BANGKOK : Shares of Thai auto parts companies fell sharply on Thursday following reports that Japanese automaker Isuzu Motors would relocate its factory in Thailand to Indonesia, before recovering slightly after the auto maker denied any such move.

Indonesian Industry Minister Agus Gumiwang Kartasasmita had said on Wednesday that Isuzu could start production in Indonesia as early as next year.

But Isuzu on Thursday denied any such plans.

Prices of AAPICO HiTech, an automotive parts manufacturer that makes the chassis frames for the Isuzu pick-up model, closed 7 per cent lower from the previous day, recovering from a 12 per cent drop in the morning trading session.

Thailand’s benchmark index was up 1.7 per cent.

Auto lighting equipment maker, Thai Stanley Electric, saw its share price down 1.8 per cent, having dropped 4 per cent in earlier trading.

Thailand’s overall auto sector index fell 1.36 per cent, having slumped 3.34 per cent in earlier trade.

Thailand is an auto production and export hub for Southeast Asia and is home to some of the world’s top producers like Toyota and Honda.

The government has been trying to maintain that status, rolling out incentives to lure investment for electric vehicle (EV) production.

Chinese EV maker Great Wall Motor is planning to set up a $30 million battery pack assembly plant in Thailand while BYD plans to set up a factory by 2024.

The Southeast Asian country produces around 1.5 million to 2 million vehicles each year, exporting half of those. It has been dubbed the Detroit of the East.

It cemented its auto credentials with a strong supply chain of auto parts over the last few decades. EVs, however, use far fewer parts than conventional automobiles, forcing the industry to adapt.

The government plans to have at least 30 per cent of auto production in the country be EVs by 2030.