Thailand slashes vehicle production targets for 2022, cites geopolitical factors and semiconductor shortages

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The Federation of Thai Industries (FTI) announced that it will be decreasing the country’s vehicle production targets for 2022 to 1,75 million from 1.8 million it has anticipated earlier.

Surapong Paisitpatanapong, vice-chair of the FTI, said it will decrease the amount of cars produced for exporting purposes by 100,000 cars, from 1 million cars down to 900,000 cars. However, it will be increasing cars produced for domestic sales by 50,000 cars, from 800,000 up to 850,000. Hence, a total decrease in production goals in 2022 by 50,000 cars.

FTI, the private sector administrative juristic body representing Thai industries, said the reason for the decrease in car production are that there is currently a shortage of raw materials and semiconductors due to the Shanghai lockdown, and the Russia-Ukraine war.

He said that vehicle exports to the two warring countries have also taken a hit by about 200,000 vehicles.

Myanmar has also introduced a policy effective at the end of July 2022 that bans the import of vehicles in an attempt to shore up their foreign-exchange reserves.

He also cited inflation, which he said was among the reason for dwindling spending power.

Despite those conditions, Surapong said that FTI will increase the amount of vehicles produced for domestic sales. He says that this is due to foreign investors and tourists re-entering the Thai market due to relaxing COVID-19 restrictions. The relaxing conditions as well as a growth in exports has allowed domestic consumers to have higher spending power.

The vice-chair also said that the increase in vehicles produced for domestic sales is also spurred by government policies aimed at stimulating the economy such as various domestic tourism programs and tax breaks for conducting meetings within Thailand.

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