Business Development Asia LLC
South East Asian Automotive News
Issue 4, December 1997
THAILAND
A JV between Advance Paint & Chemical and US-based Pittsburgh Paint & Glass delayed the construction of its automotive paint manufacturing facility in Rayong, citing a decrease in demand and an oversupply of automotive paint. (December 1st 1997)
According to the Federation of Thai Industries (FTI), automobile exports have surged recently, while domestic sales continue to fall. Car exports totaled US$230m in the first 10 months of the year, an increase of 384% over the same period last year. Car engine exports increased 179% to US$26m and the export of other parts jumped 242% to US$45m. Motorcycle exports, however, fell by US$36m to US$86m. The FTI projects next year's domestic automotive sales to fall short of the previous target of 300,000-330,000 units and instead to reach only 240,000 units. (November 3rd 1997)
The Federation of Thai Industries (FTI) asked the Thai Government for additional assistance in light of the economic downturn. The Government has already approved measures allowing manufacturers to increase their ratio of foreign ownership, extending the period for raw material import duty exemption, and reducing customs procedures, but the FTI says that these measures are still not sufficient. (November 3rd 1997)
Honda Motors plans to boost its exports of Honda Accord components from Thailand as the domestic market shrinks. Thailand will be the export base for Malaysia, Indonesia, The Philippines, Taiwan, and New Zealand. (November 27th 1997)
Currency losses at MMC Sittipol have led Mitsubishi Motors to forecast a consolidated net loss of US$330m. Of the total projected loss, US$280m will come from foreign exchange losses on dollar-denominated loans totaling US$500m which the company failed to hedge. (November 10th 1997)
Siam Tyre, a subsidiary of Siam Cement, launched a JV with Fuchs of Germany, the leading manufacturer and supplier of lubricants and petrochemical products. The JV, to be called Siam Fuchs Lubricants, will market and produce lubricants in Thailand. Siam Cement will be a major customer for the new JV as the group uses 13,500 tons of lubricant annually, worth US$8m. Siam Tyre will hold a 49% stake in the JV through a total investment of US$2m (November 11th 1997)
The Thai Government decided to raise excise taxes on vehicles by 5% in the hope of raising an additional US$167m in revenues. Although the measure will have limited direct impact in light of the planned US$19.1bn budget, it does indicate the Government's move towards a more austere policy. (November 10th 1997)
Thai Kawasaki Motors has recently agreed to enter into a tripartite joint venture with Kawasaki Heavy Industries and Nissho Iwai. The venture, Kawasaki Motors Enterprise, will bring together funds of nearly Bht3bn (US$71m) to increase the production of motorcycles. (December 5th 1997)
Thai Rung Union Car will be hit by the recent closure of Isuzu and Toyota plants in Thailand. Thai Rung manufactures and distributes car bodies and OEM parts. The company derives 80%-90% of its total revenue from Isuzu and another 6% from Toyota. Analysts predict that Thai Rung will have to severely reduce production. (November 10th 1997)
Toyota Motors (Thailand) is set to resume production after a two month suspension of operations. Toyota indicated that it would reopen two facilities and large volumes would be directed for export. 20,000 units of the Hilux truck will be assembled at the Samrong plant. Toyota will also begin increasing parts exports to Japan. Diesel engine exports will be increased from 600 units to 20,000 units a year and the export of camshafts and blocks will also be increased, from 450,000 units to 917,000 units annually. (December 9th 1997)
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