Thailand has emerged as a dominant force in the global automotive industry, renowned for its robust manufacturing capabilities and high-quality auto parts. The country stands as one of the leading automobile production bases in South-East Asia and is considered one of the largest worldwide, according to the Department of International Trade Promotion, Ministry of Commerce in Thailand.
Moreover, in 2022, automobiles and auto parts ranked as one of Thailand's top export items, reflecting the industry's substantial contribution to the national economy. The country's major export markets include the USA, Japan, Australia, and neighbouring South-East Asian countries, highlighting its strategic geographic location and strong trade relationships. Thailand’s automotive exports are characterised by their quality and reliability, further solidifying the nation's reputation in the global market.
As the industry continues to evolve, automotive businesses in Bangkok and different parts of Thailand are challenged to enhance their production capabilities and expand further and ensure the country’s status as a key exporter.
Growth of Thailand as an automotive parts manufacturer and exporter
Several factors have contributed to the growth of the country’s automotive industry and how auto parts have become one of Thailand’s top export products:
1. Rise of the OEM sector
In an article published by ASEAN Briefing, the heart of Thailand’s growth in the automotive industry lies in its Original Equipment Manufacturers (OEM) sector and its extensive network of supporting industries. The OEM sector in Thailand is renowned for its high-quality standards, advanced manufacturing techniques, and adherence to stringent international quality norms when it comes to producing car parts and accessories.
As Thailand continues to develop its manufacturing base, auto parts suppliers are increasing their presence, setting up research and development departments to better serve their customers. Many major Japanese, European, and US automotive brands have set up local production and export bases in different parts of Thailand.
2. Government policy supporting the automotive industry
The Thai government has implemented various policies aimed at fostering the growth of the automotive industry, as per ASEAN Briefing. Initiatives such as tax incentives, investment promotions, and the establishment of free trade zones have attracted significant foreign investment.
The Board of Investment (BOI) offers attractive tax incentives to automotive companies, including corporate income tax exemptions for up to eight years and import duty reductions on machinery. Moreover, the Thai government has approved a tax incentive for auto businesses that contribute to the production of electric cars in the country. These measures have encouraged both local and international companies to establish manufacturing facilities in Thailand, contributing to the industry's expansion.
3. Skilled workforce
Thailand boasts a highly skilled and adaptable workforce, which is a key asset for the automotive industry. The country has a strong emphasis on technical education and vocational training, producing a steady stream of engineers, technicians, and skilled workers. These individuals are well-versed in advanced manufacturing techniques, quality control, and precision engineering, making them invaluable assets to the industry.
4. Robust supply chain ecosystem
Being a global automotive hub, Thailand has developed a well-integrated global supply chain network that is instrumental to its success. Local auto parts manufacturers in Thailand serve as crucial suppliers for major automotive companies, ensuring a steady flow of high-quality components. This network is not just limited to local players; it also includes international suppliers who have established operations in Thailand to be closer to the manufacturing hubs. The seamless collaboration between local and international suppliers and manufacturers has led to improved efficiency, reduced production costs, and minimised lead times.
Types of automotive parts Thailand is known for manufacturing and exporting
Thailand's automotive industry is renowned for its extensive expertise in manufacturing and exporting a diverse array of high-quality auto parts. These parts are essential for both car manufacturing and the sale of spare parts.
- Electronics: Sensors, control units, and infotainment systems
- Powertrain components: Engines, transmissions, driveshaft, axles, and differentials
- Automotive body parts: Body panels, car bumpers, tyres, and other exterior components for a wide range of vehicle models
- Electric car components: EV car batteries, motors, accessories, and charging systems
How to ship car parts overseas
Efficient shipping is crucial for maintaining Thailand's position as a global automotive parts supplier. Here are some best practices to consider when exporting auto parts overseas:
2. Ensure proper packaging
Knowing how to pack automotive parts is crucial to ensure that they arrive at their destination in pristine condition. Given the often delicate and precision-engineered nature of automotive components, the right packaging can prevent damage during transit, which could otherwise lead to costly returns or replacements.
