Roger Moser: Thailand 2022

The THAILAND Automotive Industry 2022
A Preliminary Report on the Thailand Automotive 2022 Study
A collaboration between the ASIA CONNECT Center, University of St.Gallen, the Thai Automotive
Focus Group and the Thai-European Business Association.

Dr. Roger Moser Uli Kaiser
Director ASIA CONNECT Center President
University of St.Gallen Automotive Focus Group

St.Gallen/Bangkok, 2012

1 Setting the Stage: Why a Thailand Automotive 2022 Study?

2 The Industry Intelligence Approach applied for Thailand 2022

3 Summary and Outlook

STARTING POINT: Local as well as Expat and Western managers in Asian
countries face uncertainty and ambiguity regarding future institutional change.

Uncertainty & Ambiguity as Challenges
The dynamics of institutions in emerging markets can cause frequent
changes in governmental regulations, tax laws, foreign direct investment
(FDI) regulations, business practices, competition, or market conditions,
etc..
Yet, changes in environmental conditions are difficult to identify and
interpret and, subsequently, the complexity of their development and
interrelatedness are difficult to understand for local as well as foreign
senior executives.

Insights on the Future Industry Context to
Improve Strategic Flexibility
In order to successfully deal with the increased
complexity, interdependencies and dynamics that are
inherent in emerging markets’ institutional context,
senior executives require not only an accurate picture
of today’s market situation but also information about
the potential future business environment(s).

PROPOSAL: We have developed an INDUSTRY INTELLIGENCE APPROACH to
better understand potential changes in the industry environment of Asian
markets.

Industry Intelligence Approach
抛砖引玉 / Tossing out a brick to get a jade gem
The Industry Intelligence approach of the ASIA CONNECT Center-HSG can be used to serve local
as well as Expat and Western managers to better understand the dynamic context of their focal
industry. The approach enables decision-makers to reduce uncertainty about impactful future
developments as well as ambiguity about the institutional context based on a structured, practice-
oriented research methodology. The approach also allows to transform insights on potential futures
into functional consequences today.

APPROACH: The INDUSTRY INTELLIGENCE APPROACH builds on quantitative
and qualitative data from a diverse range of local industry experts as well as
onsite discussions (analysis workshops).

Looking into the Minds of Local Experts (Online Delphi Study)
First, we evaluate projections about future industry developments or
strategic group behavior with respect to their probability of occurrence as
well as impact on the industry/competitors and evaluate consensus
among the participating industry experts (e.g. online and real-time).
Moreover, participating experts are encouraged to explain the reasons for a
high/low assessment of a projection.
This approach allows for a unique understanding based on the different
perspectives and opinions of a wide range of local industry experts
 a unique combination of qualitative and quantitative data!

Exchanging Viewpoints in (Workshops)
Onsite expert workshops on the campus of business schools or
in collaboration with industry associations allow for even more
detailed insights on the consequences of the evaluated
projections and scenarios for industry stakeholders as well
as the institutional interdependencies in the focal industry.

OVERALL OBJECTIVE OF THE APPROACH : Uncertainty and ambiguity
reduction for senior executives .

UNDERSTANDING YOUR INDUSTRY
Challenge 1: ENVIRONMENT Challenge 2:
Uncertainty Ambiguity about
about future institutional developments institutional interdependences
Which changes might occur in the How changes might interrelate and
institutional environment? what does it mean for a firm?

STEP 1: Real-time Delphi
Online study with local industry experts to gather distinct
perspectives on ‘hot topics’ (e.g. PEST, Value Chain, Markets) .

STEP 2: Workshop
to develop scenarios of the future political, socio-cultural, value chain and
infrastructure environment for your focal industry, (e.g. for the year
2022).

INDUSTRY SEGMENT STUDY EXAMPLE from CHINA – There is moderate
consensus and probability that the majority of Chinese car buyers prefer green
power train technologies in 2020.

Industry Stakeholder Projection: Customers Probability * Impact* Desirability* Consensus**

“Green Focus”: In 2020, more than 90% of China’s car buyers 53% 4.1 3.9 20
prefer cars that utilize the most environment-friendly power
Very Moderate
train technologies available. Likely High
High Consensus

Probability Low Probability High

…China is too far away to prioritize environment and health …running costs will compensate the high tag price in the long run.
considerations. …be careful what is regarded as green energies…all OEMs will
…price sensitivity of the end user offer low-energy consumption vehicles.
…large vehicles will remain more popular …pollution and restrictions in urban areas drive this development.

Impact Low Impact High

… all cars will be complying with emission requirements … pushes the industry towards more R&D investments.

Desirability Low Desirability High

…this will drive up costs … continuous improvement of technologies.
* Probability (0-100%); Impact on Chinese automotive industry (low (1) –(5) high); Desirability for Chinese automotive industry (low (1) – (5) high)
* * Consensus (Level of agreement between 80 Delphi study participants measured as Interquartile Distance)

INDUSTRY SEGMENT STUDY EXAMPLE from China – Distinct
characteristics, implications for the industry's
stakeholders and probability of occurrence.

