Thai Government Offers Encouragement to Automakers

The Thailand government sees the country’s struggling automotive industry recovering in 2015, with production rising to 2.2 million units from an estimated 1.9 million this year.

Industry Minister Chakramon Phasukvanich tells a seminar at the International Motor Expo in Bangkok that government measures to help farmers, including a TB1,000 ($30.50) handout, and new megaprojects will help the economy grow between 3% and 3.5% next year.

The Bangkok Post quotes Chakramon as saying the auto industry likely faces another transitional period in early 2016 when new excise taxes take effect and manufacturers begin production under phase two of the government’s eco-car scheme.

Chakramon says the upcoming excise tax changes will mark a turning point for the industry by lowering retail prices of eco-cars and hybrids. The new tax will be based on carbon-dioxide emissions, E-85 compatibility and fuel efficiency instead of engine size.

The tax on vehicles with CO2 emissions below 100 g/km will drop from 17% to 12%-14% for eco-cars. The 10% rate for hybrid vehicles will remain unchanged.

The Thailand Automotive Institute projects the second phase of the eco-car scheme will increase local car production by 500,000 units next year.

Federation of Thai Industries Automotive Industry Club Chairman Ong-arj Pongkijworasin tells the seminar he still expects 2014 full-year production to come in at 2.1 million units, even though the 10-month build was down 25.9% year-over-year to 1.57 million.

“The first-time car buyer scheme (in 2013) stole future domestic demand, while car makers have not done well in exports due to internal risks and shrinking demand in the Middle East, Africa and South America,” he says.

Wichien Emprasertsuk, executive vice president-Toyota Motor Thailand, tells the seminar domestic sales likely will total just 900,000 units this year, down from 1.33 million in 2013.

But he says there is no cause for concern, as the market has returned to levels preceding the launch of the first-time car-buyer tax-refund scheme in effect from September 2011 to December 2012.

Thailand saw 800,357 units sold in 2010 and 795,250 in 2011.

Mitsubishi Thailand President CEO Masahiko Ueki says the automaker plans to increase exports next year. Exports from its three Thai factories comprise 75% of its annual production of 510,000 vehicles, up from 50% in 2012.

General Motors Thailand Managing Director Marcos Purty tells the seminar it will be impossible for the Thai market to return to levels seen in 2012 and 2013, when sales were driven by the first-time car-buyer incentives.

“The market is very mature now, and slight sales growth is suitable for the country,” he says.

Ford Southeast Asia President Matt Bradley says the automaker remains confident about prospects in the ASEAN region even though it expects sales to fall about 10% to 3.3 million units this year.

Bradley tells the Bangkok Post the blue oval expects an economic rebound and greater consumer confidence in Thailand next year, with the country’s economy likely to grow 4%-5% in 2015.

The automaker is spending TB18.2 billion ($555 million) to build eco-cars at its Ford Thailand Mfg. complex in Rayong province with annual production capacity for 180,000 vehicles and 2,000 engines.