Political instability in Thailand has cast a shadow on the country's auto market and stands to reduce demand and output in the coming months, Japanese automotive components supplier sources said Tuesday.
Japanese automakers with operations in Thailand returned to normal production schedules Friday after cutting work hours Thursday night when the Thai military declared martial law.
Industry sources expect Thailand's car production to fall in June from the previous months as the instability dampens consumer demand.
"The impact could only be negative -- sales will fall," said Shigenori Hayashi, director of Daiki Aluminium Industry, which operates a 8,000 mt/month secondary aluminum alloy smelting plant in Thailand.
A Japanese metal trader said a Thai-based automotive customer told him run rates would fall in June on the poor market outlook.
"I have not heard from my Thai customer for a while and am not expecting to, as the customer's [automotive related sales] are down 70% year on year," said another Tokyo trader of nonferrous metal products.
"[Even without the coup] car output in Thailand typically starts to slow in June toward summer," said one Japanese auto components maker source.
Traders said Thai firms' export activity would be less affected.
"We are not seeing an output fall because our Thai plant is export-focused, so we will maintain roughly 500 mt/month output," said one Japanese diecaster source.
Thailand produced 181,334 passenger cars and commercial vehicles in March, down 29.24% year on year, according to data from the Federation of Thai Industries. Output of small passenger vehicles with engines of 1,500 cc or less was 49,098 units, accounting for 27% of total output, while production of 1-tonne pickup trucks was 96,213 units, or 53%.
March output, however, was up from 173,506 units in February and 162,652 units in January. January-March output was 517,492 units, down 28.3% year on year.
A spokesman for Honda Motor said the 2015 planned startup of its 120,000 vehicles/year Prachinburi assembly plant might be delayed six months to a year. It is the company's second production base in Thailand.
"The launch delay is not final, but we are considering this possibility," the spokesman said.
Honda's 300,000 vehicles/year Ayutthaya plant produced 212,700 vehicles over April 2013-March 2014. The spokesman said the plant's current run rate was 40% lower than levels after Thailand's flooding crisis in 2011.
Nissan Motor still plans to launch its second 75,000 vehicles/year plant in Samut Prakarn province in August as planned, a company spokeswoman said.
The company runs a 220,000 vehicles/year plant in the same province.
"But we generally hear the Thai market environment is difficult," she said.