BANGKOK — Japanese manufacturers in Thailand have reduced production to a single shift and have stopped paying overtime to workers. Meanwhile, imported Chinese EVs are not selling, with over 10,000 cars parked idle at ports.
According to a report by Prachachat Business, the Thai car market has hit its lowest point in 10 years. Japanese automakers and Chinese EV manufacturers are facing difficulties with excess inventory. They are scrambling to find parking spaces at warehouses in Laem Chabang, Chonburi, and Rayong.
Surapong Paisitpatanapong, advisor to the chairman of the Automotive Industry Group and spokesperson for the Automotive Industry Group of the Federation of Thai Industries (FTI), admitted that car sales have dropped significantly, with passenger cars declining by about 5% and pickup trucks by nearly 50%.
A source from the FTI’s Automotive Industry Group added that the decline in car sales, especially in the pickup truck market, clearly indicates that each factory will definitely have to reduce production capacity. As the EV trend overtakes internal combustion engine (ICE) vehicles, inventories are starting to swell.
After production, the vehicles are gradually sent to dealerships, but now dealerships of each brand are also experiencing sales problems, with many closing down. Importantly, there is no space to stock cars, which has become a problem for each factory to find storage space.
“We estimate this year’s total production capacity in Thailand to be close to 2 million units, divided into 1 million units for export and 800,000 units for the domestic market. If the domestic market is replaced by Chinese EVs, which are estimated to be close to 100,000 units this year, that is the lost production capacity.”
Dr. Saroj Vasuwanich, former president of the Eastern Industrial Council, revealed to “Prachachat Business” that since the second quarter of this year, many auto parts manufacturers have been notified of order reductions from several car manufacturers.
As a result, the parts industry has had to reduce production accordingly. It is expected that the overall car production in 2023 will decrease by approximately 20-25% compared to 2022 (Jan-Dec 2022 had a production volume of 1,841,663 units). The main reasons for the reduction in production capacity are twofold: lower exports and Chinese EVs taking over the domestic ICE vehicle market.
“Don’t be alarmed by the current situation. We have to wait and see what happens in the second half of the year. Right now, it’s only a 25% reduction. However, if this continues, it could be dangerous. During this period, most employees don’t have to work overtime. Some companies will reduce the number of working days for employees. For example, previously they worked on Saturdays, but now they get Saturdays and Sundays off. The company still pays the full salary, but the company will save on reduced water and electricity costs,” he said.
In the past 2-3 months, imported car groups, especially EVs from China that have been gradually entering our market, are also experiencing problems. Currently, there are thousands of cars parked at Laem Chabang Port. Recently, executives of many brands have started to brake on import orders.
Nattapoom Powarat, president of the Warehouse, Silo and Cold Storage Association, told “Prachachat Business” that in the overall warehouse business, many EV importers and car manufacturers from various brands are renting warehouse space at Laem Chabang Port and nearby areas in large numbers, around 10,000 cars, equivalent to an area of approximately 200,000 square meters.
If calculated as a rental price, it is around 80-100 baht per square meter per day. One car uses an area of approximately 15-20 square meters.
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