Luxury car maker Daimler-Chrysler will for the first time export Thai-built vehicles to other Southeast Asian countries at the end of this year, a report on The Nation's website said.

According to the report DaimlerChrysler (Thailand) president and CEO Karl-Heinz Heckhausen said the move would take advantage of lower tariffs that will be introduced in 2005 when the vehicle market is liberalised under the Asean Free Trade Area agreement (Afta).

"We are negotiating with one country - the name of which we will not disclose now - to export our products," he reportedly said.

The Nation noted that DaimlerChrysler recently set up an assembly branch in Vietnam and has another two plants in Indonesia and Malaysia.

The report also noted that the Thai luxury car market has not yet fully recovered from the 1997 financial crisis, forcing companies to look at alternative ways to boost profits. Luxury car sales in Thailand dropped 2% in the first half of this year, while total car sales increased 33% in the same period. Total sales of DC's Mercedes-Benz brand increased by 53% in the first half of 2003 with 2,835 cars sold due to the introduction of the new E-class model last year.

But compared to its record 11,870 sales in 1995, the figure is still low, The Nation said, adding that Heckhausen is confident the company will reach its goal of 10,000 sales a year soon.

The report said other car companies, including BMW and Honda, have already started exporting their products from Thailand and other Asean countries, and vice versa, in anticipation of the lower tariffs.

The Nation said Heckhausen believed competition in the Thai car market would get tougher because more international companies would set up assembly and manufacturing plants there. "Everyone is targeting Thailand, so the competition is very intense."

He reportedly said DaimlerChrysler hoped its strategy to have more new products and introduce better marketing, combined with increased growth in the luxury car market, would help it compete better against other car makers in Thailand and other Asian markets.

Mercedes-Benz was due to start assembling its diesel CDI model in Thailand in October, Heckhausen reportedly said, and local consumers would see the same quality products for cheaper available there.

The company remains dependent on Asean free-trade talks an the cutting of tariffs has been crucial for international car producers in their production decisions, The Nation report said.