Ford and Mazda Motor Corporation have completed a new US$500m passenger car plant at AutoAlliance Thailand (AAT), their joint venture manufacturing facility.

The car plant increases the total annual production capacity at AAT to 275,000 units (including CKD units).

It will build the Mazda 2 and Ford Fiesta for sale in Thailand, southeast Asian countries, Australia, New Zealand and South Africa from early 2010 when production starts, replacing cars shipped currently from Japan, Germany and Spain.

It will export 85% of its annual capacity of 100,000 cars a year.

AAT currently ships Mazda and Ford pickup trucks to over 130 markets around the world.

The new, highly flexible passenger plant included a new stamping line and body shop, trim and final assembly areas.

The upgraded paint shop can now accommodate both pickup trucks and passenger cars, and uses an environment-friendly three layer wet paint system, which reduces volatile organic compound (VOC) and CO2 emissions, and improves vehicle painting quality.

Ford’s president for southeast Asia and Japan, David Alden, told Reuters: “A half a billion dollar investment is a huge investment in any business, especially in the economic environment that we are facing.

“It is a pretty important strategic statement that we are making of the importance of the Asean countries, with Thailand as its production base.”

Alden’s confidence in the market for the Fiestas was boosted by its launch in March in China, where 18,224 were sold in four months. But he was cautious about making sales projections, given the grip on the small car segment held by Japanese makers.

“We look at our very successful launch of Fiesta in China as a template for our success and will build on the lessons learned in China,” the Ford executive told the news agency.

“We make no sales projections. We want to under-promise things and over-do them,” he said.

According to Reuters, 90% of all passenger cars sold in Thailand, the biggest car market in southeast Asia, are built by Japanese companies led by Toyota and Honda. Sub-compact cars, such as the Fiesta, make up 45% of the Thai passenger car segment.

Ford sold 465 passenger cars in Thailand in the first five months of 2009, for a paltry 0.6% market share. In contrast, Toyota sold 33,344 for 43% of the market.

The latest $500m spend raised to $1.5bn the total investment Ford and Mazda have made in Thailand since 1995 through the AAT joint venture. Thailand is one of three Asian countries where Ford has made major investments in recent years.

It invested $510m in the Changan Ford Mazda JV passenger car plant in China’s eastern Nanjing that started production in January.

It is also investing $500m in Chennai in India, where annual capacities for its small car and engine production will be raised to 200,000 and 250,000 units respectively from 2010.