When you ship delicate components such as electronic control units (ECUs), sensors, and infotainment systems, packaging should include anti-static materials and cushioning to absorb shocks and vibrations during transit. Consider using specialised anti-static bags and foam inserts to provide comprehensive protection.
On the other hand, powertrain components, which are typically heavy goods, require sturdy, reinforced packaging to prevent movement and damage. Crates, pallets, and secure strapping can ensure these components remain in place during shipping.
Additionally, body parts like panels, car body kits, and car bumpers should be wrapped in protective materials and securely fastened to avoid scratches and dents.
Whenever possible, opt for custom-fit packaging solutions from trusted suppliers in Thailand. That way, they have packaging that are designed for the specific shape and size of each component. This minimises movement within the package and reduces the risk of damage.
2. Logistics planning for efficient shipping
Efficient logistics planning is essential for successful shipment of automotive parts. This involves several key aspects:
- Inventory management: Proper inventory management ensures that the right parts are available when required, minimising delays and keeping the supply chain moving smoothly. Consider using inventory management tools that can help track stock levels, predict demand, and automate reordering processes, minimising the risk of stockouts or overstocking.
- Route optimisation: Optimising shipping routes is critical for reducing transit times and costs. This can be achieved by analysing various routes and selecting those that are more cost-efficient.
- Carrier selection: Choose reliable logistics providers with a proven track record of handling automotive parts. Evaluate their experience, network coverage, and pricing to ensure they align with your specific shipping requirements.
3. Adherence to international shipping regulations and standards
Compliance with international shipping regulations and standards is paramount to ensure the smooth customs clearance of automotive parts in the target country. As an exporter, it’s essential to be informed of the following before shipping them overseas:
a. Duties and taxes
It's essential to do your research and understand the customs duties and taxes applicable to automotive parts in your target export markets. These can vary significantly from country to country and can impact the final cost of your products for buyers. Make sure to factor these costs into your pricing strategy to avoid surprises for your customers.
b. Export documentations
Ensure meticulous preparation and accuracy of all required export documentation. This typically includes commercial invoices, packing lists, certificates of origin, and bill of lading for sea freight. Other permits or licences may also be required, depending on the nature of the automotive parts and the destination country.
c. Restrictions and regulations of the target country
Each country has its own set of import regulations and restrictions on specific goods. Thoroughly research and understand the rules applicable to auto parts in your target markets. Pay close attention to:
- Technical standards: Some countries have specific technical standards for automotive parts, such as safety or emissions requirements. Ensure your products meet these standards to avoid rejection at customs.
- Import licensing: Certain automotive parts may require import licenses or permits in specific countries. Obtain these documents in advance to avoid delays or complications.
- Restricted or prohibited items: Some countries may restrict or prohibit the import of certain automotive parts due to safety, environmental, or other concerns. For example, in Australia, asbestos use in vehicle parts is strictly prohibited. Should the Australian Border Force (ABF) identify that the automotive part may be at risk of containing asbestos, manufacturers should provide sufficient assurance that the vehicle does not contain the substance. Be aware of these restrictions to avoid shipping non-compliant goods, which can deter your supply chain or cause penalties.
Partnering with DHL Express for Thai automotive part shipping
In the fast-paced and competitive world of automotive parts export, a reliable logistics partner can be a game-changer. DHL Express has a vast global network spanning numerous countries and territories and offers unparalleled reach, ensuring efficient and timely delivery of car parts to markets worldwide.
Our extensive experience in handling automotive components ensures that your shipments are treated with the utmost care during transit. We go beyond standard shipping services, providing custom-tailored logistics solutions that cater to the unique needs of each automotive parts exporter.
By partnering with DHL Express, you can streamline your overseas shipping operations, ensuring reliability and cost-efficiency. This strategic alliance empowers businesses to focus on your core competencies while our team handles the complexities of logistics.
Experience the convenience of our logistics services when you open a business account with us.
For more insights into shipping car parts, check out our insights on the opportunities for Thailand’s EV auto parts export market.
