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Jan - Feb 2009
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By Aey KoKo


 
 
   
 
 
   
DOUBLE BLOW for
DETROIT OF SOUTHEAST ASIA   
Laem Chabang, on the eastern seaboard, will see 20 percent drop in vehicle shipments in 2009.
Gone are the expectations of fast growth that attracted global automotive
players to Thailand, at least for the next few years. The Detroit of Southeast Asia has been caught up in the
global downturn and the domestic political turmoil which is likely to drag on for months, if not years.


Driving into 2009, hard it is for the car makers in Thailand to find a good reason to be optimistic about. The slowdown in the markets overseas and the long-drawn political uncertainty mean drastic cuts in production and staff layoffs.

Already, major car makers here have slammed the brakes on their aggressive expansion drives, wondering when the industry will be back on track. Take Toyota Motor Thailand (TMT), which is having a serious review of its investment and production plans.

The local unit of Japanese automotive powerhouse has slashed 100,000 units off its planned output of 500,000 units for 2009. TMT President Mitsuhiro Sonoda attributed the production cuts to the falling demand both at home and abroad.

As the production goes down, so does the number of Toyota’s employees. The car maker is trimming 350 out of 5,500 subcontract workforce from the Gateway plant, which builds the Camry, Corolla, Yaris and other cars for Thailand and markets in the region, offering them an early retirement programme. It retains the 8,000 permanent staff at its plants in and outside Bangkok, though.

“The market has been in a global panic, causing demand to collapse quickly. Obviously, the situation will be worse in 2009,” said Ninnart Chaithirapinyo, TMT’s vice-chairman.

He expects overall exports will decline by 30 percent year on year in 2009 due to the recession in the US, which accounts for 11 percent of Thailand’s car exports. Domestic sales, he said, will fall by 20 percent.

The downhill drive in car sales has also prompted Toyota to have a second thought on the 4.6-billion baht project to roll out 100,000 eco cars - the small, safe and fuel-efficient vehicles.

Toyota is among the seven automakers vying to make eco-cars in Thailand with a combined capacity of 783,000 units starting from 2010.

(The government’s eco car policy mandates all manufacturers to meet stringent emission and safety requirements, including the Euro 4 emission norms and crash compliance. According to the regulations, all manufacturers should start their eco car productions within 66 months of project approval.)

Depending on the market direction, Toyota may have to delay the project sponsored by the government with long-term tax breaks and other incentives.

“We are reviewing capacity expansion plans and have to set the priority for these projects’ implementation,” said Ninnart.

While Toyota is taking a hard decision moving forward, General Motors caught up with the inevitable blow of global financial crisis.

The troubled US auto giant suspended the construction of $445-million diesel-engine facility in Thailand late November. Work on the site in Rayong, 150 kms (90 miles) southeast of Bangkok, was put on hold for one year.

Steve Carlisle, President of General Motors in Southeast Asia, puts the blame on ‘the availability of cash’ and the difficult market facing the local industry.  

The facility would produce engines for Chevrolet models for sale in Thailand and other markets, part of GM’s strategy to offset falling US auto sales. The suspension followed GM’s announcement earlier in November that it would shut its assembly, also in Rayong, for two months from mid-December, laying off 258 workers.

WE ARE NOW PROJECTING THAT SALES IN 2009 COULD 25 TO 30 PERCENT LOWER THAN 2008 - YEAP SWE CHUAN, AAPICO HI-TECH PLC

SHRINKING!
Outlook for Thailand automotive industry 

 

2008*

2009*

Production

1.3 million

1.2 million

Domestic sales

590,000

550,000

Exports

740,000

650,000

*revised forecast
Source: Industry players, research houses

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