Growing uncertainty over the medium-term growth prospects for Thai vehicle production is forcing local parts makers to reconsider expansion plans.
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SET-listed Thai Stanley Electric, the country’s largest manufacturer of automotive lighting, said it would postpone construction of its sixth plant in Thailand if more vehicle manufacturers reschedule their eco-car programmes.
Thai Stanley Electric last year announced it would invest THB1.2bn (US$35m) in 2009 in a new lighting plant to supply the country’s emerging eco-car industry. It has already set aside 5,000 sq m of land for the factory.
Dozens of other suppliers announced eco-car related investment plans last year and are also monitoring developments very closely.
The Thai Board of Investment last year approved six eco-car projects, including Nissan, Suzuki, Honda, Toyota, Tata and Mitsubishi. Each has a minimum annual output requirement of 10,000 vehicles within five years of start-up.
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By GlobalData“So far only Suzuki has said it would delay its eco-car project, due to the uncertain demand outlook,” said Thai Stanley’s executive vice-president Apichart Lee-Issaranukul.
“Others have so far remained quiet,” added Apichart, fearing that the weak demand outlook at home and abroad could force other vehicle manufacturers to delay investments.
He said Honda was the most likely manufacturer to keep to its original schedule, with production due to start in 2011. Nissan is scheduled to start eco-car production at the end of 2009 and has so far not indicated that it will be delayed.
If more delays were to be announced, Thai Stanley would use existing capacity to accommodate orders from the emerging eco-car segment. Apichart said he would wait another three or four months to see if other projects will go ahead on schedule, in addition to Honda’s.
Meanwhile, the Federation of Thai Industries said it now expected Thai vehicle production to fall sharply in 2009 to 1.1m units compared with just under 1.4m in 2008, due to weakening domestic and overseas demand.
Tony Pugliese
