The Bangkok Post reports that a leading auto parts manufacturer has voiced disagreement with the recent decision by Industry Minister Suriya Jungrungreangkit to derail the ambitious plan to produce eco-cars, saying the country will lose a good opportunity to promote the small vehicles as a second key automotive export product after one-ton pickup trucks.
“I am not criticising the rationale behind the decision to shelve the proposed project as I think he (Suriya) considered it thoroughly,” said Pramote Pongthong, honorary president of the Thai Auto Parts Manufacturers Association.
After holding discussions with car companies, Mr. Suriya decided to scrap the project last week. He maintained that the project conflicted with the government’s policy to conserve energy as it would lead to more cars on the road, resulting in increased fuel consumption and potentially worsening the country’s trade deficit.
In addition, the minister was concerned about the need to offer lower tax rates as an incentive to make the production of the cars competitive.
But an informed industry source said Mr. Suriya feared sales of eco-cars could cut into those of subcompact cars such as the Toyota Vios and Honda City and one-ton pickup trucks, the Post said.
Mr. Suriya’s family owns the Thai Summit Group, a leading parts supplier to several carmakers including Toyota.
The minister said that instead he would support the production of more complex parts and upstream steel manufacturing to strengthen Thailand’s automotive industry and enhance competitiveness in the long run.
Of the big automakers in Thailand, only Toyota had continuously opposed the project, saying the car size specifications in the plan were impractical.
Mr. Pramote said eco-car production should be promoted to substitute for locally produced larger cars that are certain to face falling sales when taxes drop for some imported models as a number of bilateral free trade area agreements take effect.
In particular, he said locally made cars with engines sizes of 3.0 litres or more would vanish from the market and be replaced by cheaper imported cars, especially from Japan.
Consequently, Mr. Pramote said local auto parts suppliers stand to lose out as well. “Since we will no longer be supplying parts to larger cars after the imported ones penetrate our market under the FTA agreements, the production of eco-cars could have served as a replacement market,” said Mr. Pramote.