Automakers Heading to Thailand

by : Rain Stockton

Two Japanese automakers namely Honda and Nissan, Japan's second and third largest carmakers respectively were reported to be seeking for a license to set up plants in Thailand. These two automakers will use the plants in Thailand to build their fuel-efficient cars in support of Thailand's aim to become an eco-car production center.

Thailand is scheduled to release license on February of next year to an unspecified number of carmakers according to Satit Chanjanakul, Secretary-General of the Board of Investment. He also added that the Thailand government will offer tax breaks and lower tariffs on machinery imports to the companies.

At present there is an increasing demand for vehicles that are fuel efficient and utilizes the hybrid technology attributed to the ever increasing gasoline prices as well as the increasing awareness to preserve the environment.

Two of the world's largest automakers namely Toyota and General Motors producer of quality have their manufacturing plants in Thailand already. They use these manufacturing plants for the production of pickup trucks. Toyota and General Motors are planning of expanding their car production to add to lat year's 241 billion baht worth of vehicle exports.

Mr, Satit said, "The government wants fuel-efficient cars to be the country's future main export product after our successes in promoting shipments of pick-up trucks."

Last year Thailand's auto exports has increase by 22 percent from a year earlier to 539,206 units wherein more than 60 percent were pick-up trucks that is according to Thailand Automotive Institute. Likewise, the values of the vehicle exports which are mostly headed to Australia, the Middle East, and Europe have also increase by 19 percent.

In order to be granted a license, auto companies must build vehicles with engines of no more than 1.3 liters that are able to run more than 20 kilometers on a liter of petrol. Aside from that, the plant should at least build 100,000 vehicles annually by the fifth year of operation.

Honda spokeswoman Yasuko Matsuura in Tokyo said, "We're considering various options, but nothing has been decided."

Thailand is not the only Asian country that is hoping to become a vehicle production center as a matter of fact India's government last year has cut taxes on hatchbacks in its desire to become a global base for small cars.

There are already Japanese automakers that have started building factories in India for exporting small cars namely Suzuki Motor Corp, Nissan, and Hyundai Motor Co.

According to John Bonnel, a director at the Bangkok unit of J.D. Power & Associates the Thai government's plan of making the country a center for pick-up trucks is not going to be easy. But he also said that the country has a substantial demand for pickup trucks and its much easier converting the country to an export-oriented hub. Mr. Bonnel explained during a phone interview that the car project is "starting from scratch in terms of the market demand in Thailand. The demand is not there and has to be created."