No Plans to Move Chinese Output to Thailand, Toyota Says

Toyota is watching the situation closely and is giving priority to the safety of its staff in China as tensions rise between China and Japan in a dispute over territorial claims to uninhabited islands in the East China Sea.

Toyota says it will suspend production at two of its Chinese factories from Wednesday until Sept. 29, Reuters reports. Japanese auto makers are scaling back joint-venture production in China following anti-Japan protests that have forced dealerships to close.

The Japanese government’s move to buy the islands from their private owner has led to Chinese street protests that have disrupted automotive output in the country.

However, Toyota Thailand Vice Chairman Ninnart Chaithirapinyo rejects suggestions the auto maker may move its China operations to the relative safety of Thailand.

Former Thai Finance Minister Pridiyathorn Devakula suggests during an industry seminar in Bangkok that the Diaoyu Islands dispute might hurt Japanese auto production in China, meaning the Japanese could consider expanding their manufacturing base in Thailand.

“We will not relocate our (factories) out of China, and the protesting is expected to be short-lived,” Ninnart says, adding the industry has other concerns in Thailand such as the rising valuation of the local currency, the baht.

“Every 1-baht appreciation against the U.S. dollar would result in a loss to Toyota of TB1 billion ($32.2 million),” The Nation newspaper quotes him as saying.

Ninnart also warns that the 2015 launch of the Association of Southeast Asian Nations economic community, a single market involving Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, could see China dumping cheap cars on the ASEAN market.

Toyota still views Thailand as one of its production bases for exports, but Ninnart says a weak point for the country is its inadequate research and development and poor coordination between government agencies.

While the government's tax incentive for first-car buyers contributed to a jump in domestic sales this year, consumption is expected to plunge 20% in 2014 as the tax measures expire, he says.

Ninnart says Thai vehicle production is expected to reach 2.3 million units this year, with exports of about 1 million units.

He says first-half Thai exports do not indicate a slowdown resulting from the European financial crisis, in part because of the growing Asian markets.