The Thai Automotive Industry Club, an auto trade group, expects output to increase by 20% this year, Bloomberg News said in a special report from the region.

Quoting Surapong Paisitpatnapong, a director of the group, it said that Thai automakers expect to make 500,000 vehicles this year, up from 411,721 in 2000.

Exports will rise by half this year, accounting for two-fifths of the output, Paisitpatnapong said.

“Thailand has increasingly become the main manufacturing centre for the world’s largest car makers as they expand market share,” Surapong said in an interview with Bloomberg News.

“Their presence and increased production has helped Thailand become one of the main car production centres in the region.”

Thai auto output is rising so makers can ensure a bigger market share as Southeast Asian nations start to lower tariffs for vehicles and auto parts. They also want to make better use of factories that currently run at less than half capacity, Bloomberg said.

“Growth will rely on exports as most of the world’s main carmakers are increasingly using their plants here as their production centre for the regional market,” said Sompong Phaoenchoke, managing director of Thai Rung Union Car Pcl, which assembles Isuzu Motors Ltd. and Nissan Motor Corp. pickup trucks.

Thai Rung last week told Bloomberg its sales of assembled vehicles will more than triple this year after already winning new orders from the Royal Thai Police and Nissan.

Exports of Thai-made vehicles will rise by almost half to 200,000 units in 2001, outpacing the expected domestic sales growth of 14 percent to 300,000 vehicles, said Surapong.

Bloomberg said that global auto makers are stepping up efforts in Asia, particularly in the Asean countries, as they expect demand in North America and Europe to slow.

GM, the world’s largest automaker, has said it would this year increase Thai production of seven-seat Opel-designed Zafira minivans by 50 percent to 60,000 units to meet strong overseas demand.

It last year opened a $US614 million plant in Thailand that can produce as many as 130,000 vehicles annually. More than four-fifths of production will be exported.

Ford also aims to increase overseas shipment from its $US500 million pickup truck plant in Thailand, run in a venture with affiliate Mazda, after exports rose 17 percent to about 50,000 last year.

The Ford-Mazda venture is Thailand’s second-largest vehicle exporter after Mitsubishi, which also uses the kingdom as a pick-up production base.

Mitsubishi raised output in Thailand after it moved all pickup truck production from Japan a few years ago. Mitsubishi’s vehicle exports last year rose by 20 percent to about 70,000 units and the company is considering basing Lancer sedan production for several Asian markets in Thailand as well.

Yet, Bloomberg reported, some say demand in Southeast Asia’s main markets will slip this year, hurting demand for Thai exports.

Car and truck sales in Southeast Asia’s four largest auto markets – Thailand, Malaysia, Indonesia and the Philippines – will shrink 4.6 percent to 990,000 units this year along with slowing economic growth, according to Automotive Resources Asia Ltd., a Bangkok-based business consultancy, Bloomberg said.

Governments of the four countries, members of the Association of South East Asian Nations (ASEAN), are predicting a slowdown this year, with investor confidence dented by the falling U.S. economy.

Automakers are boosting exports partly to keep their plants busy. Mitsubishi and Isuzu are raising their exports to use idle capacity after domestic sales plunged by more than half from the 1996 peak.

Domestic sales of new cars and trucks last year were 262,189 units, compared with about 590,000 vehicles sold in 1996.

Automakers in Thailand could produce as many as one million vehicles a year, Bloomberg said.

“Thailand has by far the largest share of excess capacity” among Southeast Asian countries, said Corinna Cheah, an analyst at ING Barings, in a recent report quoted by Bloomberg.

Low factory utilisation is “mainly a reflection of the large number of global vehicle manufacturers located in the kingdom.”

Bloomberg also reported that DaimlerChrysler, BMW, Toyota and Honda have plants in Thailand building vehicles for local and other Asian markets.

Automotive products were Thailand’s second-largest export last year, from virtually nothing five years ago.

Export shipments of cars, electronic parts and other products helped Thailand rebound to growth from the economic crisis that started in 1997, Bloomberg News said.