Make / Model Search

News - Ford

Five car-makers get Thai boost

Small mercies: Ford’s Brazilian-developed Ka is one possibility for Thai production under a major expansion by the Blue Oval brand of its Rayong plant.

Ford and GM think big about small cars in massive Thailand production expansion

16 Oct 2014

FORD and General Motors will headline a multi-billion-dollar expansion of the Thai car industry under a plan to turn Thailand into a global manufacturing powerhouse for small fuel-efficient vehicles by 2019.

The American companies are among five global motor manufacturers to get the tick of approval from the Thai Board of Investment (BOI) for government incentives to build new factories or significantly expanded production facilities under Thailand’s Eco-car Phase 2 Project.

Although the companies have not yet announced what products they intend to build in the new factories, the terms of the deal demand Euro 5-compliant cars capable of consuming no more than 4.3 litres per 100km and emitting less than 100 grams per kilometre of carbon dioxide.

This points to micro or light cars, such as the new Ford Ka and Chevrolet/Holden Spark, or perhaps hybrids.

The plan will almost certainly have a knock-on effect for Australia, which is one of Thailand’s biggest auto export markets.

Thailand aims to achieve annual motor vehicle production of three millions units by 2015. The projects announced under the Eco-car 2 program so far are expected to add a further 800,000 vehicles from 2019.

Apart from Ford and GM, Nissan, Mitsubishi and Toyota have also received a Thai government thumbs up in return for a commitment to invest in expanded manufacturing facilities in the South East Asian country.

However, Ford and GM’s investment plans – for about $A640 million and $A400 million respectively – dwarf the others.

According to a Thai BOI announcement, Ford plans to boost the output of its Rayong manufacturing plant by 180,000 vehicles a year, while also adding production capacity for 2000 engines a year.

Ford already builds products such as the Fiesta, Focus, Ranger and – soon – Everest SUV in Thailand, exporting them to Australia and other countries.

The third-generation Ka five-door hatch and four-door sedan that went into production in Brazil earlier this year could be a prospect for the new Ford plant.

Some overseas journalists speculate that Ka production will be extended to Thailand, China and India. In the latter, it is expected to be called Figo, joining or replacing the Australian-developed Fiesta-based model of the same name.

In Brazil, the Ka is equipped with a choice of 1.0-litre three-cylinder and 1.5-litre four-cylinder engines.

The first-generation Ka – a three-door hatch imported from Spain – was sold in Australia from 1999 to 2003, but discontinued due to slow sales.

If Ford was to change its mind and reintroduce the latest generation to the Australian market, it would go into bat against the Barina Spark, Nissan Micra, Mitsubishi Mirage and Fiat 500, among others.

However, micro cars account for only about 1.5 per cent of automotive sales here, compared with 9.7 per cent for light cars and 22.7 per cent for small cars.

GM’s new Thai expansion is almost as big as Ford’s, resulting in 158,000 vehicles a year from its Rayong plant.

This new plant will slot in beside its current Thai factory that builds a range of GM products, including the Colorado ute and related Colorado 7 SUV sold under Holden badges in Australia.

GM announced at the Bangkok motor show in March that its proposed new Thai production base would build an all-new Chevrolet model for global markets under the Eco-car 2 scheme.

A possibility is a replacement for the Chevrolet Spark – known in Australia as the Holden Barina Spark – that is currently built in South Korea.

Nissan and Mitsubishi have also dug deep to take advantage of the Thai scheme, either building new plants or expanding existing factories.

Fellow Japanese manufacturer Toyota is making a relatively minor investment to expand production capacity by 60,000 units a year.

Curiously, five other major manufacturers that put up their hand for the program were not named in the board’s announcement, raising questions on the future of proposed new Thai factories for Volkswagen, Mazda, Honda, Suzuki and Shanghai Automotive Industry Corporation (SAIC).

VW – Europe’s biggest motor company – reportedly was ready to invest €1 billion ($A1.46b) in its first Thai manufacturing base to build 300,000 cars a year to feed its growth plans in the ASEAN region.

It is unclear if another round of investment approvals will be made by the BOI to cover these projects.

Under the Thai Eco-car Phase 2 program – similar in some aspects to Australia’s defunct Green Car Innovation Fund – car-makers must produce Euro 5-compliant vehicles with petrol engines 1.3 litres or under, or diesel up to 1.5 litres.

They also must invest at least 6.5 billion Thai baht ($A228m), and start producing the cars by 2019. Within four years, they must achieve an annual production rate of 100,000 units.

In return, the manufacturers get tax breaks, including 90 per cent discounts on tariffs on imported components.

The Road to Recovery podcast series

Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

Ford articles

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here