The Russia-Ukraine war is threatening to cause a shortage of auto parts for European automakers, which will affect global supply chains and car assembly in Thailand, says the Thai Automotive Industry Association (TAIA).
European car companies usually order auto parts made in Russia and Ukraine, but the conflict between the two countries, with sanctions imposed on Russia by the US and its allies, is causing widespread disruptions.
“We are worried automakers in Europe will face auto parts scarcity,” said Suwat Supakarndechakul, president of TAIA.
He was speaking at the 12-day Bangkok International Motor Show, which started on Thursday.
The event is expected to boost domestic car sales, but in the wider context TAIA needs to closely monitor the Thai auto industry as the war may affect logistics and the transport of car parts from Europe to Thailand.
“This will affect our car assembly, not to mention the global oil price surge, which drives up costs of some raw materials and deals a blow to the world economy,” said Mr Suwat.
Car and auto parts exports from Thailand to Russia make up only 1% of total exports in the Thai auto industry and are valued at 10.1 billion baht, while exports to Ukraine are just 0.1%, with a value of around 1 billion baht.
“We don’t bear a direct impact from the war, but indirect effects like higher oil prices are unavoidable,” said Atthawit Techawiboonwong, secretary-general of TAIA.
Thailand’s car production target for 2022 is set at 1.8 million units, with 1 million units to be exported and the rest sold domestically.
Last year car manufacturers tallied 1.68 million units, an increase of 18.1% year-on-year. The volume exceeded the target of 1.6 million units.
TAIA believes the government’s electric vehicle (EV) incentive package will significantly stimulate growth in the EV segment, with the number of newly registered cars expected to reach 10,000 units this year.
The package, which includes tax cuts and subsidies ranging from 70,000 baht to 150,000 baht, is aimed at promoting EV consumption and production between 2022-2023.
In the motorcycle segment, production is expected to rise to 2 million units this year, up from 1.65 million units in 2021, said Somkiat Poonkwan, chairman of TAIA’s motorcycles committee.