Auto Sector Investment To Remain Resilient Despite Political Unrest
BMI View : While the recent outbreak of political unrest in Thailand has clearly taken its toll on vehicle sales and production, we do not expect it to derail the auto sector's long-term investment story. Although Indonesia will be a beneficiary of auto sector related investment in the short term, the enduring strengths of the Thai auto sector will make it difficult for automakers in the SEA region to find an alternative production and export base.
The outbreak of political tensions towards the end of 2013 has clearly taken its toll on Thai auto sales and production. Indeed, we recently downgraded our 2014 domestic sales and production forecasts to reflect the deleterious effect of the political turmoil on the sector ( see 'Slashing Forecasts Due To Political Unrest', February 24).
Furthermore, our Country Risk team believes that the current political impasse is unlikely to be resolved anytime soon. Therefore, this begs the question of whether this will derail the long-term fortunes of the country's auto sector.
|Holding Up Reasonably Well|
|Thailand - Value Of Auto Exports, THBmn (LHS); % chg y-o-y (RHS)|