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GM confirms Thai product assault

Not so Cruzy: Holden faces a dilemma about replacing the locally built Cruze, but a major expansion of GM manufacturing operations in Thailand might hold the clue.

Holden eyes planned Thai products as it plans for life after local manufacturing

2 Apr 2014

GENERAL Motors will establish a global manufacturing hub in Thailand to build an all-new Chevrolet model that could potentially open the door for more Thai-built products for Holden as GM winds back its Australian and South Korean factory operations.

Holden has not ruled out sourcing more cars from Thailand for its Australian showrooms as it looks to replace its locally built Cruze small car and home-grown Commodore large sedan when it shuts its Australian factories at the end of 2017.

As well, GM reportedly is winding back its small-car manufacturing and export operations in South Korea – a major source of Holden four-cylinder cars and SUVs. Unconfirmed reports from South Korea suggest the next-generation ‘international’ Cruze will not be made by GM Korea, possibly closing that option for Holden.

But the solution might come from Thailand, where GM Thailand last week announced plans to build a new Chevrolet model in a major investment to turn its Thai operation into a “strategic hub for global exports”.

GM Thailand managing director Marcos Purty confirmed at the Bangkok motor show that GM would submit an application to join Thailand’s Eco Car Phase 2 program that offers incentives to encourage the building of environmentally friendly cars.

“GM’s intent to develop a new Chevrolet car for production in Thailand is well aligned with the objective of the Eco Car program,” he said.

“By submitting this application, GM reaffirms its commitment to invest in Thailand and make Rayong a strategic hub for global exports. Additionally, this investment will bolster our long-term commitment to the excellent regional supplier network.” The emerging importance of the Rayong operation was underscored last week by a visit to Thailand by GM CEO Mary Barra and president Dan Ammann, to celebrate the millionth vehicle to emerge from the facility.

Said Ms Barra: “Today’s milestone demonstrates why Thailand is so important to GM’s growth in Southeast Asia, and helps reinforce our commitment to continually strengthen our investment in this facility.” Holden says it is too early to discuss future products to be introduced after it closes its local manufacturing operations in 2017.

Holden national manager for product communications Kate Lonsdale told GoAuto that Holden was looking at “every avenue” for sourcing new products from within the GM network.

Asked if Holden might import more products from Thailand to fill the looming gaps in its range, Ms Lonsdale said: “We certainly have nothing to announce at this stage.

“We are still working through our future product strategy, and looking at everything that’s available to us through the GM network. But any specifics … we are not going to talk about this early on.” These sources could include GM’s Opel subsidiary in Europe, where unions are reported to have claimed Holden-badged products are in the pipeline.

Holden already imports the Colorado ute and related Colorado 7 SUV from GM Thailand’s Rayong plant.

GM has announced this Thai factory complex will get a major expansion under government-backed Thailand Board of Investment’s Eco Car Phase 2 program that encourages the building of environmentally friendly cars.

GM is one of 10 global manufacturers that have put up their hand for government incentives under the program that encourages companies to build all-new “fuel- efficient, environmentally friendly, safe and low cost vehicles, for sale throughout the region by the end of the decade”.

The cars must produce less than 100 grams of carbon dioxide per kilometre – a benchmark that suggests the cars will either be small or hybrid.

In return, manufacturers will get incentives such as a 90 per cent tax waiver on imported parts that normally incur a high import tariff designed to protect Thai suppliers.

By investing in Thai small-car manufacturing for export, GM would solve a number of issues for its Chevrolet and Holden brands, including its small presence in Southeast Asia and escalating cost of manufacturing in South Korea, where the Detroit giant has been having running battles with unions over wage claims.

All Thai imports enjoy duty-free status in Australia – a benefit that has encouraged Australian car importers to turn Thailand into this country’s second biggest source of vehicles behind Japan.

Holden’s traditional rival Ford already imports most of its Focus small car range and Fiesta light car from Thailand, while market leader Toyota recently ramped up its Thai by introducing a Corolla sedan made in the Asian kingdom.

Mazda, Mitsubishi, Honda, Nissan and Isuzu already import a large proportion of their stock from Thailand, with Suzuki to join them from early 2015.

Australia is negotiating a free-trade agreement with South Korea, but that might not be enough to save GM export programs for products such as Cruze and Barina for Holden.

GM’s Rayong plant currently has 4300 employees, exporting shipping almost 44,000 vehicles to 77 countries last year.

It also makes the four-cylinder Duramax diesel engine used in vehicle such as Colorado.

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