Thailand becomes Asia's pickup capital

[Gumusut_Amige]

Thailand becomes Asia's pickup capital By MALCOLM FOSTER, AP Business Writer
Wed Jun 21, 6:28 PM ET



SAMUT PRAKARN, Thailand - Every 60 seconds, a shiny new pickup truck rolls off the assembly line at Toyota's factory outside of Bangkok, a third of them bound overseas for places like Australia, Europe and the Mideast.

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By January, Toyota Motor Corp. will complete another, larger plant to make pickups nearby, adding to the 15 auto assembly plants, mostly Japanese, already here.

Thailand has carved out a niche for itself: Asia's pickup truck capital.

Thanks to careful government planning and Japanese investment, Thailand has become the world's No. 2 maker of pickups after the United States, making the Asian financial crisis that erupted here nine years ago seem like a distant memory.

Auto production has nearly doubled since 2002 to 1.1 million vehicles last year — three-quarters of them pickups, mostly the smaller, 1-ton variety.

Thai-made pickups may soon be flooding the U.S. market, American labor and auto groups warn, if a 25 percent duty on imported pickups is slashed under a possible U.S.-Thailand free trade agreement.

Toyota's chief here says that's unlikely, but Thailand has clearly become a major production and export base for Japanese automakers, which make and sell 90 percent of the vehicles in the country, Southeast Asia's largest auto market.

Drawn to Thailand by its the low costs, government tax breaks and extensive network of suppliers, Toyota, Isuzu Motors Ltd. and Mitsubishi Motors Corp. have gone so far as to shift their pickup truck production in Japan to Thailand.

"Thailand is positioned at the center of Toyota's Asian operations," said Ryoichi Sasaki, president of Toyota Motor Thailand Co. from the Samut Prakarn plant.

Already, Thailand is Toyota's No. 2 export base after Japan. The automaker has invested about $900 million here over the last three years building two plants, including one for passenger cars, and expanding a third.

When Toyota's new 27 million square feet plant in Ban Pho, just east of Bangkok, comes on line next year, its total production capacity in Thailand will grow to 550,000 vehicles a year, with about 40 percent for export, Sasaki said. That could easily ramp up to 650,000 if demand requires, he added.

Prized for their versatility, pickups are the best-selling vehicles in Thailand's bustling economy, perfect for hauling farm goods, construction equipment, livestock and people.

"It's selfish to have a sedan," said Thana Phum Seduangchai, a 47-year-old who lives in rural western Thailand whose Toyota Hilux Vigo, the company's best seller here, often carries nearly 20 people at once.

Unlike regional auto rivals China and Malaysia, Thailand has no domestic automakers. Instead, it has actively sought foreign investment by offering tax incentives and placing no ownership constraints on plants or subsidiaries here, unlike China, which limits foreign ownership to 50 percent.

To promote pickups and create a strong niche market, authorities have kept excise taxes on pickups at a low 3 percent while slapping passenger cars with a tax of 30 percent or more.

Government planners also have encouraged the creation of an extensive base of nearly 4,000 suppliers. Toyota, for example, gets 90 percent of its parts and materials locally.

"The biggest market for pickups (in Asia) is Thailand, so companies need to invest here. They can then use our country as a base to supply other countries," said Vallop Tiasiri, president of the Thailand Automotive Institute, a government-funded agency that promotes the industry.

Toyota is doing just that, using Thailand as key base for its IMV, or International Multipurpose Vehicle, project that allows factories to produce five kinds of vehicles — from pickups to minivans — from the same basic platform. Other IMV factories are located in Indonesia, India, South Africa and Argentina.

Ford Motor Co. and General Motors Corp. also have plants in Thailand, forming respective alliances with Mazda Motor Co. and Isuzu. Together, the two U.S. automakers account for less than 10 percent of sales, according to research company Automotive Resources Asia.

By 2010, Thai authorities hope the country will produce 2 million vehicles, three-quarters of them pickups and half for export, part of their goal to become the "Detroit of Asia."

That's an ambitious objective given Thailand's narrow focus on pickups — and the fact that Thailand ranks fifth in Asian auto output behind Japan, China, South Korea and India.

Toyota, with its enormous investment here, sees potential for Thailand's passenger car market, and has urged authorities to cut the excise tax on those vehicles, Sasaki said.

