Globalization: Japanese top auto think-tank “Japanese post-crisis hub will be India & Thailand”

Thai and India auto industry steaming hot with sexy

  • By Pooky, Thai Intel’s economics journalist

IHS Automotive, a top research and forecast unit based in Japan, says India and Thailand will be the global production of parts hub for Japan-in the post-crisis thinking by Japanese automakers.

India is a country very much stable, except for troubles with Pakistan and some internal militants, and while Thailand politics could see the country dip into civil unrest-during the unrest last year, most foreigners said the unrest was based mostly in Bangkok, where there are few factories. “Our production on the out-skirts of Bangkok was not disrupted,” said Takaichi Futikawa, a Japanese manager at a Japanese/Thai joint venture.

However, apart from safe from Thailand,s political crisis, every main Thai political parties have promised a significant increase in wage to Thai labor. While the worker in the auto industry, have traditionally, been paid a much higher wage than the average Thai wage, the raising of the minimum wage, could in fact, pressure wages in Thailand up-ward across the board. Additionally, the Thai currency is hardening and there are some logistics bottle-necks. Government policy wise, there have also been a great deal of political-plays and influence peddling-meaning, Thailand continues to lack a comprehensive auto industry development plan-that fits all.

Meanwhile, India does not face an up-ward wage pressure as Thailand will be experiencing.

The following is from Plastic News:

Earthquake, nuclear catastrophe force rethink on Japanese auto industry strategy

By Stephen Moore

Published: June 12th, 2011

Production of automobiles in Japan is forecast to plummet by around 30% to 6.3 million units in 2011 with longer term implications due to these lost sales opportunities, according to Masatoshi Nishimoto, manager of Japan and Korea vehicle forecasts at IHS Automotive based in Tokyo. In fact Japanese OEMs will still be experiencing lost volumes through to September next year as a result of quake damage and power supply restrictions.

Nishimoto expects global vehicle production to come in at 72 million vehicles this year, 2 million lower than initially anticipated prior to the disaster in Japan. He was speaking at the recent Asian Petrochemical Industry Conference in Fukuoka, Japan.

The earthquake and nuclear accident have highlighted the frailties of the Japanese supply chain model in the temblor-prone nation, with offshore assembly operations reliant on key components manufactured in Japan also having been affected. Moving forward, Nishimoto says that Japanese OEMs will look to enhance localization of parts outside of Japan, utilize India and ASEAN nations as export hubs for small vehicles, and increase their focus on China in order to hedge against supply chain risk. “They may minimize production volume [in Japan] and manufacture there only to maintain employment and plant utilization,” he notes.

While Japanese OEMs dominate the ASEAN market (the top five suppliers are also Japanese with a combined market share of 65%) and they also have a strong position in the Indian market, they do not feature among the top five suppliers in the albeit fragmented China market, which is forecast to grow to 26.6 million vehicles in 2017. In order to successfully compete in the China market, Nishimoto feels that Japanese OEMs will have to develop exclusive cars for China rather than market “global vehicles.”

Japanese OEMs also face intense competition in the price sensitive Indian market from the likes of Tata’s ultra-low-cost Nano, which has already garnered an 8-9% market share. “Besides Suzuki, Japanese OEMs will look to utilize India as an export hub for global small cars for the European, Middle East and African markets,” says Nishimoto. 6.8 million vehicles are forecast to be sold in India in 2017. Another export hub will be Thailand, serving global markets including Japan itself. By 2017, the ASEAN market is expected to reach 5.1 million vehicles.‑

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s