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.