The Thailand Automotive Institute (TAI) is encouraging local auto parts makers to seek new business opportunities given the sluggish automotive industry, producing components for railway infrastructure development.
The move follows the signing of a memorandum of understanding between the TAI and the Rail Technology Research and Development Agency, a public organisation, on cooperation to support railway and mass transit projects in Thailand.
The agreement is aimed at helping improve R&D in rail systems as well as encouraging auto parts makers to gain new technological know-how and apply their skills to the manufacturing of products that can serve railway construction.
Authorities will support auto parts makers who want to embark on the new business.
"The automotive industry is being disrupted by new mobility technology that depends less on oil as Thailand is transitioning to cleaner energy," said Kriengsak Wongpromrat, president of the TAI.
"We hope this cooperation will pave the way for parts manufacturers to adjust their production to serve railway development."
Julathep Kajornchaiyakul, president of the Rail Technology Research and Development Agency, believes the cooperation will bring benefits to rail system projects.
Thailand is developing dual-track railways and high-speed rail systems, he said.
The government plans to start the second-phase construction of an additional 1,488 kilometres of dual-track railways in April under a budget of more than 280 billion baht.
Auto parts makers are not only facing a technological challenge as they need to adapt to electric mobility technology, they are also facing the impact of stagnant domestic car sales.
Car manufacturers need to reduce production after car sales dropped significantly last year. The decrease was attributed to prospective buyers' difficulties in accessing auto loans.
Banks and car financing companies are more cautious about granting loans for fear of non-performing loans amid the high level of household debt.