SP2: “Status Symbols”

SP1: Private Transportation

INDUSTRY SEGMENT STUDY EXAMPLE from China – Understanding the
“institutional dynamics” (reducing ambiguity).

EXTENSION OF THE APPROACH: Identifying future market and value chain
investment behaviors of strategic groups.

Understanding the Future Behavior of
Question 1: STRATEGIC GROUPS Question 2:
Future Geographical Future Value Chain
Market Focus Investments
Which geographical markets do the Where do the strategic groups focus their
strategic groups focus on? investments along the value chain?

STEP 1: Real-time Delphi
Online real-time Delphi study with local industry experts to
gather distinct perspectives on ‘hot topics’.

STEP 2: Expert Interviews
to further investigate differences within strategic groups and
differentiate more specifically the interrelations between single
resource investments

STRATEGIC GROUP STUDY EXAMPLE from China – Dependent & Independent
Chinese OEMs:.
Projections * Probability vs. Impact

1 Chinese OEMs reach 40% market share Impact
Chinese 1-5
2 Indep. OEMs grow stronger than dep. OEMs
Market
4.0
3 Consolidation takes place
11
Government 4 Government support will be reduced 3.9 1
Intervention 5 Enforcement of IPR1 will improve
3.8 13 21
6 Dep. OEMs heavily depend on tech. transfer
7 Indep. OEMs are successful innovators 7
3.7 8 9
R&D
8 Indep. OEMs invest 10% of revenues in R&D 3
5 19 4 16
9 10% of indep. OEMs‘ hires are “experienced“ 3.6
12 15 14
10 Dep. OEMs produce their brands only in China
Pro- 3.5
11 Quality gap of dep. OEMs has been narrowed 18
duc- 20
VC Evolution

tion 12 Indep. OEMs follow multi-location strategy 3.4
13 Quality gap of indep. OEMs has been narrowed 17
14 Dep. OEMs will double marketing spending 3.3 6
Mar-
ke- 15 3 indep. OEMs among most valuable brands 2
3.2
ting 16 Indep. OEMs will double marketing spending 10
17 Dep. OEMs sell 98% of own brands in China 3.1
Dis-
tribu- 18 3 indep. OEMs sell 5% of cars in dev. markets
3.0
tion 19 Indep. OEMs positioned as budget brands in EU
35 40 45 50 55 60 65 70
Sour- 20 Indep. OEMs invest heavily in local suppliers
* Dependent = e.g. SAIC, FAW; Probability
cing 21 Sourcing engineering services will be critical Independent = e.g. Chery, Geely; in %

STRATEGIC GROUP STUDY EXAMPLE from China: Dependent OEMs likely to
increase the marketing spending for their own brands significantly.
Value Chain Evolution – Marketing/Branding

In 2020, dependent Chinese OEMs will have at least doubled the marketing spending for their own brands,
14
compared to the level in 2011.

Key Insights Results (Statistical Group)

• During the past few years, the Chinese government has Probability Con- Desi-
been pushing dependent Chinese OEMs to develop in % sensus Impact rability
their own brands, independent of the activities with their
JV partners 68 20 3,6 3,7
• So far the success of these initiatives has been Moderate
limited, with notable first achievements only by SAIC and Likely High High
Consensus
FAW
• One of the reasons for the slow development of own Probability (Detailed)
brands is the limited focus on marketing Share of expert panel
• Dependent Chinese OEMs have simply given much more in %
attention to the development of technological 59
60
capabilities than to the development of marketing and
50
branding know-how
40
• There is moderate consensus among the panel that this
situation is going to change. The experts rate the 30
19
probability that dependent Chinese OEMs will at least 20 13 9
double the marketing spending for their own brands within 10
0
the next decade as 68% 0
• 2 out of 3 respondents actually estimate the probability 0-20 21-40 41-60 61-80 81-100
above 60% Probability, in %

1 Setting the Stage: Why a Thailand Automotive 2022 Study?

2 The Industry Intelligence Approach applied


THAILAND 2022: Development of projections for Thailand’s automotive industry
and their assessment through online survey with local industry experts.

Online Delphi Study with experts for Thailand’s automotive industry

Definition of Initial assessment of Reconsideration of initial
relevant projections projections assessment

• Development of • Industry experts assess • After the first round,
projections for Thailand’s projections on Delphi each expert is able to
2022 vision based on online platform see assessment and
extensive desktop arguments of the other
• Every expert gives
research and interviews participants
quantitative estimates
with industry experts
for each projections with • Experts are able to
• Finalization of regard to reconsider their own
projections in major  Probability assessment based on
categories: • In addition experts can the reasoning of the rest
 PEST add qualitative of the group
 Markets arguments for their • Iterative process until
 Value chain probability ratings each participant has
evolution reached his final
assessment

THAILAND 2022 – STEP 1: Conducting an online study with local industry
experts.

