The local automotive industry must prepare for the impact of US reciprocal tariff measures set to take effect next month, which could pile further pressure on the sector, according to Kasikorn Research Center (K-Research).
The research house said US President Donald Trump remains committed to implementing new reciprocal tariff rates for specific industries starting on April 2.
This move is expected to escalate global trade tensions and affect various Thai industries, including the automotive sector.
As a result, all relevant stakeholders in the government and private sectors should monitor developments and strategise accordingly to navigate the challenging trade environment, said Burin Adulwattana, managing director of K-Research.
The think tank anticipates ongoing trade disputes will intensify competition in the global automotive market, exacerbating a glut and driving down prices. In 2024, the average car price in Thailand declined by 5.1% year-on-year, said K-Research.
Moreover, Thailand's automotive capacity utilisation has been decreasing since before the pandemic. In 2019, capacity utilisation was 77%, then it fell to 68% in 2023 and plunged to 53% in 2024.
Based on global standards, if capacity utilisation falls below 60%, a merger among auto companies becomes more likely, noted the research house.
K-Research projects Thailand's manufacturing production index will continue to contract, shrinking by 1% in 2025. This follows consecutive contractions of 1.3% in 2024 and 3.6% in 2023.
In addition, factory closures in Thailand are expected to persist, albeit at a slower rate. However, the size of closed factories has increased, with the automotive and electronics industries being among the hardest hit.
Between January and February 2024, three factories in the vehicle and transport equipment sector shut down, the same number as the previous year.
However, the average registered capital of closed factories rose significantly to about 99 million baht per factory, compared with just 2 million baht in the same period last year, the think tank reported.
K-Research warned heightened uncertainty surrounding US tariff measures could weigh on exports and GDP growth in 2025. The research centre forecasts Thailand's economic growth at 2.4% and export growth at 5% for the year.
"If the US imposes a 10% reciprocal tariff, it could reduce Thailand's GDP growth by 0.3 percentage points," said K-Research.
"The impact could be 0.6 percentage points if the tariff is 25%. Therefore, we may need to lower the GDP growth forecast to below 2.5% this year to reflect the impact."
