THAILAND: Japanese carmakers continue to invest despite 2011 floods
Far from being discouraged by last year’s flooding in Thailand, Japanese carmakers are boosting their presence in the country.
Suzuki said it aims to produce 100,000 vehicles at its new plant in the eastern Thai province of Rayong in 2016.
Osamu Suzuki, the company’s president and chairman, said: "This facility will complement a plant in Indonesia as a major foothold in Southeast Asia."
The plant has started production of the Swift compact hatchback.
Suzuki’s comments follow the announcement last week that it is withdrawing from the US car market, indicating its policy of putting emphasis on the Asian market.
The company chief added that, as the most recent entrant in the Thai market among major Japanese carmakers, Suzuki "will have to scramble to catch up with other makers”.
It plans to turn out some 21,000 Swifts at the Thai plant this year of which 17,000 will be sold in the country.
Thailand remains an important export base in south east Asia and the country is expected to produce about 1.4m units this year, up from 790,000 last year.
Toyota has announced a plan to expand its production of strategic vehicles in Thailand for emerging markets and Nissan is set to build a new plant to boost exports.
Toyota said it will build a new plant and two new engine assembly lines in Thailand.
Thailand is working to be the strongest industrial base in Southeast Asia, especially as a vehicle exporter and Japanese carmakers, struggling with the appreciation of the yen, are moving more production away from home.
This is despite last year’s devastating floods which hit all the country’s carmakers. Honda’s plant was completely under water, forcing a complete production shutdown which also affected the company’s other operations around the world.
There were fears in Thailand that Japanese companies would leave but this has not proved to be the case.
There are more than 600 companies in Thailand that supply core parts to local Japanese plants. In addition to the primary suppliers, many of which are Japanese, 1,700 companies are secondary and tertiary suppliers to Japanese carmakers.
The Thailand Automotive Institute forecasts that the auto industry in the country will increase production capacity by 40% from 2011 levels to 3.14m units by 2015.
The Thai government has introduced various measures to attract foreign manufacturers such as the exemption of corporate tax payments for seven years, construction of industrial parks favourably located for export and improved transport networks.
In January, Thailand cut the corporate tax rate from 30% to 23%, lower than in neighboring countries, and announced a plan for a further cut to 20% in 2013.
Japanese companies account for 60% of foreign investments in the country.