Nissan to Expand Production in Thailand

By: RyanThomas

Nissan, the third largest Japanese car manufacturer, announced that they will expand their production of export vehicles in Thailand. This is in connection with the company's aim to expand its use of the country as a low-cost production base. Wages in the country is significantly lower than in Japan that is why the company is looking to make bigger profits if they expand their production in the said country.

The company announced that they will be exporting Thai-made Navara to more than 100 countries around the world starting August this year. Nissan's Chief Executive Officer Carlos Ghosn made the announcement but did not specify the number of Navaras they are planning to produce in Thailand. The Navara is a one-ton pickup truck produced by the company since 1986 and is also called the Nissan Frontier in other markets.

Nissan will be following the steps taken by General Motors, Toyota and Ford which have already stepped up production in Thailand. These three car manufacturers have already taken advantage of the low production cost in Thailand as well as for the tax breaks in the country.

Nissan has earmarked a sum of about $911 million in the expansion of their production based in Thailand. The company aims to double production output in the country which would mean that they will be producing about 200,000 vehicles in the Southeast Asian country by the end of 2008. The expansion to be carried out by Nissan will make Thailand their third largest Asian production base behind Japan and China.

"The costs in Thailand are very competitive," said Ghosn. "Thailand is the other export base that we have built outside of Japan."

The Japanese car manufacturer trails Toyota and General Motors in terms of production output in Thailand. During the first quarter of this year, Japanese car manufacturers have collectively exported 2,637 units of automobiles from Thailand. That figure corresponds to an increase of 1.7 percent compared to the first quarter of 2006.

In November last year, Nissan started exporting the -equipped Tiida, which is also known as the Nissan Versa, into Australia from Thailand. The export of the said car into the Australian market is a good start for the company in terms of expanding their production base in Thailand. Aside from fully assembled vehicles, Nissan is also planning to export 11.5 billion baht worth of Thai-made auto parts. That plan would make Thailand the second largest Asian production base of auto parts for Nissan, second only to Japan.

Due to the expansion of their production base in Thailand, the country's economy has grown by 4.3 percent during the first quarter of the year. Exports from the country increased by 21 percent last month compared to May of 2006. The increase in export has given the country an income of $13.1 billion. The increase in export is led by automobiles and auto parts which shows an increase of 32 percent for the month.

While the plans are already in place, Ghosn is worried about the current political situation in Thailand. Following the ousting of Prime Minister Thaksin Shinawatra, protesters have gathered to call for the resignation of army chief Sondhi Boonyarataklin. "For a car manufacturer heavily invested in Thailand, it's not sufficient to have just a good export base," said Ghosn of the current situation. "We're following, just like anybody else, the situation with a lot of attention, hoping that it will stabilize very soon."

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