Thai Government Growing Green-Car Incentive Program

The Thai government predicts annual eco-car production will soar almost 60% to 935,000 units within five years as next year’s second phase of its promotion of high-fuel-efficiency, low-emissions cars attracts new investment in small vehicles.

The program launched in 2007 attracted investment of TB28.8 billion ($921.6 million) from Mitsubishi, Honda, Toyota, Nissan and Suzuki, producing a combined annual capacity of 585,000 units.

Board of Investment Secretary-General Udom Wongviwatchai says more automakers are expected to join the second phase of the program with a total investment of TB30 billion-TB40 billion ($960 million-$1.28 billion). The manufacturers must file an application with the board by March.

“Once approval has been given in mid-2014, investment will start a year later at the earliest,” Udom tells the Bangkok Post.

The original participants may apply to expand production or reinvest in the second phase with a minimum of TB5 billion ($160 million), while new manufacturers must commit to spend at least TB6.5 billion ($208 million).

Each automaker is required to produce a minimum of 100,000 vehicles a year by the fifth year of their involvement. The eco-cars must meet the Euro 5 environmental standard of releasing less than 100 g/km of carbon dioxide per 62 miles (100 km) compared with 120 g/km for existing models.

Engine size must be no bigger than 1.3L for gasoline and 1.5L for diesel with fuel efficiency of 54.7 mpg (4.3 L/100 km), up from 47 mpg (6.0 L/100 km) in the first phase.

In exchange, manufacturers receive a 6-year tax break as well as additional reductions for sourcing parts locally.

Office of Industrial Economics Director-General Somchai Harnhirun tells the newspaper combined production capacity for eco-cars is projected at 745,000 units in 2016; 825,000 in 2017; and 935,000 in 2018.

The result, Industry Minister Prasert Boonchaisuk predicts, is that Thailand's total vehicle output will reach 3 million units by 2017, with 70% exported, up from 50% now.

Mitsubishi Thailand President Nobuyuki Murahashi says his company will apply to join the program’s second phase as part of its plan to make Thailand its major production center for green models.

But he tells the Bangkok Post he would like to see the government offer special privileges to existing eco-car manufacturers that apply for the second phase.