Terminology Online Delphi platform

• Measures the expected
probability of each projection
Probability
to come true
• Metric scale (0-100%)

• Measured using the
interquartile range (IQR)
Degree of • The IQR is the measure of
Consensus dispersion for the median and
consists of the middle 50% of
the observations

THAILAND 2022: Research Frame Overview

Politics: There is strong consensus for a 50/50 probability that the Thai
government will have given up local standards and implemented international
UNECE-based standards in 2022.
Projection for political environment Probability * Consensus**

53% 10
“UNECE-based standards”: In 2022, the Thai government has given up local
standards and implemented international UNECE-based standards.
Likely Strong Consensus


…It depends on OEM’s whether they are ready or not, not only on …Thai government basically follows OEM's intention and
the government policy. investment plans, whereby if Thailand becomes more export
…The Thai automotive industry will not be able to meet the oriented, it must implement international standards within 10
requirements of the international UNECE-based standards in years.
terms of quality. …All car makers in key part suppliers are strongly pushing.

* Probability (0-100%); * * Consensus (Level of agreement between 23 Delphi study participants measured as Interquartile Distance)

Politics: There is moderate dissent at a low average probability that CO2
emission regulations in Thailand will be the same as in Europe in 2022.


41% 25
“CO2 emission regulations”: In 2022, CO2 emission regulations in Thailand are
the same as in Europe.
Unlikely Moderate Dissent


…Regulation process in Thailand is not as proactive as in Europe
and still moving slowly. Therefore it’s hard to catch up the same …It‘s an environmental requirement.
level as Europe. …The new national automotive master plan aims to become a
…Too many costs would result. green production hub in the next decade. Therefore the
...Thailand will always lag somehow behind. adaptation of European emission regulations is likely.


Politics: There is moderate dissent at a relatively high probability that Free
Trade Agreements will be in place between Thailand / AEC and Europe / EC in
2022.

58% 25
“Free trade Agreements”: In 2022, Free Trade Agreements are in place between
Thailand / AEC and Europe / EC.
Likely Moderate Dissent


…Pressure from Europe and at the same time benefits for
Thailand.
…in capitalistic perspective, it will be a MUST happening case but
...No one can answer this question. not fully in 2022. It needs to be more effective for ASEAN first.
…Thailand’s government and private sector are aiming to settle a
FTA Thai-EU in quick if EU will keep sensitive list to work in
second stage FTA.


Value Chain / Supplier: There is strong dissent at a high average probability
that local manufacturers will supply more than 85% of the parts used in local
assemblies of OEM’s for passenger cars in 2022.
Projection for (economic) value chain environment / Supplier: Probability * Consensus**

63% 30
“Local value creation”: In 2022, local manufacturers supply more than 85% of the
parts used in local assemblies of OEM’s for passenger cars.
Very Likely Strong Dissent


…ASEAN has allowed for free trade in between all member
countries; localization in Thailand will not be driven by
…Increasing foreign demand for auto parts and components from
government incentives but by scale effects and TOCO
Thailand will strengthen the local industry.
considerations of the OEM when sourcing.
…There is already a trend to have more local supply for significant
…Free trade will be facilitated through the introduction of AEC. As
components.
a result Thailand will as well import some auto parts instead of
producing most of them.


Value Chain / Supplier: There is strong dissent at a 50/50 probability whether
all major global automotive suppliers will have set up production plants in
Thailand in 2022.
Projection for (economic) value chain environment / Supplier: Probability * Consensus**

53% 30
“Global automotive suppliers”: In 2022, all major global automotive suppliers
have set up production plants in Thailand.
Likely Strong Dissent


...Automotive Know How will be concentrated in Thailand and will
…Many alternatives. Why cluster in Thailand? Costs rising. Labor
play a major factor for automotive OEMs in location decisions;
short. Engineering schools sub-par.
however, this does not necessarily mean that TIER1/2 will have
…related to FTA effectiveness, but most will rely on India and
plants only in Thailand and not in other ASEAN countries. Other
export to Thailand.
strategies come into play here.


Value Chain / R&D: There is strong dissent at a low average probability that
Thailand will be the only relevant R&D hub in South-East Asia in 2022.

Projection for (economic) value chain environment / R&D: Probability * Consensus**

41% 30
“Automotive R&D hub”: In 2022, the only relevant automotive R&D hub in South-
East Asia is Thailand.
Unlikely Strong Dissent


…Only if Singapore, Malaysia and Indonesia disappear from the
map.
…Japan will still be strong in R&D. …It should have developed by then.
…still difficult to have good solid R&D center in SE Asia, more in …Investors will chose Thailand as R&D center because of it's
India and China, then SEA is used for production. relatively cheap but well educated engineers.
…Malaysia has the same industrial attitude as Thailand.

