Automobile companies in Thailand are maintaining their combined production target for this year at 1.4 million units, on the assumption that the economy witnesses no politically-driven disruption.

At a Stock Exchange of Thailand-hosted seminar on the automotive outlook, Adisak Rohitasune, vice chairman of the Federation of Thai Industries, expressed his concern over the planned political demonstration scheduled for the middle of the month.

He said all eyes were now on whether the protest would lead to violence and if so, how it would affect the financial and non-financial sectors. "As a businessman, I really hope there is no violence, as that would affect the economy," he said. "The automotive industry's outlook is bright. Political stability will lead to clear policies and continuity, and maintain consumer confidence. The output target is achievable if there are no political problems."

Adisak said the industry expected production to rise 40 per cent this year to 1.4 million vehicles, thanks to the recovery in demand. Exports are targeted to reach 800,000 units, 75-80 per cent of them pickups. Domestic demand is estimated at 600,000 units, 45 per cent of them passenger cars.

Last year, overall output slumped 30 per cent to 1 million units.

Yongkait Kitaphanich, director and executive vice president of parts-maker Somboon Advance Technology, said he hoped the government would be able to contain the political situation.

If the environment is supportive, the company's sales revenue is expected to grow 40 per cent in line with the industry's growth rate, he said. While export revenue is expected to rise 55 per cent this year, the domestic growth rate will be about 10 per cent. "Political stability could allow us to witness a higher domestic growth rate, and overall growth could exceed 40 per cent," he added.

Sukit Udomsirikul, assistant managing director of the Siam City Research Institute, said political wrangling would lead to volatility in the stock market this month. He predicted the chance of violence during the March 11-16 protest period at 66 per cent, while the chance that the government can control the situation is seen as just 33 per cent.

The SET Index this month could move in a range of 700-750 points at the upper end, or fall to 660-670 points. Sukit said the lower range would present a great buying opportunity, with political instability the only factor pressuring the market.

He added that as external factors eased, foreign investors had returned to the Thai market, which is the second cheapest in Asia after South Korea. He suggested investors should allocate 50 per cent of their portfolio to stocks, and the rest to bonds, mutual funds, deposits and gold.

Thailand's economic recovery will boost the market's attractiveness. The SCRI's tracking so far this year of 88 listed companies with 75-80 per cent of the market's capitalisation showed that their net profit should grow 5 per cent to Bt 385 billion (US$ 11.7 billion), Sukit said, pointing in particular to businesses in the tourism, automotive and commerce sectors.