Human development policy and quality of life
Economic restructuring policy to create equilibrium and competitiveness
Natural Resources and Environmental policy
Foreign policy and international economic policy
Policy on the development of the legal system and good governance
Policy to promote democracy and civil society process
National security policy
Policy according to directive principles of fundamental state policy
There are many reasons that
Thailand offers you great opportunity and
Here are just a few.
I would like to highlight numbers 3, 5, and 6
For instance, promote adding value to goods,
Develop industrial system to increase capability
And conduct a proactive foreign policy.
however, as they deal with economic and
political issues, and I know that
these are major concerns for
any foreign investors.
In short, Thailand offers economic
and political stability and welcomes those
who participate in the automobile business.

28. Citroen, Peugeot,Volkswagen
4.2 Global Brands in Thailand 4
ANNUAL PRODUCTION
CAPACITY
1.2 MILLION UNITS
< JAPAN >
Toyota+ R&D Center
Honda + R&D Center
Isuzu,Mitsubishi,
Mazda,Hino, Nissan,
< EUROPE >
Citroen, Peugeot,Volkswagen
,BMW, Volvo ,Daimler
< USA >
Ford + Asia Pacific HQs
GM + Asia Pacific HQs
Chrysler
Most Global brands have already established their
Production base in Thailand, including
Toyota, Honda, Isuzu, GM and Ford.
Some companies, like Toyota, Honda & Isuzu
Have also established R&D centers in Thailand.

29. Possibility for expansion potential
4.3 Car ownership
Possibility for expansion potential
America persons / unit
Japan persons / unit
Malaysia persons / unit
Singapore persons / unit
Thailand persons / unit
Philippines persons / unit
Indonesia persons / unit
Vietnam persons / unit
Not only government policy endorsement
and establishment of global brand in Thailand,
But also the potential to expand the domestic
Market. As you can notice from the slide,
The potential car buyers in Thailand still represent a high portion of the population
at 10 persons per unit.
It is clear that consumer demand for//
personalized transportation will drive sales
as the ability to buy rises to match aspirations.
In contrast, the US,and Japan have a low index level,
reflecting higher levels of existing ownership
and reduced potential for further growth.

30. liberalization policy Attractive government incentives
4.4 Why Thailand
Political stability
liberalization policy
Attractive government incentives
Government
Good & Massive infrastructure
network
( 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 regard
including //ample electricity, //
telecommunications,//
sea ports, and a new airport.
Infrastructure

31. 4.4 Why Thailand Market Supplier Considerable market size
Large production base for pick up truck
Gateway to 500 million people of ASEAN
Market
Rich pool of supporting industries
Good access to raw materials
Cheaper parts manufacturing cost
In addition,// we offer a large market,
and, as mentioned before,//
the largest Production base
for pickup trucks, as well as the gateway
to 500 million Asian people.
We also have a rich supply of
supporting industries,
good access to raw materials,
and inexpensive manufacturing costs.
Supplier

32. Abundant of quality labor forces Language proficiency
4.4 Why Thailand
Abundant of quality labor forces
Language proficiency
Hospitality and friendly attitude
People
Delicious foods and fruits
Attractive tourist places
Plenty of golf courses
We have an abundant supply of quality labor
who possess language
proficiency and who are friendly and hospitable.
Let’s not also forget some of the other amenities
such as delicious food,
attractive tourist locations, and plenty of golf courses.
Amenity

33. 1. Mirror Set 4.5 Low Cost & Competitive Market 2.Glass set
Here are some of the competitive
parts components we currently manufacture.

34. 3.Stamping part 4. Insulator Set
4.5 Low Cost & Competitive Market
3.Stamping part
4. Insulator Set
Here are some more.

35. 5.Rubber Set 6. Interior Set
4.5 Low Cost & Competitive Market
5.Rubber Set
6. Interior Set

36. 7. Engine Set 4.5 Low Cost & Competitive Market GASOLINE DIESEL
We also produce a variety of engines in Thailand.
GASOLINE
DIESEL

37. Opportunity to invest in Thailand!!
4.6 Opportunity for Auto Industry
INSUFFICIENT COMPONENTS PRODUCED IN THAILAND
Passenger Car Engines
Fuel Injection Pumps*
Transmissions
Differential Gears
Injection Nozzles*
Electronic Systems
Electronic Control Units
Turbo Chargers*
Substrates for Catalytic Converters
Anti-Lock Brake Systems
Training Service
Design & Engineering
Mould & Die Making
Plastic injection
Opportunity to
invest
in Thailand!!
Here is a list of parts components
which we will have insufficient production
capacity in Thailand.
These include passenger car engines and transmissions,
mould & die making, plastic injection mould.
Hence, there are good opportunities
to invest in Thailand.
* New investment

38. 4.6 Opportunity for Auto Industry PARTS MANUFACTURERED IN THAILAND
Engine
- Diesels, Motorcycles
Engine Components
- Starters, Alternators, Pumps, Filters, Hosed, Gears, Flywheels
Body Parts
- Chassis, Bumpers, Fenders, Hoods, Door Panels
Brake Systems
- Master Cylinders, Drums, Disc, Pads, Linings
Steering Systems
- Steering Wheels, Gears, Columns, Pumps, Linkages
Suspensions
- Shocks, Coils, Ball Joints
Transmissions
- Gears, Casings, Rear Axles, Drive Shafts, Propeller Shafts
Electrical / Electronic
- Alternators, Starters, Speedometers, lamps, Motors, Flasher Relays
Interiors / Exteriors
- Seats, Mats, Weather Strips, Console Boxes
Others
- Windshields, Seat Belts, Radiators, Wheels, Compressors
This slide represents some of the parts
that are currently produced in Thailand.
For instance; Diesel engines,
steering wheels, drum and disc brakes,
suspension systems, transmissions, Electrical
and electronic systems and so on.

39. + + BRIGHT FUTURE 4.6 Opportunity for Auto Industry
POTENTIAL BUSINESS GROWTH FOR NEW/EXISTING INVESTORS
THAILAND
GOVERNMENT
SUPPORT
PRODUCTION
VOLUME INCREASE + +
With the effort of the private sector,
along with favorable government support,
we can see a very bright future for
the auto industry in Thailand.
EFFORT OF THE
PRIVATE SECTOR
100%
LOCALIZATION

40. Vielen vielen Dank
Again,// 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 Dank
Thank you very much.