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.