By Vithoon Amorn
BANGKOK, June 19 (Reuters) - Thailand's pickup truck industry, the second largest in the world, is forecast to nearly double in the next three years and has become a barometer for growth in Southeast Asia's fastest-growing economy.
Two out of every three new vehicles crowding Thailand's roads are now one-tonne pickup trucks, moving around the lifeblood of the economy -- construction workers and farmers.
Industry analysts and government officials say surging local sales and growing exports will help Thailand boost pickup truck production to around 700,000 units a year by 2006 from 360,000 this year.
Domestic sales of pickup trucks surged 31.6 percent in the first five months of 2003 over 2002. The rise followed a 43.1 percent jump in sales in 2002, underpinning a rise of 5.3 percent in GDP for the year.
Thai economic growth is expected to be around 5.5 to 6.0 percent this year, well ahead of its regional rivals.
JAPAN'S GLOBAL TRUCK BASE
Thailand, the second-biggest pickup truck producer after the United States, has become a regional manufacturing hub for global brands like Toyota Motor Corp , Isuzu Motors Ltd , Mitsubishi Motors Corp , Ford Motor Co and General Motors Corp .
Toyota, Isuzu and Mitsubishi have in the past year unveiled plans to make Thailand their global truck production base.
Vallop Tiasiri, executive director of Thailand Automotive Institute, predicted that exports of Thai-made pickups would jump to around 300,000 units a year by 2006 from 125,000 in 2002, with most of them going to Australia and Europe.
Toyota plans to spend $720 million to double its Thai output of pick-ups and multi-purpose vehicles to around 200,000 a year by mid-2004, half destined for export.
Over four million light pickup trucks are running in Thailand, a country slightly larger than California.
In 2002, another 241,266 of the vehicles were added to the country's congested roads, a rate of about 670 new pick-up trucks per day, or 65 percent of all new cars.
TAX BREAKS HELP
Helped by a tax structure favourable to commercial vehicles, two of every three vehicles sold by car companies in Thailand in the past 10 years are one-tonne trucks.
"The rural Thai folks grow up with pick-up trucks as a part of their life. The favourable tax policy for the vehicle is rooted in a long standing government policy to help the farming sector," said May Arthapan of Automotive Resources Asia Ltd.
Buyers of Thai pickup trucks pay a consumption tax of only three to 18 percent, against 35 to 48 percent for passenger cars.
The Thai auto industry has ironically been a beneficiary of the country's 1997/98 economic crisis, which set off a more widespread regional slump.
That crisis hit the auto industry as global manufacturers had built big assembly plants in Thailand, and forced factories to turn to exports for survival.
"The crisis has been a blessing in disguise. It created a Thai car export industry by forcing over-expanded plants to make more use of their surplus capacity," said Wisan Tanthawichian of the state-run Board of Investment.
At the height of economic turmoil in 1998, car factories in Thailand operated at only 17 percent of combined annual assembly capacity of 1.1 million vehicles. By 2002, with the economy recovering, capacity utilisation had risen to 55 percent and is rising quickly.
But Thailand has a way to go to catch U.S. domestic light truck or pickup sales, which rose 9.9 percent to 7.65 million in the year to May and made up 47.6 percent of sales.
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