Volkswagen begins local production in Thailand

Volkswagen begins local production in Thailand

BANGKOK (DPA): Volkswagen Thursday started local assembly of VW Passat and Audi A6 passenger cars with a modest sales target of 2,000 luxury cars this year, executives said.

Local production of the two car models began less than a year after VW signed an assembly contract with Thailand's Yontrakit Group in April last year.

Robert Buchelhofer, Volkswagen president for the Asia Pacific region, expressed confidence that Thailand's vehicle market was on the mend after the economy experienced a dramatic slowdown in 1997-98.

"Our timing, with the return of strong growth in the Thai automotive market, couldn't be better," Bachelhofer told a press conference.

Thailand's domestic vehicle sales reached 218,330 units last year, a 51.5 per cent increase over 1998 sales. Passenger car sales last year totaled 66,658 units, of which luxury European models accounted for less than 10 per cent of the market.

"We are confident that the Thai passenger car market will soon return to its pre-crisis level of over 160,000 vehicles," said Buchelhofer.

The VW Group sold a total of 391,000 vehicles in the Asia- Pacific region last year, of which China accounted for 310,000 units, Japan 50,000, Australia and Taiwan about 15,000 each.

Regional sales this year are expected to reach 400,000 units, said the VW executive.

VW's local assembler, Yontrakit's YMC General Assembly Plant Company, which also assembles BMW and Peugeot cars, said they could double capacity should the domestic demand increase.

Yontrakit invested about 10 million marks (US$5 million) in their local assembly plants to meet the requirements of Volkswagen. The German auto giant, the world's third largest car manufacturer, has not co-invested in the local plant nor a local distribution network.

European rivals for Thailand's luxury car market, such as DaimlerChrysler and BMW, in 1998 set up their own distribution companies to assert full management control over sales and after- sales services.

Since 1996, when Thailand automobile sales peaked at 600,000 units, Ford, General Motors, BMW and DaimlerChrysler have invested in local assembly, distribution and leasing companies in the country, despite the recession that began in 1997.