Thailand’s automotive edge entices Ford
Although the American-run Ford Motor Company’s car sales in Thailand dropped by 6.6 percent last year, plans are afoot for it to use its local factory as an Asean manufacturing hub once it commences eco-car production.
Ford Motor Company executives noted the local operation is now the major producer of its brand in Asean, easily outstripping its Vietnamese plant. Around 280,000 vehicles roll off the Ford assembly line at two factories based in Rayong, half for local consumption and the other half for export. This easily outpaces Ford’s Vietnamese operation, which produces around 20,000 units a year.
Ford is one of 10 automobile manufacturers, five of them currently engaged in making eco-cars, who have officially applied for the second phase of the government’s eco-car scheme. Between them, the 10 manufacturers are said to have offered investment worth 139 billion baht.
The 10 manufacturers have put forward plans that would see 1.58 million eco-cars produced in Thailand.
If and when the Board of Investment (BoI) approves the eco-car development plan, Ford says it will be concentrating its energies on turning the new plant into its Asean manufacturing hub.
Ford executives said the company is looking to expand into the small-car segment and this would allow it to cover all of Asean as well as export into Australia and New Zealand.
Ford has been in Thailand since 1995 and in the 19 years since then has spent more than 60 billion baht in production, design, distribution, and services.
In 1997 Ford and Mazda went into a joint venture to operate a 48-billion baht production plant in the Eastern Seaboard Industrial Estate in Rayong. Called the AutoAlliance (Thailand), or simply AAT, Ford accounts for half of the joint venture’s annual production of 240,000 units.
In 2013 Ford sold 96,000 cars within Asean, compared to 89,000 a year earlier. This gave the company a three percent share within Asean, although it has a four percent market share inside Thailand.
Ford management can clearly see plenty of upside. Japanese car manufacturers totally dominate the Thailand and Asean markets at present, but Ford can see the long-term value in basing itself inside Thailand. Geographically the country is perfect for regional expansion and, just as importantly, the infrastructure is already in place to allow for growth.
While Ford management have taken account of the long-running political turmoil in Thailand, they take the long-term view that once consumer and investor confidence returns to the marketplace when things do eventually settle down, they will be in a good position to further expand their market share simply because they already possess good automotive fundamentals and have the support of government agencies.