Thailand's automotive sector thrives
even in tough economic times
By Jon Fernquest |
The price of oil may be high. The US economy may be slowing. Inflation may be making shopping more difficult, even painful.
Despite these problems, Thailand's automobile industry is still growing strong and exports are still selling briskly. New highs in domestic sales of motorcycles were reported this week.
(In photo to the right, Takeo Fukui, CEO of Honda, poses on a Super Cub C100 following a news conference in Tokyo, Japan. The Super Cub was first manufactured in 1958 and is still manufactured today. It is the top selling motorbike of all time.)
A Honda export base
Honda has manufactured products for export in Thailand since 1987. Thailand now accounts for 15% of Honda's world output. Small passenger cars under the City, Jazz, Civic, Accord and CR-V brands are manufactured in Thailand for export.
During the first half of 2008, Honda's exports from Thailand totaled 55.6 billion baht (1.7 billion dollars), an 18% year-on-year increase, with 36.0 billion baht from automobiles, 11.7 billion baht from motorcycles, 5.6 billion baht from power products and rest from parts and components.
Worldwide Honda's "power products" include general purpose engines, water pumps, small electricity generators, outboard boat engines, lawnmowers, snow throwers, and compact household cogeneration units (Source: Honda Power Products)
Thai domestic motorcycle sales up
Honda also exports motorcycles. Honda's market share in Thailand's domestic motorcycle market is 68.6%.
The smaller motorcycles for travelling around town that are so popular in Thailand (Honda Wave, Honda Dream) are better suited to other emerging economies with similar conditions to Thailand than the large motorcycles produced in the west.
In late 2006 domestic motorcycle sales in Thailand had bottomed out and began increasing. Sales had slowed a bit at the beginning of 2008 with 1.59 million units (accumulated year total). Since then sales momentum has picked up reaching 1.62 million units in June 2008.
Motorcycles are more popular in rural areas where incomes are not as high as Bangkok and it is safer to ride motorcycles. Recently, higher food prices have increased the incomes of farmers and farming-related businesses in rural Thailand. This new income has boosted motorcycle sales.
At the same time, oil and gasoline prices have shot up this year. In only six months, gasoline prices rose to 43 baht per litre, a 30% increase. Motorcycles are a lot more fuel efficient and cheaper to operate than automobiles or trucks.
Another factor behind recent robust sales might be planned interest rate increases by the central bank. Higher interest rates will mean more expensive motorcycles in the future. Better buy now while interest rates are low, might be one expectation driving sales.
Honda's new fuel injection system
Soon all Honda motorcycles produced and sold in Thailand will be equipped with PGM-FI (programmed fuel injection). This new technology cuts carbon dioxide emissions, improves fuel efficiency, and improves acceleration performance:
Yesterday [22-07-08], AP Honda introduced CZ-i 110 and Click-i, the two newest models equipped with PGM-FI technology.The CZ-i 110 model will be sold from July 26 onward for 36,700 baht during the promotion period and for 38,400 baht as a normal price. Sales are expected to reach 8,000 units per month.
Click-i is Thailand's first automatic transmission model that is equipped with PGM-FI technology. There are two different series: Click-i Tune-up and Click-i Forward. The Click-i model will be sold from August 6 onward.
The Tune-up version is priced at 45,700 baht during the promotion period and 47,400 baht as its normal price while the Forward version is retailed at 49,300 baht during the promotion and 51,000 baht normally.
(Source #1: Bangkok Post, business, 23-07-08, SANTAN SANTIVIMOLNAT, temp-link)
(Source #2: Bangkok Post, Breaking News, DPA, 25-07-08, temp-link)
Vocabulary:
Honda Super Cub - a 49cc 4-stroke motorbike first manufactured by the Honda in 1958, with more than 60 million sold worldwide, the top selling motorbike of all time, the Honda 50 is still produced today, 50 years after it the first model was sold (See Wikipedia)
selling briskly - selling at a fast pace
domestic sales - sales within the country
Honda's export base - a place where Honda manufactures goods for export (not necessarily Honda's home country of Japan)
a brand - the special name of a product and all the images that customers associate with the name, "a collection of images and ideas representing an economic producer; more specifically, it refers to the concrete symbols such as a name, logo, slogan, and design scheme. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service, both directly relating to its use, and through the influence of advertising, design, and media commentary. A brand is a symbolic embodiment of all the information connected to a company, product or service. A brand serves to create associations and expectations among products made by a producer. A brand often includes an explicit logo, fonts, color schemes, symbols, sound which may be developed to represent implicit values, ideas, and even personality" (See Wikipedia)
year-on-year changes - rates of change compared to the same period last year
components - parts
market share - the percentage of sales in market that the company has (See glossary)
bottom out - reach a lowest point, then start increasing
accumulated year total - total amount starting from 12 months ago
momentum - moving at a faster and faster pace, more difficult to stop (See glossary #1, #2, and #3)
sales momentum - sales are increasing at a faster and faster pace
pick up - go faster
sales momentum has picked up - sales have started to increase more quickly
related to X - connected to or having to do with X
farming-related businesses - businesses that are connected to or have to do with farming
efficient - waste little time, energy and resources in doing a task
(minimize time, energy and resources in performing a task)
(See glossary)
fuel efficient - get more kilometers of travel for each liter of gasoline used
robust sales - strong sales
fuel injection - a system within modern automobile engines for mixing fuel with air that replaced carburetors in the late 1980s, modern digital electronic fuel injection system can better meet all of the various and conflicting goals: power output, fuel efficiency, emissions performance, ability to accommodate alternative fuels, reliability, driveability and smooth operation, initial cost, maintenance cost, diagnostic capability, and range of environmental operation (See Wikipedia)
emissions - the release of gas into the air
carbon dioxide emissions - a greenhouse gas that is increasing in the earth's atmosphere, this contributes to global warming and negative climate changes (See Wikipedia on carbon dioxide, green house effect, global warming, and country rankings)
cuts carbon dioxide emissions - reduce the amount of carbon dioxide entering the earth's atmosphere to reduce global warming and climate change