* Probability (0-100%); * * Consensus (Level of agreement between X Delphi study participants measured as Interquartile Distance)

Value Chain / R&D: There is strong consensus at a low probability that all
major international Tier 1 suppliers have serious R&D facilities in Thailand in
2022.
Projection for (economic) value chain environment / R&D: Probability * Consensus**

44% 10
“Serious R&D facilities”: In 2022, all major international Tier 1 suppliers have
serious R&D facilities in Thailand.
Unlikely Strong Consensus


…What would the rationale be? Application engineering yes, but
not R&D. Also, look at how Thai universities rate in the global
context; maybe one in the top 200.
…They will need to have a base in Thailand.
…In India and China, not much in Thailand.
…With the introduction of the AEC high skilled labour can migrate
…This will be the last bastion to fall. Although Thailand will lead
to Thailand and compensate the shortfall.
automotive R&D in the region, many Tier 1 suppliers will keep
their R&D in their own countries - close to the OEM R&D.


Value Chain / Sourcing: There is strong dissent at a relatively high probability
whether Japanese suppliers in OEM’s and car parts in Thailand have a market
share less than 65% in 2022.
Projection for (economic) value chain environment / Sourcing: Probability * Consensus**

56% 35
“Japanese suppliers market share”: In 2022, the market share of Japanese
suppliers in OEM’s and car parts in Thailand is less than 65%.


…More mix with Korean, Chinese and others. More strong
suppliers develop similar level of quality to support non-
…Hard to be possible when Japanese is fully dominated and able Japanese OEM as well, which helps good bland in market.
to control this market. Other change ranger such as US and …It is possibility that more Europe brands will set production
European car makers are very much far behind. bases in Thailand to survive in the buying power shift of the
…Cannot see the major investment Japan has diminishing. world.
…Suppliers will avoid cluster risk.
…VW, Ford and GM will increase presence.


Value Chain / Sourcing: There is strong dissent at a 50/50 probability whether
the quality of suppliers in Thailand is comparable to those in EU and Japan in
2022.
Projection for (economic) value chain environment / Sourcing: Probability * Consensus**

54% 30
“Quality of suppliers ”: In 2022, the quality of suppliers in Thailand is comparable
to those in EU and Japan.


…This is related to people's mentality. Thai need more flexibility of
quality in terms of delivery and time R&D management, which …Most multi nationals will be present in Thailand.
will be still critical. …Most of mechanical parts will be very competitive except for
…Culturally based, the tendency for compromises, not clearly electronically part where part makers in Thailand still have no
addressing and not sustainably solving issues as well as not competitive technology.
executing consistency in management practices is relatively …Already Thai production quality is nearly the same as in Japan.
higher pronounced than in European countries and will hinder …It must to meet market demand.
the overall quality level.


Value Chain / Production: There is strong dissent at very high average
probability that Thailand is the largest automotive production base in South-East
Asia in 2022.
Projection for (economic) value chain environment / Production: Probability * Consensus**

69% 38
“Largest automotive production base”: In 2022, Thailand is the largest
automotive production base in South-East Asia.


…Diversification will take place, low cost cars will be produced in
Indonesia, while higher priced cars will be produced in Thailand
...Indonesia will overtake Thailand. and Thailand will emerge as the clear winner.
…As a consequence of the Thai flood crisis several companies …Auto infrastructure needs some time to establish, in Thailand it
are diversifying their operations to other countries and thereby is already built up.
weaken Thailand’s current leader position. …Automotive OEMs need component parts, and Thailand is the
biggest parts production cluster, new OEMs will move in and
then bring more part suppliers.


Value Chain / Production: There is strong dissent at a 50/50 probability that
the total car production volume in Thailand is more than 5 million units per year
in 2022.

46% 30%
“5 million units production”: In 2022, the total car production volume in Thailand
is more than 5 million units per year.


…Thailand will export more vehicles.
…If the world economic do not return back to normal within 5 …Most of Japanese car makers are under process to transfer
years we might be unable to achieve that number. capacity from Japan to Thailand and Indonesia.It will make
…OEM’s have choice of production site in other countries always, Thailand become major exporting hub of Japanese.
and speed of increase is not that high in my smell. …An adjusted gi = annual growth rate (2013 to 2022) = 0.03, 0.1,
…Thailand has high costs compared to Indonesia. 0.09, 0.07, 0.05, 0.03, .01, 0.2, 0.1, 0.1 (with 2 economic
downturns) could bring the 2022 volume up to 5 Mio.


labour costs in the automotive industry are lower in Thailand than in China in
2022.