"It is very possible for Thailand to become a passenger car base in addition to pickups in the future," he said. "Hopefully, the domestic excise tax will be reduced."

Vallop said government officials are discussing ways to broaden Thailand's auto industry, but declined to reveal details.

Auto exports, meanwhile, have grown from practically nothing 10 years ago to 443,000 last year, helped by free trade agreements with Australia and the other nine members of ASEAN, the Association of South East Asian Nations.

Exports to the U.S., however, are largely blocked by a 25 percent duty on foreign-made pickups.

That tariff could be cut under a U.S.-Thailand free trade agreement that is under negotiation. Last week, United Auto Workers President Ron Gettelfinger warned that would trigger a "flood of (imported) cheap Thai-built pickup trucks, threatening the jobs of tens of thousands of American workers."

Thai-U.S. trade talks are stalled amid political uncertainty in Thailand following April's annulled elections. New polls are scheduled for Oct. 15.

But Sasaki said it's unlikely that Toyota would ship pickups to the U.S. if such duties were cut. Toyota already makes pickups in the United States, including full-size pickups, which are more popular there than the smaller pickups made in Thailand, he said.

"We already have a very strong manufacturing base in North America," Sasaki said. "There's no need for us to export from here."

China, meanwhile, will give Thailand both competition and opportunity, but for now it poses little threat to Thailand, Vallop contended. For one, pickups aren't very popular there. But should they catch on, Thailand is poised to supply them, he says.

And compared to China, Thailand offers foreign manufacturers more freedom, an export-oriented industry and a sophisticated supply network, Vallop says.

"We are much more competitive than China and India," he said.

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Year 2002-2004... dito ako tumira malapit sa Toyota plant as described above, talagang malaki ito not to mention Honda plant ay kapit planta lang nya.
A bit puzzled here? IMHO - 2 out of 10 na Thai di makapag-ingglis (gaya ko) - bakit gustong-gusto ng mga Hapon mag-invest doon... sana mananatili d2 yung ibang car manufacturers.

Mga mods... pakilipat na lang kung sakali. TIA

[theveed]

Red Tape, Corruption, Cases like the airport, skyway and other foreign companies that had troubles dealing with the government?

[ian_rex]

the problem here is the government choose politics than advancement in our economy. sayang talaga, dapat dito na lang sila nag-invest. kaso nga...

[uls]

our japanese supplier is all praises when talking about Thailand.

The Philippines has fallen behind... very far behind.

i agree with u sir theveed, the NAIA 3 issue has scared away a lot of investors. Biruin mo, after ka mag patayo ng airport, i-co-confiscate ng gobyerno ung pinatayo mong airport tapos di ka babayaran? WTF!?

That sent a signal all over the world ---- the Philippines doesnt not honor contracts.

[isketi]

A bit puzzled here? IMHO - 2 out of 10 na Thai di makapag-ingglis (gaya ko) - bakit gustong-gusto ng mga Hapon mag-invest doon... sana mananatili d2 yung ibang car manufacturers.

Mga mods... pakilipat na lang kung sakali. TIA

I agree. Nung pumunta kami dun, ang hirap bumili o magtanong ng directions kasi konti lang nakakaintindi ng English. Kaya nakakapagtaka kung paano sila nakikipagtrade sa ibang bansa kung di nila alam yung international language.

Btw, di ako mod but I think this should be in the Diesels, SUVs, Mini-SUVs, AUVs and Trucks forum.

[Gumusut_Amige]

Red Tape, Corruption, Cases like the airport, skyway and other foreign companies that had troubles dealing with the government?

Hmmmmm... this reminds me of the Tsikot Forum Thread - The "Perpetual" NBA thread. But still hoping a change gonna happen here... kailan kaya? Well let's wait for tsikoteer/s to stand against these corrupt politicians, mabuhay ang mga Tsikoteers!!!

[109]

I agree. Nung pumunta kami dun, ang hirap bumili o magtanong ng directions kasi konti lang nakakaintindi ng English. Kaya nakakapagtaka kung paano sila nakikipagtrade sa ibang bansa kung di nila alam yung international language.

the authorities on foreign affairs and trade relations do know how to speak the language

me pag-asa pa ang pinas, i know.........i believe.

[Gumusut_Amige]

the authorities on foreign affairs and trade relations do know how to speak the language

me pag-asa pa ang pinas, i know.........i believe.

Just keep our finger crossed... that it will happen during our time, sooner not later.