KResearch has assessed that Thai auto exports in 2021 should improve from the previous year, thanks in large part to the economic recovery of major trading partners in Oceania and Asia. At the same time, an increasing number of Japanese car manufacturers are using Thailand as a production base for export markets, especially for shipments back to Japan. However, two major risks are weighing on Thai auto exports at present, namely (1) the trend of COVID-19 cases among Thailand's trading partners, which remains shrouded in uncertainty. This may not only cause import demand to decrease in some countries, but may also affect vehicle production if certain car or auto parts plants are forced to shut down as a result of domestic outbreaks; and (2) the present microchip shortage. Although KResearch perceives that the situation should gradually improve from 3Q21 onwards, ongoing chip scarcity at several major plants in certain countries may affect plans to allocate them to factories worldwide. For this reason, KResearch maintains a cautious stance, with auto exports projected to be in the range of 890,000-950,000 units, or growth of 21.0-28.0 percent YoY from an extremely low base in 2020.
Going forward, carmakers in Thailand should expedite the development of zero-emission vehicles (ZEVs). On the other hand, Thai auto exports to key existing markets may encounter mounting competition from other manufacturing sources as well as tariff measures that could eventually hinder the growing export volume. Moreover, if Thailand fails to conclude certain FTAs like its pending FTA with the EU, and the CPTPP, it may result in reduced exports. Nevertheless, KResearch perceives that the potential rise in investment from Chinese carmakers may serve as a way for Thailand to expand into new export markets amid the risk of market share loss due to intensifying competition in the automotive industry, especially once ZEVs gain a stronger foothold in the market. That said, close attention should still be paid to the geopolitical tensions between the Chinese government and key ZEV markets like the United States, Europe and Australia.