50% 36
“Labour costs”: In 2022, labour costs in the automotive industry are lower in
Thailand than in China.
Likely / Unlikely Strong dissent


…China is a big country which doesn't use all of it’s labor yet, but
Thailand is going to reach the maximum level of labor use …They are lower now and costs in China will rise stronger than
already. Thai cost.
…Thailand does everything to impede migration of labor from …Labor cost in China is increasing rapidly due to high inflation
neighboring countries while at the same time forcing increases and fast growth in the automotive industry. It will pass Thailand
in labor cost. very soon.
…Costs are continuing to increase in Thailand, inflation will hinder …Could come down from AEC.
the industry.


car and component production in Thailand is mostly automated in 2022.


52% 35
“Automated production”: In 2022, car and component production is mostly
automated.


…Not much of a pay-back. If investment in automation is required,
other countries like Malaysia with better skill base will be more
attractive. ...Labour shortage will drive automation.
…More customers are adding robots today. …Cost of labor will drive this.
…Already some level of automation has been successful in …It's already mostly automated.
Thailand. In process, it will be more automated but not as
significant as you would imagine.
…Automation will increase, but not to that extent.


Value Chain / Marketing: There is VERY strong dissent at relatively high
probability that the most important marketing channel for the automotive industry
in Thailand in 2022 is Social Media.
Projection for (economic) value chain environment / Marketing: Probability * Consensus**

56% 51
“Social Media”: In 2022, the most important marketing channel for the automotive
industry in Thailand is Social Media.
Likely Strong dissent


...Social media is just a hype and not a long term trend.
…Communication is becoming more and more digitalized.
…There will always be a need for the conventional.
Therefore social media is highly relevant in the future.
…Social Media is growing up its importance, but it might not reach
…Some influence but more from actual hearing from peers.
Thai rural area and not cover to all ones who have power of
…As everywhere in the world – unfortunately.
buying cars.


Value Chain / Marketing: There is moderate consensus at 50/50 probability
that Thailand’s motor shows in 2022 are as significant for global automotive
OEM’s as the shows in Europe, US and Japan.
Projection for (economic) value chain environment / Marketing: Probability * Consensus**

46% 15
“Motor Shows”: In 2022, Thailand’s motor shows are as significant for global
automotive OEM’s as the shows in Europe, US and Japan. Moderate
Unlikely
Consensus


…Two current shows need to merge into one to be able to hold
the most relevant show in 2022 as Jakarta will be catching up
very fast.
…Thailand as the automotive hub in ASEAN provides access to a
…Thailand‘s relevance in the automotive industry is as a sourcing
market of about 600 Million people. Therefore Thai motor
and production market rather an end-consumer market.
shows gain relevance.
Therefore its motor shows will not become globally relevant.
…In Thailand all is related to R&D and trend impact rather than
selling shows.

* Probability (0-100%); * * Consensus (Level of agreement between X Delphi study participants measured as Interquartile Distance)

Value Chain / Distribution: There is strong dissent at a 50/50 probability that
75% of all vehicles manufactured in Thailand are exported in 2022.

Projection for (economic) value chain environment / Distribution: Probability * Consensus**

54% 30
“Export ratio”: In 2022, 75% of all vehicles manufactured in Thailand are exported.


…Investors will derisk and hedge export bases.
…The realization of the DAWEI deep seaport project reduces
…May be 50%.
logistic cost for exporting Thai made vehicles and therefore
…There will be growth of the local market as more eco cars are
boosts Thai automotive exports.
produced here.
…That is the direction that I can see considering investment and
…The realization of the DAWEI deep seaport project reduces
market domestic demand.
logistic cost for exporting Thai made vehicles and therefore
boosts Thai automotive exports.


Value Chain / Consumers: There is strong dissent at a 50/50 probability that
car density in Thailand is 200 cars per 1000 people in 2022.

Projection for (economic) value chain environment / Consumers: Probability * Consensus**

47% 35
“Car density”: In 2022, car density in Thailand is 200 cars per 1000 people.


... Macroeconomics don't support this number. Plus infrastructure
…It's already at >160.
will collapse at that level.
…Average personal income will grow accordingly.
…Too many cars to imagine, no infrastructure to support.
…More developed road infrastructure will lead to higher car
…Only in BKK area, others still primitive.
density.


Value Chain / Consumers: There is moderate consensus at a very low
probability that the motorcycle has replaced small cars for personal transport
and is only be used for recreational transport in 2022.

“Motorbikes for recreational transport”: In 2022, the motorcycle has been 28% 20
replaced by small cars for personal transport and is only used for recreational
Moderate
transport. Unlikely
Consensus


…Motor cycles will remain a flexible low cost means of
transportation. The importance of low cost cars however has
increased. …As cars get cheaper and salaries go up this will happen. It has
…Still act as one of major transporting method, all related to city already happened to a significant extent.
development and rail / road infrastructure but there is not much …GDP in Thailand grows fast and therefore gives people more
improvement in last 10 years. purchasing power. If affordable Thai people will always prefer a
…Small cars flopped even in India. car over a motorbike.

