Wednesday, November 12, 2008

What the Bankrupt Big 3 Automakers in the US Could Learn from Thailand

Thailand Leads the Way in Making Green Cars

The Australian

Here is a fast-emerging Asia-Pacific "green car" manufacturing centre, the brainchild of a government intent on transforming its vehicle industry.

It is in Thailand, Southeast Asia's most important carmaking centre, developed virtually from scratch in 15 years.

Next year, Toyota Thailand will begin producing Camry hybrids, the carmaker's third foreign manufacturing site for hybrid vehicles, a year before Australian taxpayer-subsidised Camrys begin production in Victoria.

The Thai industry is larger, more modern and far more export-focused than Australia's.

Thailand's "eco-car" project has been in planning and development for five years. It also has firm commitments from the three big Japanese manufacturers -- Toyota, Honda and Nissan -- plus Volkswagen, Mitsubishi and Suzuki. India's Tata Motors recently denied reports it was backing out.

The approved or pending eco-carmakers have committed to investments totalling 66 billion baht ($2.8 billion), with the first vehicles in production by 2010.

To qualify for the generous duty and sales tax exemptions, and eight-year income tax "holiday" attached to the eco-car project, the new vehicles must have engines smaller than 1.3l, achieve fuel consumption of 20km/l and emit less than 120g/km of carbon dioxide.

The makers are required to invest at least five billion baht and be producing 100,000 units by their fifth year of operations.

These carmakers have agreed to the tough specifications not because of the attractions of the domestic market, though annual sales of locally-produced new cars in Thailand are almost twice Australia's, but because of the Thai industry's already-proven export strengths.

Thailand's domestic market buys about 620,000 locally-built vehicles annually, compared with 320,000 in Australia, and exports will boost total production this year to about 1.4 million units.

Thailand's vehicle export industry, which is one of the most important markets for Australian component makers, began almost by accident a little more than a decade ago.

The 1997-98 Asian financial crisis, which blasted Thailand's previously booming economy, caught several international manufacturers with brand-new production facilities but suddenly hardly anything left of the intended local market.

Aided by the collapse of the local currency during the crisis, the manufacturers turned their output into the export market and within five years, Thailand had become the world's second-largest producer, after the US, of light pick-up trucks.

But in 2003, long before the oil price surge caused US makers to regret their over-commitment to pick-ups and sports utility vehicles, the Thaksin Shinawatra government decided the Thai industry needed to diversify and chose as a new focus the emerging Asian mass market for thrifty, clean, small passenger vehicles.

The eco-car project was born, putting Thailand well ahead of Australia.

In light of the fact that the US Congress is about to give $25 billion more to the Big 3 to stay solvent, maybe they should look to Thailand for inspiration in creating a viable auto industry that is actually paying attention to the market.


Anonymous said...

The enthusiasm of the author is nice... but we shall remember a few "points"...

Thailand didn't "create from scratch" a car industry...

The japanese did it.. ;-)

In exchange for huge privileges (tax cuts, etc.).

The car industry made 1,43 billions USD of exports (vehicles+parts) in september... for a total amount of 15,86 billions USD for thai exports...

That's a mere 9 %... Surprised ?

Furthermore, we should ask how much those companies contribute to state revenues...

Tax cuts on imported parts (from Japan). And then tax cuts on exported cars. And smiling japanese in the middle... using their factories to sell also... on the domestic market !

Well played, gentlemen.

In other words : it's super great to be the "hub of car manufacturing" in Asia... it gives a lot of pleasure to the thai politicians... it makes nice headlines in the medias... but at what costs ?

davidb98 said...

seems Khun Thaksin was ahead of the game again...

so, the PAD want to throw this sort of talent away?

who do they propose to continue to drive Thailand forward?

does Sondhi have any wise words to help his supporters live in the new world of global warming?

davidb98 said...

excellent post... I hope the Australian government is listening and wants to cooperate!

patiwat said...

No Nation bashing. Some praise for Thailand. No mention of PAD thugs and how Thaksin has been persecuted.

Have you hit your head, Fonzi?

Fonzi said...


I think the point I was trying to make is that government can actually make actually welcoming for the car industry to a) make money b) make a product that people want(cheap hybrids) c) have a good impact on the economy(multiplier effect).

Also, the incentives that Thailand is giving to the auto makers is much more effective imo than giving Japanese car makers $25-50 billion in government cash because they are incompetent.

Ad said...

Nice point Mr. Fonzi. And I'd give Thaksin credit for 'pushing' for the policies that worked for Thailand's auto industry. Most Thais at least agree that Thaksin's business-friendly policies for the most part provided Thailand good long-term economic direction.

Too bad Thaksin over-reached, was arrogant and believed himself indispensable with his suborning ways. It is Thaksin's ego that drives his current mad-man polarizing tactics.

davidb98 said...

ad... why did you need to add the last paragraph?

do you really think its Thaksin that is the "mad-man polarizer"?

Thaksin seems to be a bit sad but apart from that calm and rational about his situation and seems to have the welfare of Thailand in his heart...

and doesnt seem to want to inflame differences between people... he is even not particularly anti-PAD, but he does know that there are people that do not want him... I suppose an example is you... why dont you want him?

there is someone that seems to fit your description, "mad-man polarizer", much better... a spinner of hate and destructive actions...

do you know where Sondhi wants to end up? my analysis says he loves continuing the protests for business resasons

do you really want to be part of that?

Ad said...

David I don't know why the truths about Thaksin should disturb you so.
The faults and criminal bents of Thaksin Shinawatra and wife Potjaman are already well known. The criminal convictions of the Shinawatras are well-deserved. And Thaksin as a mad-man polarizing figure is undeniable.

Sure Thaksin made good economic policies that accelerated Thailand's recovery from the 1997 Thai financial crisis that Chavalit-Thaksin largely or in part themselves caused.

Thaksin's divisive politics, and, his disdain for observing constitutional rule of law for expediency (the anti-drugs extra-constitutional killings directed and encouraged by Thaksin) and his suborning institutions to perpetrate conflicted deals designed to enrich himself, his family and cronies were UNFORGIVEABLE and criminal.

So what is your point David?

davidb98 said...

the hate expressed by Khun Sondhi, and those that seem to have accepted what he says, for Khun Thaksin is well known and means that that group are divided from the rest of Thai society

whether its right to say that Khun Thaksin created that division rather than just being the excuse for the division is moot

I am waiting to see if there are any laws that it is proven that the Thaksin have credibly broken, it is my view its unlikely, because I believe that the Thaksins had legal advice and avoided breaking the law in any of their transactions

I am against killings of any sort and I think Thailand badly needs to setup something similar to the UK/Australian Coroners Office where every death that is not signed off as natural causes is routinely referred for investigation and a court signoff is required before the body and evidence can be released for burial/cremation

when a professional coronial service and a Coroners Court are involved then everyone becomes much more conscious of the value of every human life and can be more confident that police or anyone else is more careful of unlawful killing

meanwhile keep perspective and balance, compare Thailand under Khun Thaksin to eg. Chavalit, Suchinda, Thanom, etc, atc

Definitely Thailand is on the track to improvement... keep moving in the right direction... read my Democracy Eliminates Corruption!