* Production of auto parts makers down by 30-35 pct
* More than 30,000 subcontracted workers laid off this year
* Industry looks to July polls for fresh start
By Khettiya Jittapong and Pisit Changplayngam
BANGKOK, May 9 Thailand's auto sector, Southeast
Asia's biggest, has fired more than 30,000 subcontracted workers
this year and slashed production, as sales plunge after months
of political unrest that threatens to drive some manufacturers
The lay-offs are the latest sign that the auto industry,
accounting for about 11 percent of Thai economic output, is
being hit hard by the prolonged power-struggle between the
Bangkok-based royalist establishment and the mainly rural
supporters of ousted former Prime Minister Thaksin Shinawatra.
The crisis deepened on Wednesday, when a court ordered Prime
Minister Yingluck Shinawatra, Thaksin's sister, to step down
after finding her guilty of abuse of power, leaving a caretaker
government to press ahead with plans for a July election.
As a regional production and export base, Thailand's
troubles have major implications for top manufacturers such as
Toyota Motor Corp, Nissan Motor Co and Ford
Motor Co, which may be forced to shift some production to
cheaper bases such as Indonesia, the region's second-biggest
"As political instability continues, we are concerned that
automakers may reduce their exposure to Thailand to diversify
their risk," said Kovit Wongkolkitsilp, chairman of the auto
parts group of the Federation of Thai Industries (FTI).
Honda Motor Co said it was considering delaying the
start-up of a new $530 million manufacturing plant in Thailand
by six months to a year, as the economy teeters on the brink of
recession and political turmoil prompts automakers to rethink
"It's critical especially in the auto sector. We have seen a
big lot of layoffs, about 500 to 700 staff, several times in
recent months," National Congress of Thai Labour President Panus
Toru Hasegawa, Nissan's Indonesia chief, said that "because
of the political uncertainty, total industry volume is a bit
affected", but he added that Thailand remained a key market for
"They are also a big market and still growing. For Nissan,
Southeast Asia is very much important," Hasegawa said.
Rival Toyota said at the start of the year it planned to
sell 400,000 vehicles in Thailand this year, but in the three
months to March saw sales there drop 33 percent to 84,000.
Toyota Executive Vice President Nobuyori Kodaira told
reporters in Tokyo on Thursday that the car maker might have to
consider cutting its sales outlook for Thailand as a result.
"Thailand is one of our very important strongholds globally
and we have no change in our stance to make vehicles and conduct
business there," he said.
DOMESTIC SALES PLUNGE
The roughly 30,000 mostly low-skilled sub-contractors who
Panus said had been laid off this year represent about 3 percent
of the auto sector's workforce.
The layoffs reflect a year of sliding domestic sales that
has sucked the life out of an auto industry that relies on local
buyers to consume about half of its output.
The expiry last year of a first-car subsidy scheme, which
had sparked a surge in demand in 2012, has exacerbated the
downturn in the domestic market, analysts said.
"Auto part makers' production has dropped by 30 to 35
percent so far this year. They are suffering from the impact of
poor domestic demand and fierce competition from rivals in the
export market," the FTI's Kovit said.
Domestic auto sales in March this year plummeted 46.7
percent compared with a year earlier, according to the FTI.
March output slumped 29 percent on year, while car makers
focused more on export markets. Auto exports rose 9 percent on
year to the highest in six months.
"Right now, consumers are not confident to spend and farmers
have less money to afford new cars, and that's why demand has
dropped sharply," said Sompong Phaoenchoke, managing director at
auto assembler Thai Rung Union Car Pcl.
Companies that depend on domestic sales rather than exports
say the industry should bottom out in the first half, amid signs
that output and sales turned a corner in March compared with the
Automakers are planning to launch new models to stoke demand
in the second half, hoping the election will go ahead in July
and the formation of a new government will resolve the political
"We may see the light at the end of the tunnel. If the new
election is held in July, we should have a new government in the
third quarter. The sooner the better so we can recover," Kovit
($1 = 32.37 Baht)
(Additional reporting by Yoko Kubota in TOKYO and Fransiska
Nangoy in JAKARTA; Editing by Stephen Coates and Alex