... Motor cycles will be used in rural areas.


Value Chain / Consumers: There is moderate dissent at a rather high
probability that public transportation is the only efficient mode of transportation
throughout the metropolis in 2022.

58% 25
“Public transportation”: In 2022, public transportation is the only efficient mode of
transportation throughout the metropolis.


…If emphasis is on "efficient" then yes, all other means of
…Thai likes to drive and private feeling among friends.
transportation will not be providing adequate ratios of
…Since cars will remain a very important status symbol in
1) Resources per person per kilometer
Thailand, public transportation will never be the most preferred
2) Time per person per kilometer
means of transportation.
…The transport system will be improved.
…It already is.
…It is already.


Value Chain / Consumers: There is strong dissent at a very low probability that
Bangkok has introduced car-sharing (i.e. fractional car ownership / pay per use
vehicles) throughout the metropolis in 2022.

27% 30
“Car-sharing”: In 2022, Bangkok has introduced car-sharing (i.e. fractional car
ownership / pay per use vehicles) throughout the metropolis.


…Additional rise in traffic volume will bock the metropolis seriously
…Sharing a meal: yes. Sharing cars, no.
and make parking space really expensive. Therefore people will
…People want ownership
consider car-sharing as a convenient alternative.
…It’s too risky for cars being stolen and deceit.
…Low vehicle-ownership rates due to low incomes will boost car-
sharing in Bangkok.


Society: There is VERY strong dissent at a 50/50 probability that there is an
annual demand for one million low-emission vehicles per year in Thailand in
2022.
Society Projection Probability * Consensus**

50% 45
“Demand for low emission vehicles”: In 2022, there is an annual demand for one
million low-emission vehicles per year in Thailand.
Unlikely Strong dissent


…no incentives (government driven) in sight and unlikely to be
…Thailand has a new green Automotive Master Plan.
done unless government becomes more focused on the issue
…there might be a chance when the Thai government sees
and implements real policies rather than face saving, false
possibilities to gain profit from it by implementing charges on
compromises.
car manufacturers which doesn’t provide low-emission vehicles.
…Thai people will not relief on low-emission yet but price only.
…Thailand has strong views on the environment.
…cost of technology are too high.
…trends will change due to pressure from ASEAN for low
... In terms of capacity, there is obligation for OEM to produce in
emission vehicles and overall pollution reductions.
given years, but mainly it will be used for export base.


Society: There is very strong dissent at a 50/50 probability that total cost of
ownership of a car is the most important factor for a purchase decision of an
average Thai car buyer in 2022.
Projection for social environment: Probability * Consensus**

51% 41
“TCOO for purchase decision”: In 2022, total cost of ownership of a car is the
most important factor for a purchase decision of an average Thai car buyer.


…Total cost will be key criteria for purchasing intention when most
…Status of "owning a car" is more important than TOCO; this is
of people are the mid income and debt will be national issue to
embedded in the national culture and requires significant
control.
external triggers to start shifting towards a more cost oriented
…Small car segment is growing and these buyers are more
view (e.g. fuel prices increase ten fold, taxes etc.)
budget conscious.
…One of the most important, yes, but the most important, no.
…Another big financial crisis which forces Thais to reduce their
Practicality for intended purpose (e.g. truck)and overall appeal
cost and save for the future.
(e.g. design)are likely to supersede cost of ownership.
…Thai's hire purchase and image is important so cost still
…Thailand will have more disposable income by 2022
important but other factors too.


Society: There is VERY strong dissent at a low probability that 100% Biodiesel
is the most popular fuel in the rural areas of Thailand in 2022.

Projection for social environment: Probability * Consensus**

38% 50
“Biodiesel”: In 2022, 100% Biodiesel is the most popular fuel in the rural areas of
Thailand.


…Hard to be possible when palm oil shall supply to food sector
too. ...When the price of the world diesel oil is too high, people in rural
…Not in the next 10 years. The government has given so much area will do save their cost by using more Biodiesel.
program to promote investors to come based on usual fuel, …Thailand can produce Biodiesel locally.
adapting Biodiesel requires additional structure change for …Biodiesel is economical and environmentally friendly.
OEM, which is being studied but not in next 10 years.
…It is a profit maximizing question. Therefore the government
plays an important role in this question.


Technology: There is VERY strong dissent and at a relatively high probability
that roads are the only relevant mass transportation infrastructure in Thailand in
2022.
Projection for (soft/hard technological) infrastructure environment: Probability * Consensus**

56% 50
“Roads for mass transportation”: In 2022, roads are the only relevant mass
transportation infrastructure in Thailand.


