Industry Trend Analysis - Japanese Dominance A Challenge For Thai-Made Fuso Trucks - AUG 2017


BMI View : Daimler ' s plans to set up an assembly plant in Thailand to produce Fuso branded trucks will be supported by a recovery in demand for these vehicles on the back of the Thai government ' s infrastructure development plans. That said, the dominance of Japanese automakers Toyota and Isuzu in the local commercial vehicle market will pose a challenge to growing Fuso ' s sales volumes in the country.

In June 2017, German automaker Daimler announced plans to set up a truck assembly plant near Laem Chabang, Thailand. Daimler Commercial Vehicles (Thailand), a new wholly-owned subsidiary, will make and sell trucks under the Fuso brand. Production is expected to start by November 2017 with an annual capacity of 3,000 trucks, with sales solely focused on the Thai market.

We believe that output from this plant will be felt in earnest in 2018 due to its late 2017 commencement and as a result we are revising up our heavy truck production forecast for Thailand to growth of 5.3% in 2018, up from 4.2% previously. We expect Thai heavy truck production to average annual growth of 3.3% over our 2019-2021 forecast period, reaching 27,601 units by 2021.

Production Growth Steadily Rising
Thailand - Heavy Truck Production, Units
f = BMI forecast. Source: The Federation of Thai Industries, BMI

Fuso Sales To Benefit From Market Recovery

Daimler is aiming to sell 1,000 Fuso branded trucks in 2018, when we believe a recovery in demand for heavy trucks will provide tailwinds for the brand's sales volumes in the country. Following a three-year slump, we expect growth in the heavy truck market to return to positive territory in 2017, with forecast growth of 3.0%, accelerating to 3.5% in 2018. This will be supported by the Thai government's infrastructure development plans as heavy trucks are better suited to meet the logistical requirements for these infrastructure projects ( see ' Transport Sector Supports Positive Growth Outlook ' , April 26) . In addition, by producing domestically, Daimler will be able to avoid import taxes of 80% as current Fuso models are imported from India, allowing for more competitive pricing in the Thai market.

Infrastructure Development Plans Support Heavy Truck Recovery
Thailand - Heavy Truck Sales, Units
f = BMI forecast. Source: The Federation of Thai Industries, BMI

Japanese Brands To Provide A Challenge

We believe that the dominance of Japanese automakers Toyota and Isuzu in the Thai commercial vehicle (CV) market will pose a challenge to growing Fuso's sales volumes in the country. Isuzu and Toyota held a combined market share of 59.5% in the Thai CV market in Q117 versus less than 0.1% for Fuso ( see chart below). This indicates the tough task that Fuso will face in terms of achieving significant sales volumes in the years ahead.

Japanese Market Dominance A Headwind For Fuso Sales
Thailand - CV* Sales By Brand, Market Share %
Note: * CV sales include 1-ton pick-ups and SUVs. Source: Toyota Motor Thailand Co., BMI