GM Seeks Entry Into Thailand’s Phase 2 Eco-Car Program

General Motors Thailand is applying to the Thailand Board of Investment to join the government’s Eco-Car Phase 2 program, becoming one of the first automakers to do so as a March 31 deadline for applications looms.

To be eligible for tax breaks under the program, automakers must spend at least TB6.5 billion ($199.5 million) on a new plant with an annual production capacity of 100,000 units within four years of operation. Eligible cars must meet Euro 5 environmental standards and emit less than 100 g/km of carbon dioxide, down from 120 g/km for existing models.

In return, the government will waive corporate taxes and import duties for machinery for the first eight years of operation, and participating automakers will pay an excise tax as low as 14%. Ecocars that can run on E85-compatible fuel will be taxed at just 12%.

Marcos Purty, new managing director of GM Thailand, says GM’s intent to develop a new Chevrolet car for production in Thailand is well aligned with the objective of the eco-car program.

“By submitting this application, GM reaffirms its commitment to invest in Thailand and make Rayong a strategic hub for global exports,” Purty says in a statement.

“Additionally, this investment will bolster our long-term commitment to the excellent regional supplier network.”

The program calls for automakers in Thailand to build an all-new vehicle that is fuel-efficient, environmentally friendly, safe and low cost for sale throughout the region by the end of the decade. The eco-cars are expected to use many locally produced components, including powertrain parts.

Automakers have been slow to join the second phase, saying they believe the financial and production conditions are too rigid.

The Bangkok Post reported earlier this month that despite the approaching deadline for applicants to submit eco-car investment plans, Japanese automakers remain hesitant to join.

It quoted Nissan Thailand's newly appointed president, Hiroyuki Yoshimoto, as saying the parent company remains concerned about Thailand's political turmoil and the price-competitiveness of cars to be made under the new phase.

Board Secretary-General Udom Wongviwatchai acknowledged then that no company had applied for the second phase, but said automakers probably would submit applications “during the very last week” before the deadline.

The Industry Ministry still expects the second phase to boost annual eco-car production almost 60% to 935,000 units within five years.

The first phase, launched in 2007, attracted combined investment of TB28.8 billion ($884 million) by Mitsubishi, Honda, Toyota, Nissan and Suzuki. The five automakers built 712,292 eco-cars between 2010 and 2013

GM Thailand says more details about its participation in the Phase 2 program will be revealed at a later date.