…Inaptitude to manage large mass-transport projects.
…True for upcountry while Bangkok will see a significant improve
…Thailand seems to lack vision and will to develop a
in mass transportation in order to prevent a total collapse of the
comprehensive rail network for example.
infrastructure.
…Yes, still if you say only in next 10 years, however, in the longer
…Thailand will have a developed high speed train system by then
term Rail transport and Vessel transport will be examined
because the government planes to spend more than 1 trillion
effectively.
THB to develop rail infrastructure.
…Though many new sky train lines will have been finished before
…Thai government provides more and better infrastructure on
2022 but that for Bangkok Metropolitan, Thailand is not merely
rails since the traffic on the roads will increase dramatically and
Bangkok.
is not controllable anymore.


Technology: There is strong consensus at a relatively high probability that
Thailand has a significant shortfall of unskilled and semi-skilled labour in the
automotive industry in 2022.

57% 10
“Labour shortfall”: In 2022, Thailand has a significant shortfall of unskilled and
semi-skilled labour in the automotive industry.
Likely Strong Consensus


…The demand will rise stronger than the supply.
…0%, if labor can move freely within AEC.
…100%, if current system of protected profession, and exclusion
…Significant shortfall is already immanent and existing;
clauses remains in place.
Government will ease immigration policies to neighboring
…Even if government relaxes it’s policy of protection it wont be
countries which will have reduced the pressure on labor by
sufficient to address the growth because the process to
2022.
restructure education system is still moving too slow.
…The government increase the possibility of education also in the
…It will take decades for the complete mind-set change needed
country side and could promote more upcountry people to move
to view a vocational/technical skills-based education as equally
to the industrial area, or might use foreign labor effectively.
important and attractive as an academic education.


Technology: There is strong dissent at 50/50 probability that most high skilled
automotive engineers from ASEAN area are working in Thailand in 2022.


53% 36
“ASEAN’s engineers in Thailand”: In 2022, most high skilled automotive
engineers from ASEAN area are working in Thailand.


…Thailand is the center of SE Asia and have the biggest
automotive parts production cluster in the region with a good rate
…Thailand has faced a “brain drain” in recent years, with its skilled
of growing up.
students and workers migrating in search of better opportunities
…Especially, Chinese and Indian will be present with experienced
and pay.
skills to fulfill the gap since skilled Thai workers will be still short.
…Indo and others are not far behind.
…Thailand will maintain it's status as Automotive hub.
…Indonesia is catching up, with macroeconomics and
……Competition with neighboring countries such as Indonesia and
demographics in their favor.
Malaysia is significant. However, Thailand will come up as the
manufacturing hub for ASEAN.


Malaysia: There is moderate consensus at a low probability that Malaysia has
found a JV Partner for Proton and has become a serious player with more than
1’000’000 vehicles produced per year and 30% export ratio in 2022.
Projection for ASEAN environment: Probability * Consensus**

“Malaysia”: In 2022, Malaysia has found a JV Partner for Proton and becomes a 42% 20
serious player with more than 1’000’000 vehicles produced per year and 30% export
Moderate
ratio. Unlikely
Consensus


…Quality and design is still not that shiny, additionally they have
their own management problem. …Local value creation requirements in Malaysia boost its exports.
…So many engagements, but never a wedding. …Chines brands will enter the Malaysian market and therefore
…Proton will vanish. help the industry growing.
…Proton always has difficulty on improving technology in order to …Looks like Honda is the enabler, if one can trust the newspaper
match the world standard. reports.
…Unlikely. Many have looked, but few have continued with Proton.


Indonesia: There is moderate consensus at a low probability that Indonesia has
increased its automotive export to 50% and has overtaken Thailand as the
leading automotive production hub in South-East Asia in 2022.

“Indonesia”: In 2022, Indonesia has increased their automotive export to 50% and 41% 20
has overtaken Thailand as the leading automotive production hub in South-East
Moderate
Asia. Unlikely
Consensus


…Indonesia supports mainly domestic demand.
…Indonesia cannot build up a component parts cluster within 10
years and labour cost are the same as in Thailand.
…Macroeconomics and demographics favour Indonesia.
…Indonesia is politically too unstable.
…Many companies will continue to invest in Indonesia and by this
…It is depending on car makers policy from which base they
help bringing it to the top in South-East Asia.
export, but from Japanese point of view Thailand will be main
exporting base because Thailand’s supply chain is more
competitive.


Myanmar: There is strong dissent at a low probability that Myanmar has an
automotive industry with more than 1’000’000 car capacity per annum strongly
dominated by Chinese manufacturers in 2022.

“Chinese Domination in Myanmar”: In 2022, Myanmar has an automotive 38% 40
industry with more than 1’000’000 car capacity per annum strongly dominated by
Chinese manufacturers. Unlikely Strong Dissent


... Automotive industry will be set up in Myanmar but development
in all aspects need more than 10 years.
…Maybe 500’000 but not dominated by Chinese.
…China is developing Myanmar as logistics gateway and
…Myanmar needs more time to develop the infrastructure.
production will follow.
…Hard for such fast capacity building unless the market grows
.. Yes, some chance and Chinese will be major player followed by
significantly.
Japanese.
…Myanmar is still far from being en enticing market for industrial
investment. In order to get to that scale, projects would have to
be starting now.

