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NEWS UPDATES 30 July 2010

Audi, Volkswagen may build plants here

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The healthy premium car market in Thailand and ballooning sales for the industry overall have prompted leading European brands - Audi and Volkswagen - to consider plans to set up production locally to serve Southeast Asia, the Bangkok Post said.

Audi, the premium brand of Volkswagen AG, has been seeing a bigger share in the Thai premium car market, which grew 50 percent year-on-year in the first half of 2010, said Vallop Tiasiri, director of the Thailand Automotive Institute.

The segment's two perennial leaders, Daimler's Mercedes-Benz and BMW, have also enjoyed sales spikes from a year before, he added.

Mr. Vallop this week has joined Industry Minister Chaiwuti Bannawat and Board of Investment executives to promote Thailand's investment potential to German businesses including the three leading carmakers, Volkswagen, Daimler and BMW.

"Audi executives asked about [automotive] parts suppliers in Thailand and also discussed the preferential import tariff schemes of Thailand's free trade pacts with China, India and Australia," he said.

Audi has expressed its interest in setting up an auto-parts plant, starting with semi knocked-down (SKD) kits before being upgraded to completely knocked-down (CKD) kits later. The plant would also serve other Asean countries.

Mr. Chaiwuti said Volkswagen remained interested in Thailand but had yet to finalise the plan. Volkswagen, ranked third globally after Toyota and General Motors, has been among six companies granted an approval to produce an eco-car in Thailand through its 20 percent equity held in Suzuki. It acquired a stake in Japan's Suzuki in January this year.

Volkswagen has also been in talks with Thai Rung Union Car and Thonburi automotive group for business partnership in Thailand and Asean.

"Volkswagen has remained keen to invest in Thailand but is now focusing on its two big plants under development in China," Mr. Chaiwuti said. "But I think the possibility is high as Thailand has moved in the right direction to promote the investment in medium-sized and small cars which are the major trend of the industry globally," added the minister.

Volkswagen operates two plants in India. It sold 6.3 million units worldwide in 20 countries.

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