South East Asian Automotive News

Auto Alliance Thailand (AAT), a JV between Ford Motor Co and Mazda Motor Corp, began production of its one-ton pickup trucks in Rayong on July 1st.   AAT’s US$500m production facility will manufacture 12-valve versions of the Mazda Fighter B-Series and Ford Ranger compact pickup trucks for both the domestic and export markets.  The plant has a combined production capacity of 135,000 units, but will produce only 10,000 units this year.  Over 100 supply facilities have been built in Thailand to support the AAT plant and to comply with the local content requirement of 70% for both models.  (July 2^nd 1998)

Bangkok Microbus Co plans to sign an agreement with Thonburi Automotive Assembly Co, the local Mercedes-Benz assembler and distributor.  The agreement will let Thonburi acquire 22 bus routes and 400 small air conditioned buses from Microbus, in exchange for Microbus’ Bht200m (US$4.8m) debt from bus procurement.  (July 1^st 1998)

Degussa AG is scheduled to construct an automotive exhaust catalyst facility before the end of 1998 in Bangkok.  Production capacity will be one million units per year.  Output will be supplied to the large-scale car manufacturing plants in Thailand.  (July 3^rd 1998) 

The Government will restructure classified import duties on steel, plastic, automobiles and machinery for the automotive industry when the local content rule expires in 2000.  If current duties (20% for CKD kits and 5%-42% for spare parts) remain, local manufacturers will be unable to compete in the world market.  The local content requirement was to be lifted this year, but after General Motors delayed the opening of its plant, the plan was postponed. (August 5^th 1998)

Honda Cars (Thailand) Co Ltd has exported more than 1,000 units of the low-budget City sedan to Singapore, Brunei, Cyprus, Bangladesh and Sri Lanka in the first half of this year.  Honda is relying on exports to Gulf countries for the second half of this year.  There have been complications, however, due to regulations on car parts in the Gulf countries that do not exist in Asia.  (July 21^st 1998)

Mazda Motor Co closed its Sukosol and Mazda Motor Industry (SMMI) vehicle assembly plant in Thailand due to lowered demand. SMMI produced 12,123 units in 1997 and just 2,160 this year, bringing production to a halt in May.  By closing the SMMI assembly plant, Mazda can concentrate on the newly opened AAT assembly facility.  (July 27^th 1998)

Mitsubishi Motors, a leading Japanese carmaker, has reported that it would increase exports of pickup trucks from its Thai plant.  The company will export slightly more than 50,000 units this year, compared with 41,000 units last year.  By 2000, exports could reach 60,000 units.  Mitsubishi has been hit badly by the economic crisis and will direct exports to the European market.  (June 25^th 1998)

MMC Sittipol Co Ltd (MSC), a subsidiary of Mitsubishi Motors, will begin exporting passenger cars again to try and raise total vehicle exports this year to 60,000 units.  Between January and May 1998, MSC exported 19,526 units worth Bht8.8bn (US$214m), a 70% year-on-year  increase.  MSC’s goal is to generate Bht30bn (US$732m) to compensate for the 70% drop in domestic demand.  (July 27^th 1998)

Peugeot, the French carmaker, has given full support to its local distributor, European Automobile (EAC), to promote its products in Thailand.  Peugeot is providing half of the promotion and advertising budget of Bht30m (US$700m).  The sales target for 1998 is 1,000 units.  300 units were sold in the first half of this year.  (July 29^th 1998)

Siam Nissan Automobile reported that its sales ratio between sedans and pick-up trucks last year was 50:50, a change from the 25:75 ratio from five years ago.  A narrowing price gap between the cars and pick-ups has changed consumer trends. Passenger cars were previously more expensive, but to broaden market range, companies have begun to sell low price sedans, targetted at the low-end market.  Nissan plans to introduce new models according to the needs of consumers.  (July 16^th 1998)

Siam Motors & Nissan Sales Company has given Thai Nissan dealers financial support to construct or improve their showrooms and after-sales service centers.  More than Bht200m (US$5m) has been given to Nissan dealers to help relieve their financial and investment burdens.  Since mid-1997, debts totaling more than Bht1bn (US$24m) have been incurred.  Nissan Motor Corp of Japan also contributed funds to support Thai dealerships. (June 18^th 1998)

Siam Motors & Nissan Sales Company, in cooperation with GE Capital, has established a lease program in an attempt to boost sales.  The program aims to help clients obtain loans and also to help dealers improve their liquidity.  The company is launching three models this year, the new Nissan Big M pickup truck, the Nissan Sunny and the Nissan Cefiro with minor changes.  (June 18^th 1998)

Swedish Motors Corp, the distributor of Volvo, has approved the inclusion of five insurance garages in the company’s after-sales network. Volvo is dependent on income from its after-sales service activities, which could reach Bht100m (US$2.5m) per year.  (July 1st 1998)

Thai Chrysler Automotive Ltd (TCA) is facing lawsuits from ten international banks which filed against the company after Chrysler Corp of the US confirmed that it will not take responsibility for the debts incurred by its Thai subsidiary.  There are already five pending lawsuits filed against TCA.  Chrysler holds a 30% stake in TCA, but provides no guarantee for TCA’s loans.  (July 29^th 1998)

Thai Rung Union Car (TRU), has begun exporting 200 semi-completely knockdown units (SKD) for its station wagon model to Africa and China this year.  The domestic auto market has contracted 70% from 560,000 units in 1997 to 150,000-160,000 units this year, increasing the need to export.  TRU expects to see a 30% increase in exports next year.  (July 15^th 1998)

Toyota Motor Thailand (TMT) has completed a major capital increase from Bht520m (US$13m) to Bht4.5bn (US$109m).  TMT’s Japanese parent, Toyota Motor Corp of Japan, maintained its 70% holding by investing a further Bht2.8bn (US$68m) in the Thai company.  (July 1^st 1998)

Toyota Motor Thailand, Siam Nissan Automobile Co, MMC Sittipol Co and Thai-Swedish Assembly Co, will receive Bht205m (US$4.8m) in tax rebates under ASEAN’s Brand to Brand Complementation (BBC) scheme.  The four companies originally paid full taxes for their auto part and component imports from Malaysia and the Philippines worth Bht1.4bn (US$35m), despite the BBC regional agreement which states that participating countries must only pay half tax rates for products exchanged under the scheme.  (July 29^th 1998)

Toyota Motor Thailand is reducing its 1998 export target almost 50% to Bht2.8bn (US$66m) from Bht5bn (US$119m), due to an 80% decline in demand in the ASEAN market.  The company has also revised its export target for 1999 to Bht7.5bn (US$178m) from Bht10bn (US$238m).  (July 29^th 1998)