|R&D projects to help Thai auto industry|
The Thai automobile industry has been around for more than 50 years, and today is considered an industry that is highly important to the Thai economy.
Last year the auto industry created Bt330 billion (S$13.2 billion) in added value, which is equivalent to 12 per cent of Thailand's total industry (up from 6.4 per cent in 2003) and ranks second behind the food and beverages industry.
The auto industry employs an estimated 350,000 people.
In 2010, the industry produced more than 1.65 million vehicles for the first time, with approximately 50 per cent being exported.
Meanwhile, over 2 million motorcycles are manufactured annually, with 200,000 being exported.
Although the auto industry may be a big earner, all vehicle manufacturers at present are foreign. Thai parts manufacturers depend on foreign technology and the country is still unable to design and produce its own automobiles.
This makes it difficult for the industry to develop.
Today automotive technology is changing quickly due to environmental concerns and the rising prices of fossil fuels.
This has led auto-makers around the world to develop vehicles that have improved fuel economy and emission levels.
Many have also introduced hybrid and electric vehicles, while developing fuel-cell vehicles for the future that would emit nothing but water vapour.
Our automobile industry is divided into two markets. The mainstream market consists of manufacturers who are from overseas.
The companies that are Thai-owned or have major Thai shareholders are parts manufacturers from tiers 1,2 and 3 who depend on design and production technology from abroad.
The other market is the niche market, consisting of SMEs producing buses, farming vehicles and small trucks.
In this market, most of the companies are Thai and products are sold domestically, where there is little foreign competition.
Most of the players have not been utilising much technology in terms of design, manufacture and engineering.
Due to the importance of the Thai auto industry, the National Science and Technology Development Agency (NSTDA) has set up a support programme for automotive and parts research and development under the industrial and services cluster group.
This will enable specialised industries to have the capability to design and produce electric vehicles and multi-purpose trucks.
It will also help strengthen the niche market in the future and provide technology for design, production and engineering for Thai parts-makers in order to raise their capabilities.
The NSTDA had launched the Strategic Planning Alliance 1st Phase (SPAI) in 2006 that was targeted at stand-alone parts design and manufacturing.
The project was intended to create an automobile platform for Thailand that would be relayed to the private sector.
The second phase of the project was initiated in 2011 for automobile and parts manufacturers, and the NSTDA teamed up with the Electricity Generating Authority of Thailand (Egat) and the Thai Automotive Institute.
According to the plan, product development will be carried out for the niche sector, which includes three markets.
The first is the electric bus market. The NSTDA says that a large number of the population use buses for daily transport, and most of the buses are assembled locally.
The NSTDA said it would help support the development of electric buses that are efficient and safe, as well as push for real usage in areas that are suitable, such as delivering students within university campuses or in tourist attractions with hardly any traffic.
It also wants to promote farming vehicles, which are currently made from experience and used auto parts from overseas, resulting in poor safety levels and product quality.
The NSTDA supports research for design and production of farming vehicles, including major parts such as the chassis, sub-chassis and front beam.
The last is the electric motor modification kit and electronic control modules for vehicles running on internal-combustion engines.
It said that in the future fuel prices are expected to rise while emission laws will become stricter.
The NSTDA is to join hands with Egat in helping vehicle owners modify their internal combustion engines to make them 100-per-cent electric vehicles driven by an electric motor powered by lithium ion batteries.
To ensure safety and good vehicle performance, the NSTDA has also supported the research and development of automotive electronics including batteries and motor cooling systems, regenerative braking systems, coordinating systems for the original ECU, and the design of motors and inverters for electric vehicles.
However, a major issue will be raising the capability and efficiency of design and engineering by parts manufacturers.
As major auto manufacturers develop more hybrid and electric vehicles, Thai parts suppliers must improve their design, engineering and production processes in order to win contracts from these auto-makers.
Apart from supporting tier 1, 2 and 3 suppliers, the NSTDA wants to help push Tier 1.5 suppliers to fully become Tier 1 suppliers.
The NSTDA expects that in 2013 and by 2016 it would be able to lower production costs and time, along with raising the capabilities of personnel in both the industrial and education sectors in terms of auto parts design and production through joint efforts with allies from the two sectors both in Thailand and abroad.
It will set up joint research for design and production in both mainstream and niche industries to help Thai companies achieve international standards.
This will allow the Thai auto and auto parts industry to maintain its global production base status, and develop the Thai niche market so that it grows both domestically and internationally.
Farmers and underprivileged people will also benefit from the multi-purpose vehicle that is safer and can be legally registered with the Land Transport Department.
According to the NSTDA, this project plays an important role in creating stability for the Thai auto industry, especially with its target of achieving production of 3 million vehicles per year in the near future.
Automotive industry structure
1. Upstream industries responsible for manufacturing raw materials for the auto industry, such as rubber and plastics industries.
2. Tier 2 and 3 raw material auto parts-makers or REM (Replacement Equipment Manufacturer) suppliers who provide raw materials for Tier 1 manufacturers. They may also be equipment suppliers and could be classified in Tier 1 for certain products. There are more than 1,100 manufacturers in this group and most are Thai SMEs.
3. Tier 1 parts suppliers who are Direct OEM (Original Equipment Manufacturer) suppliers who produce parts directly for auto assembly plants. Parts classified in this group are of high quality, with standards being designated by the auto producer. Presently there are 709 Tier 1 suppliers in Thailand, made up of 287 foreign companies (117 Japanese), 68 foreign-Thai joint ventures and 354 Thai suppliers. Of the 709, 386 produce automobile parts while 201 produce motorcycle parts; the rest produce for both industries.
4. Auto assemblers, brand owners and product designers - Thailand has 15 automobile assemblers, with more than 70 per cent being Japanese. Toyota has the largest market share (almost 40 per cent) and is also the largest producer in the country, followed by Isuzu with a 15-per-cent market share. Honda is the largest motorcycle manufacturer out of the 7 brands and has a market share of more than 70 per cent followed by Yamaha with 23 per cent.