“Toyota is so comfortable in Thailand, I don’t see any major move away any time soon,” said auto industry analyst Michael Dunne.
“Thailand is a premier manufacturer without equal.”
Toyota has said it has scrambled to source parts from other manufacturers in the region and it plans to resume production by November 21. It plans to restore output further down the supply chain in North America – currently running at 10% lower than before the flooding – to normal levels in the coming week.
Nevertheless, Thailand is too good a fit for Toyota for it to leave permanently. When the floodwaters recede the automaker has vowed to return.
“Toyota is not considering shrinking its operations here,” Toyota’s president Akio Toyodo said recently. “If anything we hope to expand.”
The floodwaters have, so far, left Toyota’s plants untouched.
Other markets in the region may be gaining ground on Thailand, he explained, but they still have a long way to go to steal a march on Thailand, where infrastructure such as highways and power supply are better developed.
Nevertheless, Indonesia’s growth figures, at 51.1% in 2010, according to the International Organization of Motor Vehicle Manufacturers (OICA), are impressive.
Dunne said Daihatsu recently made a Y20 billion ($260 million) investment in the country.
“Indonesia is on a high right now,” he said. “Its sales are the largest in South East Asia.”
Thailand’s automotive manufacturing output is more than double that of its closest rival Indonesia. Figures from the OICA show Thailand produced 1,644,513 motor vehicles in 2010. This compares with 704,715 vehicles in Indonesia, and just 567,715 for Malaysia.
The impact of Thailand’s floods, meanwhile, are working down the supply chain and are being felt as far away as Jakarta and Detroit, as automakers scale back production and suppliers in one of the world’s most important auto parts hubs struggle to get back on their feet.
“It’s interesting to see the impact,” said Dunne. “Normally Honda in Indonesia would be offering discounts at this time of year, but the margins have been cut so deeply by the floods that they’re having to charge the full price.”
Toyota, Japan’s biggest automaker, says the floods have cost it 150,000 vehicles in lost production – 90,000 in Thailand itself, 40,000 in Japan and the rest across the region.
Analysts estimate that lost vehicle production from the Thai floods may total about 250,000 globally – far fewer than the 700,000 from Japan’s Tsunami disaster in March – but the disasters had the disadvantage of coming on top of each other and were certain to hit the bottom line of all carmakers in 2011.
Report by : CNN