Myanmar: There is moderate dissent at a 50/50 probability that the DAWEI
deep seaport is the biggest deep sea port in South East Asia in 2022.


52% 27
“DAWEI deep seaport”: In 2022, the DAWEI deep seaport has taken over to be
the biggest deep sea port in South East Asia.


…Other ports that are well established will remain highly utilized
and relevant.
…China's Western Seaboard.
…A lot of investment is going into this project.
…Oversized ambition will meet reality.
…Successful completion of the project by 2022.
…Still Thailand or Singapore act as major player but DAWEI has
potential for sure.


China: There is moderate dissent at low probability that Thai automotive exports
to China account for 30 per cent of the Thai automotive exports to global
markets in 2022.
Projection for global environment: Probability * Consensus**

32% 25
“Exports to China”: In 2022, the Thai automotive exports to China account for 30
per cent of the Thai automotive exports to global markets.
Unlikely Moderate Dissent


…China will not import but produce domestically.
…Chinese still consider automotive as sensitive list. So they will
block them out.
…China will still have their own OEM’s domestically, no need to …Only Thailand can produce the luxury class cars.
rely on other countries much (except high end).
…Unlikely, as OEM will build in China for local market and in
Thailand for the rest of the world.


China / Japan: There is strong dissent at a rather low probability that China is
the second largest foreign automotive investor in Thailand after Japan in 2022.


44% 30
“Investments from China and Japan”: In 2022, China is the second largest
foreign automotive investor in Thailand after Japan.


... Myanmar is the target for China.
…Chinese investments will go to Indonesia because it’s a larger
market. …China will strongly engage in ASEAN.
…It’s hard for Chinese car to find acceptance in Thailand or in …Chinese OEM and suppliers need other place like Thailand to
ASEAN by culture whereas US cars are still competitive and invest in order to support not much Yuan appreciation as well as
more accepted. duty exemption in importing countries.
…China will increase investment in Thailand but not within next 10
years.


China / Japan: There is strong dissent at a rather low probability that in 2022
many Western and Japanese automotive companies have shifted new
investments to Thailand for exports to China and India.

“Investments from China and Japan”: In 2022, many Western and Japanese 43% 30
automotive companies have shifted new investments to Thailand for export to China
and India. Low Strong Dissent


…Companies will build where they sell. Why would a relatively
…Japanese part makers are moving to Thailand to follow car
high cost location export to low cost countries?
makers that transfer capacity to Thailand. And sooner European
…Japanese would shift more to India or other non-explored
car and part maker will follow when it is the only room to maintain
country, Thailand, they would monitor labor wage increase.
their competitiveness in global market.
…If they shift it will be to India.
…Thailand is the perfect low cost base to produce for export.
…India and China will continue to grow to support their domestic
…Only Thailand can produce high technology or luxury cars.
markets rather than exports.

* Probability (0-100%); * * Consensus (Level of agreement between 23Delphi study participants measured as Interquartile Distance)

1 Setting the Stage: Why a Thailand Automotive 2022 Study

2 The Industry Intelligence Approach applied


THAILAND 2022 – (Outlook): Conducting a “scenario development” workshop
(reducing uncertainty).

THAILAND 2022 – (Outlook): Turning scenario insights into functional
consequences today through the “Institutions-Resource Matrix” (Example).

Scenario Development Industry Environment P-S-T
Probability
Projection 1
Impact Roadmap
Projection 2
Desirability

Political Value Chain

Institutional Industry Value Chain
Dynamics Probability
Projection 1
Socio-cultural Technological Impact
Projection …
Infrastructure Desirability

Effects on Department's
Strategic Plans

Physical Human Technological Organizational Relationships
(Plants, Machinery etc.) (Executives, Employees (IP Rights, Production (Structures, Processes, (within company,
etc.) Technologies, Tacit Leadership Style etc.) functions, customer or
Knowledge etc.) suppliers etc.)

R&D
Procurement
Production
Modification of Local Operations
Marketing
Distribution
After Sales

CONTACT: The ACC-HSG / AFG research team can be contacted to further
discuss your interests and answer your questions.

ASIA CONNECT Center-HSG Automotive Focus Group
Dr. Roger Moser, Director Uli Kaiser
University of St.Gallen
Dufourstrasse 40a
CH-9000 St.Gallen, Switzerland

Tel: +41 71 224 73 54
E-mail: Roger.Moser@unisg.ch
Web: www.acc.unisg.ch

Paolodal Pozzo Toscanelli, 1457

Roger Moser: Thailand 2022

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