Thailand's weak manufacturing sector and a series of factory closures such as car manufacturing hit confidence

Bangkok (Reuters) - Thailand's manufacturing sector is weakening, with factories closing one after another. In the past two weeks, two Japanese automakers have announced plant closures, further shaking investor confidence in Thailand's auto manufacturing prospects.

Following Subaru's announcement late last month that it would end its vehicle assembly business this year, another automaker, Suzuki, announced last Friday that it would close its Thai plant by the end of next year.

According to the Nation newspaper on Wednesday (12), Subaru's business in Thailand has lost money for five consecutive years. Suzuki Thailand is also facing competition from Chinese electric vehicles, and its sales are declining.

Supo, president of the auto Parts Chamber of the Federation of Thai Industries, disclosed that Suzuki Thailand's sales have been poor in the past few years. The company cut the price of each car by 100,000 baht (S $3,686) to compete with Chinese electric cars. Still, Suzuki Thailand's production of fuel-efficient cars has plummeted from 8,000 a month to less than 1,000.

He noted that Subaru's production has also been declining in recent years. "These two brands have had low production in recent years and their closures will not have much impact on the auto parts industry, but it will affect investor confidence in the auto market in the future."

Subaru and Suzuki announced the closure of their car plants, which not only triggered investor concerns about productivity in Thailand, Southeast Asia's largest auto manufacturing center, but also reflected the weakness of Thailand's overall manufacturing industry.

The Bangkok Post reported Wednesday that research by Kiatnakin Phatra showed that Thailand's manufacturing production index declined from December 2022 to March this year, despite a recovery in global trade that began late last year.

In the second half of last year, an average of 159 factories closed every month

The number of factory closures in Thailand has been increasing, especially since the second half of last year. According to statistics, an average of 57 local factories closed every month in 2021, increasing to 83 in 2022, and surging to 159 in the second half of last year.

Between January last year and March this year, about 1,700 factories were closed, more than the number of new factories opened.

The report noted that most of the closures were large factories, while most of the new openings were small factories. This shows that the Thai manufacturing industry is not only facing operational difficulties, but also structural problems. Among them, leather, rubber, agriculture, wood and machinery manufacturing shrank, and the proportion of factories closed was also higher. The closures highlight the growing woes of Thailand's manufacturing sector.

Trade frictions between China and the United States are expected to intensify after the U.S. elections later this year, which will continue to weaken Thailand's competitiveness. The impact on the car industry is expected to be even greater in the face of competition from Chinese electric vehicles.