The late 2011 flood in Thailand was catastrophic not only for the locals, but also for the Japanese carmakers, which unveiled a surprising fact that Thailand is actually one of the major car manufacturing countries in the world. In 2012, Thailand produced 2.45 million of vehicles in which 1 million were exported, making it the seventh largest car exporter in the world.
Thailand mainly builds its advantages on cheap labor and localization. According to a market research firm, Thailand localizes 80% of its production, meaning most parts that are assembled come from local companies. It also exports its parts to other countries at quite competitive prices among South-East Asian countries.
I think the real threats for Thailand now is its own ASEAN (Association of South-East Asian Nations) neighbors. Most Thai auto plants have been there for around 50 years and one of Thailand’s advantages in producing cars is the cheap workers’ expertise. However in the era where information and technology are booming every second, better tooling, manufacturing techniques and materials will eventually overcome the predominating advantage in labor. I wonder when Thai wages eventually get less competitive, would it ever hand over the production lines to its neighbors such as Indonesia, which is an emerging car exporting competitor.