Japanese automotive sector backs Thailand's status as a manufacturing hub

He highlighted that Japan and Thailand have maintained a robust partnership for over 60 years, fostering a strong supply chain that has created significant employment opportunities through the sharing of technology and expertise.

Between 2013 and 2022, Japan's cumulative investment in Thailand reached approximately 1.2 trillion baht. As of October 2023, there are 5,856 Japanese companies operating in Thailand, 2,348 of which are involved in the automotive supply chain, employing more than 70,000 skilled workers. This represents a clear "win-win situation."

"Thailand is now one of the world’s key hubs for vehicle production and export, benefiting both the Thai economy and its people, as well as Japan," Tanaka stated. This success is attributed to the collective efforts of various stakeholders, including the Thai government, suppliers, and the Japanese government, who have all worked tirelessly to achieve this milestone and will continue to advance this partnership.

“Made in Thailand is important, but Made by Thailand is equally significant,” emphasized Kazushige. This means that suppliers in Thailand must remain competitive, as the Japanese automotive industry heavily relies on local suppliers. For example, the popular pickup trucks exported to Australia and other markets are 90% composed of parts sourced from Thailand. This competitiveness of Thai suppliers significantly impacts the national economy.

“Without local suppliers, this would not be possible,” Kazushige reiterated. Amid the rising trend of EVs, he urged Thailand to maintain the strength of its suppliers rather than relying solely on importing EVs or EV batteries from abroad, which would not support Thai suppliers.

The evolving landscape of the automotive industry requires transformation toward green energy and digitalization. To support this shift, the Japanese government has launched several initiatives:

• Promoting the EV Ecosystem: This includes government funding for technology development, reducing risks associated with strategic raw materials like batteries, subsidies for EV purchases, support for charging stations, and tax incentives to encourage domestic production.
• Utilizing Hydrogen Energy in Transportation: Japan is advancing a hydrogen society, with legislation passed in May 2024 to promote hydrogen use, set to be implemented by November.
• Encouraging Synthetic and Biofuels

“Combustion engines and electric vehicle (EV) engines share both similarities and differences. EVs, for instance, do not require traditional engines. If suppliers cannot transform to produce EV components, they risk losing customers,” said Kazushige. He noted that in Japan, the government supports a smooth transition to EV technology.

On the topic of digital transformation, Kazushige emphasized the importance of data collaboration initiatives. The European Union, for example, has introduced the European Battery Regulation, which requires EV exports to report the carbon footprint of vehicle production. In Japan, the automotive industry has already developed a centralized platform for this purpose. Suppliers provide carbon footprint data to manufacturers, who then submit it to the central platform.

“We want Thailand to adopt a similar platform because you are a global production hub. If you aim to export to the EU, such a system is essential. We have already begun discussions with the government and the industry on this matter,” Kazushige added. Successful implementation of this initiative would also facilitate exports to markets like the US, Australia, and others, especially as environmental concerns grow in regions like Australia.