Thai flooding may hurt Philippine auto industry

MANILA, Philippines—The massive flooding in Thailand may cause disruptions in local vehicle supply, especially if Thai parts and vehicle assembly operations remain paralyzed for a longer period.

According to the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), local auto companies are not yet feeling the full impact of the Thai flooding as they still have inventories.

Going into the Christmas buying season, however, work stoppage in some Thai vehicle and parts plants could cause a shortage in local vehicle supply. The local units of Toyota Motor Corp. and Honda Motor Co. have already slashed production in their Laguna plants.

“The floods being experienced by Thailand will invariably have an effect on the local automotive industry in case the production and supply situation of automotive companies in Thailand will not return to its normal level sooner,” Campi said.

“As of now, most local assemblers have not yet felt its effect since they still have existing inventories, although they are preparing for contingencies to ensure that they can serve the requirements of the domestic market. They continue to monitor the situation in Thailand and they are hopeful that the production and supply situation will normalize soon,” Campi added.

Local auto assemblers get a significant chunk of their parts supply from Thailand, which means a supply disruption there could cause a production reduction here.

Both TMPC and HCPI had announced production cutbacks in view of the Thai floods, with Toyota scaling back operations to just three days a week starting last week.

This was the second time this year that auto firms had reduced their local operations. The first time was earlier in the year, following the March earthquake and tsunami in Japan, which also hurt vehicle and parts production.

Local auto assemblers were just starting to recover from the Japan crisis when typhoons and floods hit Thailand and affected the automotive sector’s operations.

Campi was targeting a sales growth of 4-5 percent this year. As of the third quarter, however, local vehicle sales were on a decline, shrinking 3.5 percent in the first nine months.