Thai 'national car' makes inroads abroad

Thai 'national car' makes inroads abroad

BANGKOK (DPA): Unlike neighboring Malaysia and Indonesia, which have the "Proton Saga" and "Timor" made-at-home vehicles, Thailand has never imposed a "national car" policy on their home market.

But anyone who has traveled outside of Bangkok can tell you that Thailand has developed a national vehicle - the ubiquitous one-ton pickup, used upcountry as a mini-bus, for transporting farm produce to the market and as an open top family car.

Since last year Thai-made pickups have started to make inroads abroad, partly because of a sputtering domestic market.

"It's a balancing act," says Suthida Kosarussavadi, a manager at MMC-Sittipol Company Limited. "Our domestic market is going down but we still have a growing export market."

MMC-Sittipol, a joint venture between Mitsubishi Corp. of Japan and Sittipol Motors of Thailand, is one of some 17-18 local assemblers of foreign brand vehicles.

A few years ago the Mitsubishi affiliate exported its first batch of Thai-made one-ton "Cyclone" pickups to Cyprus, and has since pioneered markets in Europe, the Middle East and Africa reaching 12,569 units in exports last year.

In April MMC-Sittipol for the first time exported pickups back to Japan, and Mitsubishi has announced it will soon stop manufacturing pickups in Japan, sourcing exports from Thailand instead.

MMC-Sittipol has set itself an export target of 40,000 pickups this year, with half of them aimed at Europe. Last year it exported pickups to Turkey, Greece, Israel, Spain and the United Kingdom.

Mitsubishi is not the only automobile manufacturer with big pickup plans for Thailand.

Ford and Mazda have entered a US$470 million joint venture to assemble and partly manufacture about 120,000 one-ton pickups per annum in Thailand for both the domestic and the export market.

The joint venture, Auto Alliance Thailand Company Limited, is scheduled to start production in May, 1998, with about half of its production destined for export.

Mazda, which plans to close its existing pickup factory in Hiroshima, will use its international trading network to help find new markets, or expand old markets, for the Thai-made Mazda pickup.

For Ford, which is launching its own made-in-Thailand pickup brand by sharing factory costs with Mazda, the joint venture was primarily a means of penetrating Thailand's market for the one- ton truck.

"In Ford's case it was kind of reestablishing a presence that we had given up on the corporate level 20 years ago," explains Ford Operations (Thailand) Company's manager Ken Brown. Ford and the other U.S. auto giant abandoned the Thai market in the late 1960's when the government began to enforce a local assembly policy.

"If you are going to do it (assembly) here the core product has got to be a pickup because Thailand is primarily a pickup market and it's going to be that way for a while," says Brown.

In 1996 some 589,219 vehicles were sold on the Thai market, of which some 55 percent were one-ton pickups.

One of the reasons for the pickup's tremendous popularity is the price; it is the cheapest car on the market selling for between 300,000-400,000 baht ($12,000-$16,000). More than 70 percent of the parts in Thai pickups are sourced locally.

The government has classified the pickup as a "commercial vehicle," exempting them from the 38-41 percent excise tax that is slapped on all locally assembled or imported passenger cars.

Pickups are also cheaper to drive because they use diesel which uses less petrol per kilometer. These cost considerations help explain why the pickup has become Thailand's de facto national car.

"There was a conscious decision by the government to promote pickup consumption and production," says Michael Dunne, director of Automotive Resources Asia, a consultancy firm.

Thailand's large domestic market for pickups goes a long way towards explaining why Japanese and U.S. automobile manufacturers are choosing the country as a regional hub for the one-ton trucks.

It is the world's second largest pickup market after the U.S., but that sounds more impressive than it is. "There's the U.S., then Thailand, then nobody," says Dunne.

Many industry sources therefore wonder where the huge stock of Thai-made pickups will be exported to, especially at a time of falling sales domestic sales because of the poor economy. Pickup sales reached 112,632 units during January-May, 1997, down 18 per cent from last year's figures.

Despite all the talk of establishing a tariff-free zone in the Association of Southeast Asian Nations (ASEAN) local pickup manufacturers are not targeting Southeast Asia for their exports.

"The biggest ASEAN markets, Indonesia and Malaysia, already have their own national cars," notes MMC-Sittipol's Suthida.